-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KnNFX0Q26slKtb9U7F7ym0EE57o0SzXBF86DrFeES6HeZks5+5aW8B0XVgW27FFJ +x1h0H+ejRneuLPZoFQqYg== 0000947871-04-001363.txt : 20040514 0000947871-04-001363.hdr.sgml : 20040514 20040514134637 ACCESSION NUMBER: 0000947871-04-001363 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 76 FILED AS OF DATE: 20040514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEMBERWORKS INC CENTRAL INDEX KEY: 0001020996 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 061276882 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500 FILM NUMBER: 04806218 BUSINESS ADDRESS: STREET 1: 680 WASHINGTON BLVD., SUITE 1100 CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2033247635 MAIL ADDRESS: STREET 1: 9 WEST BROAD STREET CITY: STAMFORD STATE: CT ZIP: 06902 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Coverdell & Company, Inc. CENTRAL INDEX KEY: 0001290290 IRS NUMBER: 581604660 STATE OF INCORPORATION: GA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-12 FILM NUMBER: 04806208 BUSINESS ADDRESS: STREET 1: 1718 PEACHTREE STREET NW CITY: ATLANTA STATE: GA ZIP: 30309 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Discount Development Services, L.L.C. CENTRAL INDEX KEY: 0001290291 IRS NUMBER: 364395849 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-11 FILM NUMBER: 04806207 BUSINESS ADDRESS: STREET 1: 8420 W. BRYN MAWR CITY: CHICAGO STATE: IL ZIP: 80631 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Impaq Marketing CORP CENTRAL INDEX KEY: 0001290292 IRS NUMBER: 470756248 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-09 FILM NUMBER: 04806205 BUSINESS ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Best Benefits, Inc. CENTRAL INDEX KEY: 0001290293 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-08 FILM NUMBER: 04806204 BUSINESS ADDRESS: STREET 1: 8420 W. BRYN MAWR CITY: CHICAGO STATE: IL ZIP: 80631 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Uni-Care, Inc. CENTRAL INDEX KEY: 0001290294 IRS NUMBER: 363819290 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-07 FILM NUMBER: 04806203 BUSINESS ADDRESS: STREET 1: 8420 W. BRYN MAWR CITY: CHICAGO STATE: IL ZIP: 80631 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Quota-Phone, Inc. CENTRAL INDEX KEY: 0001290295 IRS NUMBER: 133078443 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-06 FILM NUMBER: 04806202 BUSINESS ADDRESS: STREET 1: 3 GANNETT DRIVE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Countrywide Dental, Inc. CENTRAL INDEX KEY: 0001290296 IRS NUMBER: 061378251 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-05 FILM NUMBER: 04806201 BUSINESS ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MemberWorks Canada Holdco, Inc. CENTRAL INDEX KEY: 0001290297 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-04 FILM NUMBER: 04806200 BUSINESS ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Lavalife Corp. CENTRAL INDEX KEY: 0001290301 IRS NUMBER: 000000000 STATE OF INCORPORATION: A5 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-03 FILM NUMBER: 04806199 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MyHealthySavings.com, Inc. CENTRAL INDEX KEY: 0001290302 IRS NUMBER: 061596637 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-02 FILM NUMBER: 04806197 BUSINESS ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Billing Services International, Inc. CENTRAL INDEX KEY: 0001290303 IRS NUMBER: 223792589 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-01 FILM NUMBER: 04806196 BUSINESS ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media (MN) Corp. CENTRAL INDEX KEY: 0001290304 IRS NUMBER: 411790935 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-14 FILM NUMBER: 04806210 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MemberWorks Canada LLC CENTRAL INDEX KEY: 0001290307 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-10 FILM NUMBER: 04806206 BUSINESS ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive S.J. Voice Media Corp. CENTRAL INDEX KEY: 0001290320 IRS NUMBER: 943215560 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-16 FILM NUMBER: 04806212 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media Baltimore LLC CENTRAL INDEX KEY: 0001290272 IRS NUMBER: 980169980 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-32 FILM NUMBER: 04806229 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media Colorado LLC CENTRAL INDEX KEY: 0001290273 IRS NUMBER: 980195835 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-31 FILM NUMBER: 04806228 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media Georgia LLC CENTRAL INDEX KEY: 0001290274 IRS NUMBER: 980190771 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-30 FILM NUMBER: 04806227 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media Michigan LLC CENTRAL INDEX KEY: 0001290275 IRS NUMBER: 980170250 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-29 FILM NUMBER: 04806226 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media New Jersey LLC CENTRAL INDEX KEY: 0001290276 IRS NUMBER: 980195847 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-28 FILM NUMBER: 04806225 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media New York LLC CENTRAL INDEX KEY: 0001290277 IRS NUMBER: 980195834 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-27 FILM NUMBER: 04806224 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media Ohio LLC CENTRAL INDEX KEY: 0001290278 IRS NUMBER: 980190772 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-26 FILM NUMBER: 04806223 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media Pennsylvania LLC CENTRAL INDEX KEY: 0001290279 IRS NUMBER: 980190773 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-25 FILM NUMBER: 04806222 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Lavalife Washington D.C., LLC CENTRAL INDEX KEY: 0001290280 IRS NUMBER: 980169983 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-24 FILM NUMBER: 04806221 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Media Group (USA) Ltd. CENTRAL INDEX KEY: 0001290281 IRS NUMBER: 980121016 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-23 FILM NUMBER: 04806220 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Media Consolidated, Inc. CENTRAL INDEX KEY: 0001290282 IRS NUMBER: 980190774 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-22 FILM NUMBER: 04806219 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive (TX) Voice Media Corp. CENTRAL INDEX KEY: 0001290283 IRS NUMBER: 760471301 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-21 FILM NUMBER: 04806217 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive L.A. Voice Media Corp. CENTRAL INDEX KEY: 0001290284 IRS NUMBER: 954482652 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-20 FILM NUMBER: 04806216 BUSINESS ADDRESS: STREET 1: 905 KING STREET STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Media (IL) Corp. CENTRAL INDEX KEY: 0001290285 IRS NUMBER: 364060721 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-19 FILM NUMBER: 04806215 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Media MO Corp. CENTRAL INDEX KEY: 0001290286 IRS NUMBER: 431593730 STATE OF INCORPORATION: MO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-18 FILM NUMBER: 04806214 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Barnes Holding Corp. CENTRAL INDEX KEY: 0001290287 IRS NUMBER: 980131452 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-17 FILM NUMBER: 04806213 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media (CA) Corp. CENTRAL INDEX KEY: 0001290288 IRS NUMBER: 943147771 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-15 FILM NUMBER: 04806211 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Interactive Voice Media (Sacramento) Corp. CENTRAL INDEX KEY: 0001290289 IRS NUMBER: 943230007 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-115500-13 FILM NUMBER: 04806209 BUSINESS ADDRESS: STREET 1: 905 KING STREET WEST STREET 2: SUITE 500 CITY: TORONTO STATE: A6 ZIP: M6K3G9 BUSINESS PHONE: 203-674-7190 MAIL ADDRESS: STREET 1: C/O MEMBERWORKS INC. STREET 2: 680 WASHINGTON BLVD., 11TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 S-4 1 s4_043004.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on May 14, 2004 Registration No. ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MEMBERWORKS INCORPORATED (Exact name of registrant as specified in its charter) Delaware 06-1276882 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
MemberWorks Incorporated 680 Washington Boulevard, Suite 1100 Stamford, CT 06901 (203) 324-7635 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) George Thomas Esq. MemberWorks Incorporated 680 Washington Boulevard, Suite 1100 Stamford, CT 06901 (203) 324-7635 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: Steven T. Giove, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 (212) 848-4000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If the securities registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. | | If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | | If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | |
CALCULATION OF REGISTRATION FEE ====================================================================================================================== Proposed Proposed Maximum Maximum Offering Aggregate Amount of Title of each Class of Amount to Price per Offering Registration Securities to be Registered be Registered Unit Price (1) Fee - ---------------------------------------------------------------------------------------------------------------------- 9 1/4% Senior Notes due 2014.......................... $150,000,000 100% $150,000,000 $19,005 Subsidiary Guarantees of 9 1/4% Senior Notes due 2014. None (2) None (2) None (2) None (2) ======================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f). (2) Pursuant to Rule 457(n) under the Securities Act, no separate fee is payable for the subsidiary guarantees. The registrant hereby amends this Registration Statement on such date as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ TABLE OF ADDITIONAL REGISTRANTS
Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation Classification Identification Name or Organization Code Number Number - ---- --------------- ----------- ------ Interactive Voice Media Baltimore LLC(1) DE 7389 98-0169980 Interactive Voice Media Colorado LLC(1) DE 7389 98-0195835 Interactive Voice Media Georgia LLC(1) DE 7389 98-0190771 Interactive Voice Media Michigan LLC(1) DE 7389 98-0170250 Interactive Voice Media New Jersey LLC(1) DE 7389 98-0195847 Interactive Voice Media New York LLC(1) DE 7389 98-0195834 Interactive Voice Media Ohio LLC(1) DE 7389 98-0190772 Interactive Voice Media Pennsylvania LLC(1) DE 7389 98-0190773 Lavalife Washington D.C., L.L.C.(1) DE 7389 98-0169983 Interactive Media Group (USA) Ltd.(1) DE 7389 98-0121016 Interactive Media Consolidated, Inc.(1) DE 7389 98-0190774 Interactive (TX) Voice Media Corp.(1) TX 7389 76-0471301 Interactive L.A. Voice Media Corp.(1) CA 7389 95-4482652 Interactive Media (IL) Corp.(1) IL 7389 36-4060721 Interactive Media MO Corp.(1) MO 7389 45-1593730 Barnes Holding Corp.(1) NY 7389 98-0131452 Interactive S.J. Voice Media Corp.(1) CA 7389 94-3215560 Interactive Voice Media (CA) Corp.(1) CA 7389 94-3147771 Interactive Voice Media (MN) Corp.(1) MN 7389 41-1790935 Interactive Voice Media (Sacramento) Corp.(1) CA 7389 94-3230007 Coverdell & Company, Inc.(2) GA 7389 58-1604660 Discount Development Services, L.L.C.(3) IL 7389 36-4395849 MemberWorks Canada LLC(4) DE 7389 N/A Impaq Marketing Corporation(4) DE 7389 47-0756248 Best Benefits, Inc.(3) DE 7389 N/A Uni-Care, Inc.(3) IL 7389 36-3819290 Quota-Phone, Inc.(5) NY 7389 13-3078443 Countrywide Dental, Inc.(4) DE 7389 06-1378251 MemberWorks Canada Holdco, Inc.(4) DE 7389 N/A Lavalife Corp.(1) Nova Scotia 7389 N/A MyHealthySavings.com, Inc.(4) DE 7389 06-1596637 Billing Services International, Inc.(4) DE 7389 22-3792589 - ---------------------------------------------------------------------------------------------------
(1) Registrant's address is 905 King Street West, Suite 500, Toronto, Ontario, Canada M6K369. (2) Registrant's address is 1718 Peachtree Street NW, Atlanta, GA 30309. (3) Registrant's address is 8420 West Bryn Mawr, Chicago, IL 80631. (4) Registrant's address is 680 Washington Blvd., 11th Floor, Stamford, CT 06091. (5) Registrant's address is 3 Gannett Drive, White Plains, NY 10604. The information in this prospectus is not complete and may be changed. A registraiton statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted before the registration statement becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED MAY 14, 2004 MemberWorks Incorporated Offer to Exchange all outstanding 9 1/4% Senior Notes due 2014 issued on April 13, 2004 which have not been registered under the Securities Act ($150,000,000 aggregate principal amount outstanding) for 9 1/4% Senior Notes due 2014 registered under the Securities Act ------------ We hereby offer, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, which together constitute the exchange offer, to exchange $150,000,000 aggregate principal amount of our new 9 1/4% Senior Notes due 2014, or the new notes, for $150,000,000 aggregate principal amount of our issued and outstanding 9 1/4% Senior Notes due 2014, or the old notes, and collectively with the new notes, the notes. The Exchange Offer o The exchange offer will expire at 5:00 p.m., New York City time, on , 2004, unless extended. o All old notes that are validly tendered and not validly withdrawn will be exchanged. o Tenders of old notes may be withdrawn any time prior to 5:00 p.m. on the business day prior to expiration of the exchange offer. o The exchange of notes will not be a taxable exchange for U.S. federal income tax purposes. o We will not receive any proceeds from the exchange offer. The New Notes o The terms of the new notes to be issued are substantially identical to the outstanding old notes, except for the transfer restrictions and registration rights relating to the old notes. o The new notes will be our unsecured senior obligations and will be guaranteed on a senior unsecured basis by all of our existing and future domestic subsidiaries and certain existing and future foreign subsidiaries, including Lavalife. The new notes and the related guarantees will rank equally in right of payment with any of our and such guarantors' existing and future unsecured senior indebtedness and will rank senior in right of payment to all of our and such guarantors' existing and future unsecured subordinated indebtedness. The new notes and the related guarantees will be effectively subordinated to all of our and such guarantors' secured indebtedness to the extent of the value of the assets securing such indebtedness. o No public market exists for the old notes or the new notes. We do not intend to apply for listing of the new notes on any securities exchange or to arrange for them to be quoted on any quotation system. See "Risk Factors" beginning on page 16 for a discussion of matters that should be considered in connection with the exchange offer. Neither the Securities and Exchange Commission nor any state Securities Commission has approved or disapproved of the notes to be distributed in the exchange offer, nor have any of these organizations determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2004. TABLE OF CONTENTS
Page Page ---- ---- Industry and Market Data.................................ii Business.................................................55 Currency Translation.....................................ii Management...............................................62 Forward-Looking Statements...............................ii Description of Other Indebtedness........................64 Summary...................................................1 The Exchange Offer.......................................65 Risk Factors.............................................16 Description of the New Notes.............................73 The Lavalife Acquisition.................................27 Certain U.S. Federal Income Tax Considerations..........112 Use of Proceeds..........................................28 Plan of Distribution....................................117 Capitalization...........................................29 Legal Matters...........................................117 Unaudited Pro Forma Condensed Combined Financial Data....30 Experts.................................................117 Selected Condensed Consolidated Financial Data...........44 Where You Can Find More Information.....................117 Management's Discussion and Analysis of Financial Incorporation by Reference..............................118 Condition and Results of Operations..................45 Index to Consolidated Financial Statements..............F-1
------------- This exchange offer is not being made to, nor will we accept surrenders of old notes from, holders of old notes in any jurisdiction in which this exchange offer or the acceptance of old notes would not be in compliance with the securities of blue sky laws of such jurisdiction. Each holder of old notes wishing to accept this exchange offer must deliver the old notes to be exchanged, together with the letter of transmittal that accompanies this prospectus and any other required documentation, to the exchange agent identified in this prospectus. Alternatively, you may effect a tender of old notes by book-entry transfer into the exchange agent's account at The Depository Trust Company, DTC. All deliveries are at the risk of the holder. You can find detailed instructions concerning delivery in the section called "The Exchange Offer" in this prospectus and in the accompanying letter of transmittal. ------------- If you are a broker-dealer that receives new notes for your own account pursuant to this exchange offer, you must acknowledge that you will deliver a prospectus in connection with any resale of the new notes. The letter of transmittal accompanying this prospectus states that by so acknowledging and by delivering a prospectus, you will not be deemed to admit that you are an "underwriter" within the meaning of the Securities Act of 1933. You may use this prospectus, as we may amend or supplement it in the future, for your resales of new notes received in exchange for old notes where the old notes were acquired by you as a result of market-making or other trading activities. We have agreed to make this prospectus available to any broker-dealer in connection with any such resale for a period of one year after the date of expiration of this exchange offer. For more information, see the section called "Plan of Distribution" in this prospectus. ------------- You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different or additional information. You should assume that the information contained or incorporated by reference in this prospectus is accurate only as of the date of this prospectus or the date of the document incorporated by them. We are not making an offer of exchange in any jurisdiction where the offer is not permitted. ------------- We are incorporating by reference into this prospectus important business and financial information about our company that is not included in or delivered with the prospectus. This information is available without charge upon written or oral request. Requests should be directed to: MemberWorks Incorporated 680 Washington Boulevard Stanford, Connecticut 06901 Attention: Investor Relations Telephone: (203) 324-7635 Any request for documents should be made by , 2004 to ensure timely delivery of the documents prior to the expiration of the exchange offer. ------------- INDUSTRY AND MARKET DATA Industry and market data used throughout this prospectus were obtained through company research, surveys and studies conducted by third parties and industry and general publications. We have not independently verified market and industry data from third-party sources. While we believe this information is reliable and market definitions are appropriate, none of the research, surveys and studies or these definitions has been verified by any independent sources. ------------- CURRENCY TRANSLATION Unless otherwise indicated, all references to "$" in this prospectus refer to United States dollars and all references to "Cdn$" refer to Canadian dollars. The following table lists, for each period presented, the high and low exchange rates, the average of the exchange rates on the last day of each month during the period indicated and the exchange rates as of the end of the period for one Canadian dollar, expressed in United States dollars, based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York. Unless otherwise specified, all translations of Canadian dollars into U.S. dollars were made based on the noon buying rate in New York City as of April 1, 2004. On April 1, 2004, the inverse of the noon buying rate in New York City for cable transfers of Canadian dollars was Cdn$1.00 = US$0.7633.
Year Ended December 31, ---------------------------------------------------- 1999 2000 2001 2002 2003 ------ ------ ------ ------ ------ High for the period............................ 0.6925 0.6969 0.6697 0.6619 0.7738 Low for the period............................. 0.6535 0.6410 0.6241 0.6200 0.6349 Average for the period......................... 0.6732 0.6734 0.6459 0.6369 0.7159 End of period.................................. 0.6925 0.6669 0.6279 0.6329 0.7738
------------- FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about the industry in which MemberWorks operates and our management's beliefs and assumptions. These forward-looking statements include statements that do not relate solely to historical or current facts and can be identified by the use of words such as "believe," "expect," "estimate," "project," "continue" or "anticipate." These forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance and are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, many of which are ii beyond our control, cannot be foreseen and reflect future business decisions that are subject to change. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Among the many factors that could cause actual results to differ materially from the forward-looking statements are: o higher than expected membership cancellations or lower than expected membership renewal rates; o changes in the marketing techniques of credit card issuers; o increases in the level of commission rates and other compensation required by marketing partners to actively market with us; o potential reserve requirements by business partners such as our credit card processors; o unanticipated termination of marketing agreements; o our ability to integrate acquired businesses into our management and operations and operate successfully; o the extent to which we can continue to successfully develop and market new products and services and introduce them on a timely basis; o unanticipated changes in or termination of our ability to process membership fees through third parties, including credit card processors and bank card associations; o our ability to develop and implement operational and financial systems to manage growing operations; o our ability to recover from a complete or partial system failure or impairment, other hardware or software related malfunctions or programming errors; o the degree to which we are leveraged; o our ability to obtain financing on acceptable terms to finance our growth strategy and to operate within the limitations imposed by financing arrangements; o further changes in the already competitive environment fix our products or competitors' responses to our strategies; o changes in the growth rate of the overall U.S. economy, or the international economy where we do business, such that credit availability, interest rates, consumer spending and related consumer debt are impacted; o additional government regulations and changes to existing government regulations of our industry, including the Federal Trade Commission's 2003 Amendment to its Telemarketing Sales Rule which created a national do-not-call list; o whether competitors of Lavalife move to a transactional-based model; o our ability to compete with other companies that have financial or other advantages; o adverse movement in foreign exchange rates; o our ability to attract and retain active members and users; iii o adverse results of litigation or regulatory matters; and o new accounting pronouncements. Many of these factors are beyond our control, and, therefore, our business, financial condition, results of operations and cash flows may be adversely affected by these factors. We caution that such factors are not exclusive. All of the forward-looking statements made or incorporated by reference in this prospectus are qualified by these cautionary statements and you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. Except as required by law, we do not have any intention or obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. ------------- iv SUMMARY This summary highlights selected information from this prospectus. It does not contain all of the information that is important to you in order to understand this exchange offer or the terms of the notes. You should read this entire prospectus, including "Risk Factors" and the additional information, including the financial statements and related notes, included or incorporated by reference in this prospectus, before making a decision to participate in this exchange offer. See "Incorporation by Reference." On April 1, 2004, MemberWorks Incorporated completed the acquisition of all of the assets and outstanding capital stock of Lavalife Inc. After the acquisition, Lavalife Inc. changed its name to Lavalife Corp., which now operates as a wholly owned subsidiary of MemberWorks Incorporated. As used in this prospectus, unless otherwise stated or the context otherwise requires, the term (1) "MemberWorks" refers to MemberWorks Incorporated and its subsidiaries prior to the acquisition of Lavalife, (2) "Lavalife" refers to the business conducted by Lavalife Inc. and its subsidiaries (3) "we," "us," "our" and similar terms refer to MemberWorks Incorporated and its subsidiaries, including Lavalife, and (4) the "Transactions" collectively refers to (i) the execution of our amended and restated senior secured credit facility, borrowings thereunder and the use of proceeds therefrom, (ii) our acquisition of Lavalife and the concurrent purchases by Lavalife's senior management of MemberWorks' restricted common stock and (iii) the offering of the old notes and the use of proceeds therefrom. The Exchange Offer On April 13, 2004, we completed the private offering of $150 million of 9 1/4% senior notes due 2014. We entered into a registration rights agreement with the initial purchasers in the private offering in which we agreed, among other things, to deliver to you this prospectus and to complete the exchange offer within 30 business days of the effectiveness of the exchange offer registration statement. In the exchange offer, you are entitled to exchange your outstanding old notes for new registered notes with substantially identical terms. If the exchange offer is not completed within 30 business days of the effectiveness of the exchange offer registration statement, and in certain other circumstances, we will pay liquidated damages to each holder of the old notes. You should read the discussions under the headings "The Exchange Offer -- Registration Rights" and "Description of the New Notes" for further information regarding the liquidated damages and the registered notes, respectively. We believe that the new notes issued in the exchange offer may be resold by you without compliance with the registration and prospectus delivery provisions of the Securities Act, subject to certain conditions. You should read the discussion under the heading "The Exchange Offer" for further information regarding the exchange offer. MemberWorks Incorporated We are a leading provider of innovative membership programs to consumers and, with the acquisition of Lavalife, a leading global provider of web-based and interactive voice response ("IVR") based personals services. Our membership programs offer consumers easy access to a variety of discounted products and services provided by our participating vendors. Through Lavalife, we offer users both web-based and IVR-based personals services, which allow them to interact with each other from anywhere in real time. For the twelve months ended December 31, 2003, after giving pro forma effect to the Transactions, our revenues would have been $545.4 million. Membership Programs Our members benefit by receiving significant discounts and insightful information on everyday items in areas which include healthcare, personal finance, insurance, travel, entertainment, fashion and personal security. We design our membership programs to address the particular needs and preferences of our members by combining various features and benefits to customize our programs. We had approximately 6.3 million members as of December 31, 2003. Our clients (who offer the membership programs to their customers), including Citibank, N.A. and West Corporation, benefit by receiving royalty payments in exchange for providing us with new members or access to potential members. Our participating vendors (who offer products and/or services through our membership programs) have an incentive to provide discounts to our members in order to reach a large number of demographically attractive consumers while incurring minimal incremental marketing costs. Our membership programs are for either annual or monthly renewable terms. Traditionally, we marketed membership programs which had an up-front annual membership fee. However, in fiscal 2003, we expanded our marketing of membership programs for which membership fees are payable in monthly installments, which 1 generally have higher margins than our annual payment membership programs. During the six months ended December 31, 2003, more than 60% of our new member enrollments were in monthly payment programs, and we expect the proportion of our monthly payment programs to increase going forward. Membership fees vary depending upon the particular services offered by the membership program. In the first half of fiscal 2004, annual membership fees averaged approximately $106 per year and monthly membership fees averaged $11.18 per month, compared to $100 and $9.60, respectively, for the same period in fiscal 2003. We continue to enhance our existing membership programs to add more member value by continuously monitoring and addressing the needs and preferences of our members, which, in turn, has enabled us to increase the average membership fees year over year. We generally design membership programs to provide our members with potential savings of at least twenty times their membership fees. Our money-saving programs fall into the following four key categories: o Health and Insurance -- The health and fitness membership programs offer significant savings on a comprehensive array of products, including prescription drugs, vitamins and supplements, eye glasses and contact lenses, hearing aides, durable medical equipment and select consumer health products. Also offered are discounts on professional services, including medical, dental, chiropractic, alternative medicine, elder care and personal health services. Our insurance programs offer competitively priced insurance products, including life, accidental death, short-term and catastrophic disability and supplemental medical, warranty and identity theft insurance coverage. o Travel, Entertainment and Shopping -- These membership programs offer exclusive, members-only savings with leading brand name partners. Members have multiple opportunities to save on airfare, hotel rates, car rental and cruise packages, theme and amusement parks, restaurants and movie theaters. Members also have access to savings on a wide range of merchandise, apparel and personal services. o Privacy, Protection and Home Improvement -- Members have access to bundles of services that enable them to better manage their privacy and protection through identity theft insurance, card registration, credit reporting, scoring and monitoring, and personal information monitoring services, and savings on security systems, 24-hour protection services, roadside assistance, financial, tax and retirement planning and extended warranty protection. Members also have access to discounts on home improvement, consumer electronics and family entertainment. o Specialty Markets and Custom Programs -- We partner with well known clients to offer custom, private label or co-branded membership programs to meet the specific needs of our client's defined customer base. In addition, we offer membership materials and customer service in Spanish and French. Personals Services Through Lavalife, we offer both web-based and IVR-based personals services to Lavalife's users. These services allow users to interact with each other from anywhere in real time by phone, email, text chat or video. To acquire new users and retain existing users, Lavalife relies on its innovative products, marketing relationships with major media groups, advertising campaigns in large markets, widely recognized brand and advanced technology infrastructure. Lavalife is headquartered in Toronto, Canada, and serves customers in the United States, Canada and other regions, principally Australia, which accounted for approximately 69%, 25% and 6%, respectively, of its net sales for the fiscal year ended September 30, 2003. As of December 31, 2003, Lavalife had approximately 700,000 active web-based and IVR-based users. During January 2004, Lavalife.com, our interactive website, had approximately 8.2 million unique web visitors. Lavalife employs a transactional business model, in which users buy non-refundable credits up front and spend those credits only when they want to interact with other users. Lavalife's competitors generally employ a subscription model, in which users pay a fixed periodic fee. We believe a transactional model is more attractive to new users, who will join due to a lower initial cost and the ability to easily control their spending. Furthermore, once a user has an account balance, the user has a strong financial incentive to return to use their remaining credits. To further encourage return visits, Lavalife continues to refine its existing service offerings and introduce new interactive services such as video. Lavalife continues to refine its product offerings and introduce innovative interactive products, including video and real time online social networking. 2 Competitive Strengths We participate in the consumer membership services market of the direct marketing industry and, with the acquisition of Lavalife, in the personals services industry. A successful business model for membership and personals services business depends on a large and stable customer base, strong relationships with marketing partners and vendors, diversified distribution channels and an understanding of the regulatory environment. We believe we have successfully developed all of these aspects of our business model. We believe our competitive strengths are as follows: o Proven Business Model with Recurring Cash Flows -- Over the last 15 years, we have established a large and stable membership base. As of the end of each of the last four fiscal years, we had over 6 million members. This membership base has historically generated a recurring stream of cash flows. After the initial new member acquisition costs are recovered, we generate a substantial stream of cash flow because the cost of maintaining a renewal member is minimal. In addition, with the acquisition of Lavalife, we are diversifying our proven business model by adding a complementary business with a history of consistent profitability and a large base of active users. As of December 31, 2003, Lavalife had approximately 700,000 active web-based and IVR-based users. o High Barriers to Entry -- The membership services business is characterized by high barriers to entry, which include establishing client and vendor relationships and acquiring a critical mass of members. By offering quality programs and a high level of customer service over the last 15 years, we have earned the trust of well-known vendors who, we believe, prefer to license their brands to established industry participants, such as ourselves. Building a membership services business sufficient to support continued growth takes time. In addition, because the benefits of a high margin cash flow are not realized until the member acquisition costs are recovered, new entrants are not likely to experience positive cash flow during the initial years of their operations and would require large amounts of upfront capital. In addition, the personals services business is characterized by barriers to entry, including a critical mass of users and advanced computer and communication systems that support the business. o Extensive Vendor Network -- In most cases, the products and services accessed through our membership programs are offered and provided directly to members by independent benefit providers, or vendors. To ensure member satisfaction, we evaluate and engage only those vendors who we believe can deliver high quality products and services at discounted prices. We have thousands of vendors providing approximately 400 distinct benefits in the areas of healthcare, insurance, travel and entertainment, shopping, home improvement, financial and personal security and more. Our strong vendor network continues to help us develop innovative membership programs by giving us access to a variety of products and services. We are able to establish and retain strong relationships with our vendors by leveraging our client relationships and large member base to drive low-cost incremental traffic to our vendors. o Strong Client Relationships -- We have established strong relationships with our clients, which have helped us increase our market penetration and gain access to a large number of potential new members. Our clients include banks and other financial institutions, e-commerce companies, direct response television companies, catalog companies, retailers, major oil companies and other organizations with large numbers of individual account holders and customers. We have built and maintained these client relationships by providing our clients' customers with high quality, innovative membership programs supported by our extensive vendor network. o Diversified Distribution Channels -- During the past several years, we have been able to effectively diversify our distribution channels for membership programs. We market our programs through a variety of direct marketing channels, including inbound call marketing through MemberLinkSM, online marketing, outbound telemarketing (which we outsource to third party contractors) and direct mail. Our diversified distribution channels for membership programs enable us to shift toward more cost effective distribution channels to acquire new members. o Lavalife's Transactional Business Model -- Lavalife employs a transactional business model, in which users buy credits up front and spend those credits only when they want to interact with other users. Our competitors generally employ a subscription model, in which users pay a fixed periodic fee. We 3 believe that a transactional business model is more attractive to new users, who will join due to a lower initial cost and the ability to easily control their spending. In addition, once a user has an account balance, the user has a strong financial incentive to return and use any remaining credits. Furthermore, through its transactional business model, Lavalife is positioned to immediately benefit from product upgrades that promote credit-consuming features. o Experienced Management Team -- We believe MemberWorks' senior management's extensive knowledge of the consumer industry has been important in building MemberWorks' successful membership programs business. In particular, Gary Johnson, one of our co-founders, has served as our President and Chief Executive Officer since our inception. MemberWorks' senior management has an average of seven years of experience at MemberWorks. In addition, the founders of Lavalife, each with 16 years of experience at Lavalife, have joined MemberWorks and, in connection with the acquisition, have purchased approximately Cdn$11.9 million ($9.1 million) in MemberWorks' restricted common stock. Our Strategy Our business strategy is to extend our position as a leading consumer membership and personals services company. We intend to strengthen our market leadership positions, maximize profitability and enhance cash flow through the following strategies: o Optimize Customer Retention -- We will seek to optimize our customer retention rates and revenue generated per customer by continuing to enhance our programs and services by adding more value and/or features. Historically, this strategy has enabled us to increase our average membership fees year over year while maintaining our membership base. o Pursue Growth Opportunities and Cost Synergies -- We expect to generate revenue growth and realize cost synergies from the Lavalife acquisition. We expect to increase our revenues by cross-selling MemberWorks' customized membership programs to Lavalife's users and Lavalife's services to MemberWorks' members. We also expect to realize cost savings by combining certain of our operations and infrastructure and through potential volume discounts with our existing vendors and media companies that carry our advertisements. o Continue to Develop Innovative Products and Services -- We believe our membership programs are innovative with respect to the variety and quality of particular services, discounts, and other features offered. We will continue to increase the variety of programs offered and enhance the customer value in our existing programs by combining various features and benefits. We will also continue to customize our programs to the particular needs of our members and clients. o Capitalize on Global Online Market Opportunities -- Lavalife participates in the global market for online personals, which was estimated to be approximately $530.0 million in sales for 2003 according to Marketdata Enterprises Inc. We believe that this market will continue to grow, driven by growth in social acceptance, improved service offerings and the integration of new technologies. We intend to pursue a wider target audience for our membership programs by capitalizing on our broadened online marketing presence. o Pursue Strategic Acquisitions -- We believe that strategic acquisitions represent an effective means to broaden our product offerings. We intend to selectively pursue opportunities that enhance sales growth, increase customer and geographic diversity, offer complementary products, have proven technologies and/or provide potential revenue opportunities and marketing synergies. Recent Developments The Lavalife Acquisition On April 1, 2004, MemberWorks completed the acquisition of all of the assets and outstanding capital stock of Lavalife for approximately Cdn$152.5 million ($116.4 million) in cash. See "The Lavalife Acquisition." Lavalife's senior management purchased approximately Cdn$11.9 million ($9.1 million) in MemberWorks' 4 restricted common stock at closing of the acquisition. We financed the purchase price with cash on hand and borrowings of approximately $15.0 million under our $45.0 million senior secured credit facility. For the twelve months ended December 31, 2003, Lavalife had revenues of Cdn$98.6 million ($70.6 million). We believe the Lavalife acquisition is an attractive opportunity for us because Lavalife offers: o entry into the growing personals services market with a leading brand; o a proven business model with consistent profitability; o a broad online marketing presence with a large potential target audience; o a transactional business model, which we believe is more favorable than a subscription business model for the personal services industry; o opportunities to cross-sell our programs and services across our customer base; and o an experienced management team with significant expertise in the personals services industry. Lavalife now operates as a wholly owned restricted subsidiary of MemberWorks, guarantees the old notes and will guarantee the new notes. Senior Secured Credit Facility On March 25, 2004, we entered into an amended and restated senior secured credit facility that allows borrowings of up to $45.0 million. Borrowings under the senior secured credit facility accrue interest at either LIBOR, or the base commercial lending rate for the bank, plus an applicable margin. As of April 29, 2004, we had $25.6 million of borrowing capacity remaining under the senior secured credit facility due to a $5.5 million letter of credit outstanding thereunder and other restrictions under the senior secured credit facility. See "Description of Other Indebtedness -- Senior Secured Credit Facility." ------------- MemberWorks Incorporated, a Delaware corporation, was organized in 1996 and conducted business under the name Cardmember Publishing Corporation from 1989 to 1996. Our principal office is located at 680 Washington Boulevard, Stamford, CT 06901 and our phone number is (203) 324-7635. Our internet address is www.memberworks.com. Information on our website is not a part of this prospectus. 5 Summary of the Terms of the Exchange Offer On April 13, 2004, we issued $150,000,000 aggregate principal amount of unregistered 9 1/4% senior notes due 2014. These old notes are unconditionally guaranteed by all of our existing and future domestic subsidiaries that guarantee our credit facilities. The exchange offer relates to the exchange of up to $150 million aggregate principal amount of old notes for an equal aggregate principal amount of new notes. The new notes will be obligations of our company entitled to the benefits of the indenture governing the old notes. The form and terms of the new notes are identical in all material respects to the form and terms of the outstanding notes except that the new notes have been registered under the Securities Act of 1933, as amended, and therefore are not entitled to the benefits of the registration rights granted under the registration rights agreement, executed as part of the offering of the outstanding notes, dated April 13, 2004 among us and the initial purchasers in the private offering. These benefits include the liquidated damages we would pay in the event that the filing and declaration of effectiveness of the required registration statement and subsequent consummation of an exchange offer pursuant to the registration statement do not occur within the time periods specified in the registration rights agreement. Registration rights agreement...... You are entitled to exchange your notes for registered notes with substantially identical terms. The exchange offer is intended to satisfy these rights. After the exchange offer is complete, you will no longer be entitled to any exchange or registration rights with respect to your notes. The exchange offer................. We are offering to exchange $1,000 principal amount of 9 1/4% senior notes due 2014 which have been registered under the Securities Act for each $1,000 principal amount of our outstanding 9 1/4% senior notes due 2014 which were issued on April 13, 2004 in a private offering. In order to be exchanged, an outstanding note must be properly tendered and accepted. All outstanding notes that are validly tendered and not validly withdrawn will be exchanged. As of this date there are $150 million principal amount of notes outstanding. We will issue registered notes on or promptly after the expiration of the exchange offer. Resale of the new notes............ Based on an interpretation by the staff of the Commission, we believe that you will be able to resell the new notes without compliance with the registration and prospectus delivery provisions of the Securities Act if: o you are acquiring the new notes in the ordinary course of your business; o you are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the notes issued to you in the exchange offer; and o you are not an "affiliate" of ours. If any of these conditions are not satisfied, (1) you will not be eligible to participate in the exchange offer, (2) you should not rely on the interpretations of the staff of the SEC in connection with the exchange offer and (3) you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of your notes. If you are a broker-dealer and you will receive new notes for your own account in exchange for old notes that you acquired as a result of market-making activities or other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale of the new notes. See "Plan of Distribution" for a description of the prospectus delivery obligations of broker-dealers in the exchange offer. 6 In accordance with the conditions, if you are a broker-dealer that acquired the old notes directly from us in the initial offering and not as a result of market-making activities, you will not be eligible to participate in the exchange offer. The exchange offer is not being made to, nor will we accept surrenders for exchange from, holders of outstanding notes in any jurisdiction in which this exchange offer or the acceptance thereof would not be in compliance with the securities or blue sky laws of such jurisdiction. Expiration date.................... The exchange offer will expire at 5:00 p.m., New York City time, , 2004, unless we decide to extend the expiration date. Accrued interest on the new notes and the outstanding notes....... The new notes will bear interest from April 13, 2004. Holders of outstanding notes whose notes are accepted for exchange will be deemed to have waived the right to receive any payment of interest on such outstanding notes accrued from April 13, 2004 to the date of the issuance of the new notes. Consequently, holders who exchange their outstanding notes for new notes will receive the same interest payment on October 1, 2004 (the first interest payment date with respect to the outstanding notes and the new notes to be issued in the exchange offer) that they would have received had they not accepted the exchange offer. Termination of the exchange offer.. We may terminate the exchange offer if we determine that our ability to proceed with the exchange offer could be materially impaired due to any legal or governmental action, new law, statute, rule or regulation or any interpretation of the staff of the Commission of any existing law, statute, rule or regulation. We do not expect any of the foregoing conditions to occur, although there can be no assurance that such conditions will not occur. Should we fail to consummate the exchange offer, holders of outstanding notes will have the right under the registration rights agreement executed as part of the offering of the outstanding notes to require us to file a shelf registration statement relating to the resale of the outstanding notes. Procedures for tendering outstanding notes .............. If you are a holder of a note and you wish to tender your note for exchange pursuant to the exchange offer, you must transmit to LaSalle Bank National Association, as exchange agent, on or prior to the expiration date of the exchange offer: either o a properly completed and duly executed Letter of Transmittal, which accompanies this prospectus, or a facsimile of the Letter of Transmittal, including all other documents required by the Letter of Transmittal, to the exchange agent at the address set forth on the cover page of the Letter of Transmittal; or o a computer-generated message transmitted by means of DTC's Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book entry transfer in which you acknowledge and agree to be bound by the terms of the Letter of Transmittal; 7 and, either o a timely confirmation of book- entry transfer of your outstanding notes into the exchange agent's account at The Depository Trust Company ("DTC") pursuant to the procedure for book-entry transfers described in this prospectus under the heading "The Exchange Offer Procedure for Tendering," must be received by the exchange agent on or prior to the expiration date of the exchange offer; or o the documents necessary for compliance with the guaranteed delivery procedures described below. By executing the Letter of Transmittal, each holder will represent to us that, among other things, (1) the notes to be issued in the exchange offer are being obtained in the ordinary course of business of the person receiving such new notes whether or not such person is the holder, (2) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such new notes and (3) neither the holder nor any such other person is an "affiliate" (as defined in Rule 405 under the Securities Act) of ours. Special procedures for beneficial owners ......................... If you are the beneficial owner of notes and your name does not appear on a security position listing of DTC as the holder of such notes or if you are a beneficial owner of registered notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender such notes or registered notes in the exchange offer, you should contact such person in whose name your notes or registered notes are registered promptly and instruct such person to tender on your behalf. If such beneficial holder wishes to tender on his own behalf, such beneficial holder must, prior to completing and executing the Letter of Transmittal and delivering its outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in such holder's name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time. Guaranteed delivery procedures..... If you wish to tender your notes and time will not permit your required documents to reach the exchange agent by the expiration date of the exchange offer, or the procedure for book-entry transfer cannot be completed on time or certificates for registered notes cannot be delivered on time, you may tender your notes pursuant to the procedures described in this prospectus under the heading "The Exchange Offer--Guaranteed Delivery Procedure." Withdrawal rights.................. You may withdraw the tender of your notes at any time prior to 5:00 p.m., New York City time, on , 2004, the business day prior to the expiration date of the exchange offer. Acceptance of outstanding notes and delivery of new notes........... Subject to the conditions summarized above in "Termination of the Exchange Offer" and described more fully under "The Exchange Offer--Termination", we will accept for exchange any and all outstanding notes which are properly tendered in the exchange offer prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer. The notes issued pursuant to the exchange offer will be delivered promptly following the expiration date. 8 Material U.S. federal income tax consequences................ The exchange of the notes pursuant to the exchange offer will not be a taxable exchange for U.S. federal income tax purposes. Consequences of failure to exchange..................... If you are eligible to participate in this exchange offer and you do not tender your old notes as described in this prospectus, you will not have any further registration rights. In that case, your old notes will continue to be subject to restrictions on transfer. As a result of the restrictions on transfer and the availability of new notes, the old notes are likely to be much less liquid than before the exchange offer. The old notes will, after the exchange offer, bear interest at the same rate as the new notes. Use of proceeds.................... We will not receive any proceeds from the issuance of notes pursuant to the exchange offer. We will pay all expenses incident to the exchange offer. Exchange agent..................... LaSalle Bank National Association is serving as exchange agent in connection with the exchange offer. The exchange agent can be reached at LaSalle Bank N.A., 135 LaSalle Street, Suite 1960, Chicago, IL 60603 Attention Christine Linde, Vice President. For more information with respect to the exchange offer, the telephone number for the exchange agent is (312) 904-5532 and the facsimile number for the exchange agent is (312) 904-2236. 9 Summary Description of the New Notes Issuer............................ MemberWorks Incorporated. Notes Offered..................... $150,000,000 in aggregate principal amount of 9 1/4% Senior Notes due 2014. Maturity Date..................... April 1, 2014. Interest Payment Dates............ April 1 and October 1, commencing October 1, 2004. Subsidiary Guarantees............. Our obligations under the new notes will be fully and unconditionally guaranteed by all of our existing and future domestic subsidiaries that guarantee our credit facilities. The new notes will also be guaranteed by Lavalife, which is a guarantor under the senior secured credit facility, and any of our future restricted foreign subsidiaries that guarantee our credit facilities. For the twelve months ended December 31, 2003, MemberWorks Incorporated and the subsidiary guarantors, after giving pro forma effect to the Transactions, would have accounted for approximately 97% of our revenues. Ranking........................... The new notes will be our senior unsecured obligations. Accordingly, they will rank: o pari passu in right of payment to all of our existing and future senior unsecured indebtedness; and o senior in right of payment to all of our existing and future subordinated indebtedness that expressly provides for its subordination to the new notes. The subsidiary guarantee of each guarantor will be such guarantor's senior unsecured obligations. Accordingly, they will rank: o pari passu in right of payment to all of such subsidiary guarantor's existing and future senior unsecured indebtedness; and o senior in right of payment to all of such subsidiary guarantor's existing and future unsecured indebtedness that expressly provides for its subordination to the new notes. The new notes and the guarantees will effectively be subordinated in right of payment to any secured indebtedness of us or our subsidiary guarantors to the extent of the value of the assets serving as security for such secured indebtedness. The new notes will also be effectively subordinated to all liabilities, including trade payables, of our subsidiaries that are not subsidiary guarantors. As of December 31, 2003, on a pro forma basis after giving effect to the Transactions: o we and our subsidiaries would have had approximately $240.0 million aggregate principal amount of outstanding indebtedness on a consolidated basis, $5.5 million of issued and undrawn letters of credit outstanding under our senior secured credit facility, and an additional $25.6 million available for borrowings 10 under the senior secured credit facility; o approximately $90.0 million principal amount of our outstanding indebtedness would have been contractually subordinated to the new notes; and o our subsidiaries that are non- guarantors would have had approximately $5.6 million in liabilities, excluding intercompany liabilities but including trade payables. Optional Redemption................ At any time before April 1, 2007, we may redeem up to 35% of the new notes with net cash proceeds of certain equity offerings, as long as at least 65% of the aggregate principal amount of the notes issued under the indenture remains outstanding after the redemption. We may redeem all or part of the new notes prior to April 1, 2009 by paying a make-whole premium. At any time on or after April 1, 2009, we may redeem some or all of the new notes at the redemption prices set forth under "Description of the New Notes-- Optional Redemption," plus accrued and unpaid interest and liquidated damages, if any, to the date of redemption. See "Description of the New Notes-- Optional Redemption." Mandatory Offer to Repurchase...... If we sell certain assets or experience specific kinds of changes in control, we must offer to purchase the new notes at the prices set forth under "Description of the New Notes-- Repurchase at the Option of Holders," plus accrued and unpaid interest and liquidated damages, if any, to the date of purchase. Certain Covenants.................. We will issue the new notes under an indenture among us, the guarantors and the trustee. The indenture (among other things) will limit our and our restricted subsidiaries' ability to: o incur or guarantee additional indebtedness and issue preferred stock; o pay dividends or make other distributions; o create liens; o sell assets; o engage in sale and leaseback transactions; o place restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions; o engage in mergers or consolidations with other entities; o engage in certain transactions with affiliates: and o make certain investments. Each of these covenants is subject to a number of important exceptions and qualifications. See "Description of the New Notes-- Certain Covenants." 11 No Prior Market.................... The new notes will be new securities for which there is currently no market. Although the initial purchasers of the old notes have informed us that they intend to make a market in the new notes, they are not obligated to do so, and they may discontinue market-making at any time without notice. Accordingly, we cannot assure you that a liquid market for the new notes will develop or be maintained. Risk Factors The new notes, like the old notes, entail substantial risk. You should carefully consider all the information in this prospectus prior to participating in the exchange offer. In particular, we urge you to consider carefully the factors set forth herein under "Risk Factors." 12 Summary Unaudited Pro Forma Financial Data The following table sets forth a summary of our unaudited pro forma financial data, giving effect to the Transactions as if they had occurred on the dates indicated and after giving effect to the pro forma adjustments. The unaudited pro forma consolidated balance sheet data as of December 31, 2003 has been derived from MemberWorks' historical unaudited balance sheet as of December 31, 2003 and Lavalife's unaudited balance sheet as of December 31, 2003, adjusted to give effect to the Transactions as if they occurred on December 31, 2003. The unaudited pro forma consolidated statement of operations data for the twelve months ended December 31, 2003 gives effect to the Transactions as if they occurred on January 1, 2003. The Lavalife acquisition will be accounted for under the purchase method of accounting. The pro forma adjustments are based upon available information and certain assumptions that we consider reasonable. The pro forma results of operations are not necessarily indicative of the results of operations that would have been achieved had the Transactions reflected therein been consummated prior to the period presented. The unaudited pro forma financial data are only a summary and should be read in conjunction with the "Capitalization," "Unaudited Pro Forma Condensed Combined Financial Data," "Selected Historical Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and MemberWorks' and Lavalife's consolidated financial statements and the notes thereto included elsewhere or incorporated by reference in this prospectus. The unaudited pro forma financial data are presented for informational purposes only and are not necessarily indicative of what the actual combined results of operations of the combined company would have been for the period presented, nor do these data purport to represent the results of future periods. Twelve Months Ended December 31, 2003 ----------------- ($ in thousands) Statement of Operations Data: Revenues.............................................. $545,396 Total expenses........................................ 509,350 --------- Operating income...................................... 36,046 Interest income (expense), net........................ (15,455) Other income (expense), net........................... (74) --------- Income before provision for income taxes.............. 20,517 Provision for income taxes............................ 7,490 --------- Net income............................................ $ 13,027 ========= Other Financial Data and Selected Ratios: Depreciation and amortization......................... $ 21,202 Capital expenditures.................................. 6,854 Ratio of earnings to fixed charges(1)................. 2.1lx Balance Sheet Data (at period end): Cash and cash equivalents............................. $152,939 Restricted cash....................................... 3,169 Total assets.......................................... 457,796 Total debt............................................ 237,627 Shareholders' (deficit) equity........................ (54,552) - ------------- (1) The ratio of earnings to fixed charges is computed by dividing pre-tax income from continuing operations by fixed charges. Fixed charges consist of interest charges, whether expensed or capitalized, and that portion of rental expense we believe to be representative of interest. 13 Summary Financial Information of MemberWorks We are providing the following financial information to assist you in your analysis of the financial aspects of the Transactions. We derived the historical information below from the audited consolidated financial statements of MemberWorks as of and for the years ended June 30, 2001, 2002 and 2003 and from the unaudited condensed consolidated financial statements of MemberWorks as of and for the six months ended December 31, 2002 and 2003. The information is only a summary and should be read in conjunction with "Capitalization," "Unaudited Pro Forma Condensed Combined Financial Data," "Selected Historical Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and MemberWorks' consolidated financial statements and the notes thereto included elsewhere in this prospectus. The historical results included below and elsewhere in this document are not necessarily indicative of the future performance of MemberWorks or the combined company.
Six Months Ended Year Ended June 30, December 31, ----------------------------------- ------------------------ 2001 2002 2003 2002 2003 --------- -------- --------- --------- --------- ($ in thousands) Statement of Operations Data: Revenues ....................................... $475,726 $427,602 $456,881 $219,049 $236,988 Total expenses ................................. 509,050 415,713 434,595 211,066 216,457 --------- --------- --------- --------- --------- Operating income (loss) ........................ (33,324) 11,889 22,286 7,983 20,531 Non-operating gain (loss) ...................... (2,172) 31,980 17,983 17,983 - Interest income (expense), net ................. (363) 333 570 605 (1,082) Other income (expense), net .................... (87) (734) (244) (265) (183) --------- --------- --------- --------- --------- Income (loss) before equity in affiliate and minority interest ......................... (35,946) 43,468 40,595 26,306 19,266 Equity in income of affiliate .................. 83 -- -- -- -- Minority interest .............................. 9,106 450 -- -- -- --------- --------- --------- --------- --------- Income (loss) before provision for income taxes (26,757) 43,918 40,595 26,306 19,266 Provision for income taxes ..................... -- -- 16,239 10,523 7,706 --------- --------- --------- --------- --------- Net income (loss) before cumulative effect of accounting change ......................... (26,757) 43,918 24,356 15,783 11,560 Cumulative effect of accounting change ......... (25,730) (5,907) -- -- -- --------- --------- --------- --------- --------- Net income (loss) .............................. $ (52,487) $ 38,011 $ 24,356 $ 15,783 $ 11,560 ========= ========== ========== ========== ========== Other Operating Data: Active members (in millions at period end)(1) 7.9 6.6 6.3 6.3 6.3 Price points(2): New annual ................................ $ 78 $ 90 $ 105 $ 100 $ 106 Monthly ................................... n/a $ 9.00 $ 10.12 $ 9.60 $ 11.18 Other Financial Data and Selected Ratios: Cash flow provided by operating activities ..... $ 12,022 $ 17,014 $ 48,533 $ 32,877 $ 20,441 Depreciation and amortization .................. 20,498 13,252 12,120 6,169 5,242 Capital expenditures............................ 15,133 5,761 5,463 2,762 2,538 Ratio of earnings to fixed charges(3) .......... NM 17.69x 15.52x 18.28x $8.22x Balance Sheet Data (at period end): Cash and cash equivalents ...................... $ 21,745 $ 45,502 $ 72,260 $ 79,950 $ 119,995
14
Six Months Ended Year Ended June 30, December 31, ----------------------------------- ------------------------ 2001 2002 2003 2002 2003 --------- -------- --------- --------- --------- ($ in thousands) Restricted cash ................................ 991 5,683 2,732 2,842 3,169 Total assets ................................... 348,461 280,817 248,505 290,016 285,206 Total debt...................................... -- -- -- -- 90,000 Shareholders' (deficit) equity ................. (25,965) (20,630) (20,283) (9,786) (63,552)
- ----------- (1) The number of active members for 2001 includes approximately 800,000 members of iPlace, Inc., which was sold in fiscal 2002. (2) New annual price points reflect the weighted average price billed to new annual members during the relevant period and monthly price points reflect the weighted average price billed to new monthly members during the relevant period. (3) The ratio of earnings to fixed charges is computed by dividing pre-tax income from continuing operations (before adjustment for minority interest in consolidated subsidiaries and loss from equity investees) by fixed charges. Fixed charges consist of interest charges, whether expensed or capitalized, and that portion of rental expense we believe to be representative of interest. For the year ended June 30, 2001, earnings were insufficient to cover fixed charges by $3.8 million. 15 RISK FACTORS You should carefully consider the risks described below before making a decision to participate in the exchange offer. You should also consider the other information included or incorporated by reference in this prospectus before making a decision to participate in the exchange offer. Any of the following risks, as well as other risks and uncertainties, could harm our business and financial results and cause the value of the notes to decline, which in turn could cause you to lose all or part of your investment. Risks Related to MemberWorks' Business MemberWorks' profitability depends on members continuing to retain their memberships in its programs. Increased cancellations could impair MemberWorks' profitability. MemberWorks generally incurs losses and negative cash flow during the initial year of an individual membership program, as compared to renewal years. This is due primarily to marketing costs associated with obtaining a new member. In addition, MemberWorks experiences a higher percentage of cancellations during the initial membership period as compared to renewal periods. Annual members may cancel their membership at any time during the membership period generally for a pro rata refund of the membership fee based on the remaining portion of the membership period. Monthly members are billed each month after the trial period until they cancel their membership. Accordingly, the profitability of each of MemberWorks' programs depends on recurring and sustained membership renewals and increased cancellations could have a material adverse effect on its business, financial condition, results of operations and cash flows. MemberWorks' business may suffer if it fails to successfully integrate Lavalife or other businesses it acquires in the future or to properly assess the risks in particular transactions. MemberWorks has recently acquired all of the assets and outstanding capital stock of Lavalife, and MemberWorks may acquire other businesses and assets in the future. The successful integration of the acquired businesses and assets, such as Lavalife, into its existing operations can be critical to MemberWorks' future performance. Acquired businesses may not be successfully integrated with MemberWorks' operations or produce the anticipated benefits in a timely manner, or at all. Failure to successfully integrate acquired businesses or to achieve anticipated operating synergies or cost savings could have a material adverse effect on MemberWorks' business, financial condition, results of operations and cash flows. Although MemberWorks attempts to evaluate the risks inherent in each transaction and to value acquisition candidates appropriately, MemberWorks cannot assure you that it will properly ascertain all such risks or that acquired businesses and assets will perform as MemberWorks expects or enhance the value of MemberWorks as a whole. In addition, acquired companies or businesses may have larger than expected liabilities that are not covered by the indemnification, if any, MemberWorks obtains from the seller. The loss of MemberWorks' key clients could have a material adverse effect on its results of operations. Membership programs sponsored by MemberWorks' two largest clients, West Corporation and Citibank, N.A. (and its affiliates), accounted for 16% and 21% of MemberWorks' revenue, respectively, for the fiscal year ended June 30, 2003 and 18% and 13% of MemberWorks' revenue, respectively, for the six months ended December 31. 2003. A loss of MemberWorks' key clients or a decline in the businesses of the clients from which MemberWorks acquires new members could have a material adverse effect on MemberWorks' results of operations. There can be no assurance that one or more of MemberWorks' key or other clients will not terminate their relationship with MemberWorks or suffer a decline in their business from which MemberWorks acquires new members. MemberWorks markets many of its membership programs through credit card issuers. A downturn in the credit card industry or changes in the marketing techniques of credit card issuers could adversely affect MemberWorks. MemberWorks' future success is dependent in large part on continued demand for its membership programs within its clients' industries. In particular, membership programs marketed through MemberWorks' credit card issuer clients accounted for a significant amount of its revenues in fiscal 2003. A significant downturn in the credit card industry or a trend in that industry to reduce or eliminate its use of membership programs could have a material adverse effect on MemberWorks' business, financial condition, results of operations and cash flows. 16 The unanticipated termination of agreements with vendors could have a material adverse effect on MemberWorks' business. MemberWorks depends on vendors to provide most of the products and services included in the programs it markets. The vendors generally operate pursuant to non-exclusive agreements with MemberWorks that may be terminated by the vendor with limited prior notice. There can be no assurance that, in the event a vendor ceases operations, or terminates, breaches or chooses not to renew its agreement with MemberWorks, a replacement vendor could be retained on a timely basis, if at all. In addition, vendors are independent contractors and the level and quality of services they provide is outside MemberWorks' control. Any service interruptions, delays or quality problems could result in customer dissatisfaction and membership cancellations and/or termination of clients' relationships with MemberWorks, which could have a material adverse effect on MemberWorks' business, financial condition, results of operations and cash flows. MemberWorks depends on credit card processors to obtain payments for it. MemberWorks depends on credit card processors to obtain payments for it. The credit card processors operate pursuant to agreements that may be terminated with limited prior notice. In the event a credit card processor ceases operations or terminates its agreement, there can be no assurance a replacement credit card processor could be retained on a timely basis, if at all. Any service interruptions, delays or quality problems could result in delays in collecting payments, which could have a material adverse effect on MemberWorks' business, financial condition, results of operations and cash flows. MemberWorks' efforts to increase the share of monthly payment programs in its program mix may adversely affect its cash flow. MemberWorks has traditionally marketed membership programs which have an up-front annual membership fee. However, in fiscal 2003, MemberWorks expanded its marketing of membership programs for which membership fees are payable in monthly installments. During the first half of fiscal 2004, more than 60% of MemberWorks' new member enrollments were in monthly payment programs, and MemberWorks expects the proportion of its monthly payment programs to increase throughout fiscal 2004. MemberWorks' increased emphasis on monthly payment programs adversely affects its cash flow because the immediate cost of acquiring a new member is higher than the first month's membership fee. MemberWorks may be unable to compete effectively with other companies in its industry that have financial or other advantages. MemberWorks believes that the principal competitive factors in its industry include the ability to identify, develop and offer innovative membership programs, the quality and breadth of membership programs offered, competitive pricing and in-house marketing expertise. MemberWorks' competitors offer membership programs which provide products or services similar to, or which compete directly with, those provided by MemberWorks. These competitors include, among others, Aegon N.V., Trilegiant (a subsidiary of Cendant Corporation). Fords and General Electric Financial Assurance. In addition, MemberWorks could face competition if its current clients or other companies were to introduce their own in-house membership programs. Some of these competitors have substantially larger customer bases and greater financial and other resources than MemberWorks. To date, MemberWorks has effectively competed with such competitors. There can be no assurance that: o MemberWorks' competitors will not increase their emphasis on programs similar to those MemberWorks offers; o MemberWorks' competitors will not provide programs comparable or superior to those MemberWorks provides at lower membership fees; o MemberWorks' competitors will not adapt more quickly than MemberWorks to evolving industry trends or changing market requirements; o new competitors will not enter the market; or 17 o other businesses (including our current clients) will not themselves introduce in-house membership programs. Such increased competition may result in price reductions, reduced operating margins or loss of market share, any of which could materially adversely affect MemberWorks' business, financial condition and results of operations. Additionally, because contracts between clients and program providers are often exclusive with respect to a particular program, potential clients may be prohibited from contracting with MemberWorks to promote a new program if the products and services provided by MemberWorks' program are similar to, or overlap with, the products and services provided by an existing program of a competitor. We depend on key executive and marketing personnel. MemberWorks is dependent on certain key members of its management and marketing staff, particularly its Chief Executive Officer, Gary Johnson. In addition, MemberWorks believes that its future success will depend in part upon its ability to attract and retain highly skilled managerial and marketing personnel. MemberWorks faces significant competition for such personnel, and it may be unsuccessful in hiring or retaining the personnel it requires. The failure to hire and retain such personnel could have a material adverse effect on MemberWorks' business, financial condition and results of operations. MemberWorks' industry is increasingly subject to federal and state government regulation. MemberWorks markets its membership programs through various distribution channels, including MemberLinkSM (our inbound marketing channel), online marketing, outbound telemarketing and direct mail. These channels are regulated at both state and federal levels and MemberWorks believes that these channels will be subject to increasing regulation, particularly in the area of consumer privacy. Such regulation may limit MemberWorks' ability to solicit new members or to offer products or services to existing members. The telemarketing industry has become subject to an increasing amount of federal and state regulation as well as general public scrutiny. For example, the Federal Telephone Consumer Protection Act of 1991 limits the hours during which telemarketers may call consumers and prohibits the use of automated telephone dialing equipment to call certain telephone numbers. The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 and Federal Trade Commission ("FTC") regulations prohibit deceptive, unfair or abusive practices in telemarketing sales. The FTC's 2003 Amendment to its Telemarketing Sales Rule created a national do-not-call list effective October 1, 2003. Both the FTC and state attorneys general have authority to prevent telemarketing activities deemed by them to be "unfair or deceptive acts or practices." Further, some states have enacted laws, and others are considering enacting laws, targeted directly at regulating telemarketing practices, including the creation of do-not-call lists, and any such laws could adversely affect or limit MemberWorks' operations. Compliance with these regulations is generally MemberWorks' responsibility, and MemberWorks could be subject to a variety of enforcement and/or private actions for any failure to comply with such regulations. MemberWorks' provision of membership programs requires it to comply with certain state regulations and any changes to such regulations could materially increase MemberWorks' compliance costs. The risk of MemberWorks' noncompliance with any rules and regulations enforced by a federal or state consumer protection authority may subject it or its management to fines or various forms of civil or criminal prosecution, any of which could have a material adverse effect on MemberWorks' business, financial condition and results of operations. See "Business -- MemberWorks -- Government Regulation and Litigation." Also, the media often publicizes perceived noncompliance with consumer protection regulations and violations of notions of fair dealing with consumers, and the membership services industry is susceptible to peremptory charges by the media of regulatory noncompliance and unfair dealing. MemberWorks currently maintains rigorous security and quality controls that are intended to ensure that all of its marketing practices meet or exceed industry standards and all applicable state and federal laws and regulations. MemberWorks only collects and maintains customer data that is necessary to administer its business activities, such as a customer's name, address and encrypted billing information. For marketing and modeling purposes, MemberWorks only uses publicly available information, such as demographic, neighborhood and lifestyle data. MemberWorks does not resell any confidential customer information that is obtained or derived from its marketing efforts, nor does MemberWorks purchase consumer information from financial institutions. However, 18 there can be no assurance that MemberWorks' efforts will continue to meet all applicable state and federal laws and regulations in the future. See "Business - -- MemberWorks Government Regulation and Litigation." Risks Related to Lavalife's Business Competitors may move to a transactional model for their services. Currently, Lavalife is one of a few online dating services that offers its IVR and web services on a transactional model. This means that customers buy credits, but only spend them when communicating with other users. Other companies offer a subscription service, in which a customer pays a monthly fee for access to the online dating service, whether or not they actually communicate with other users. Lavalife believes that a transactional model is more attractive to new users, who will join due to a lower initial cost and the ability to easily control their spending. At the same time, unused credits lower the churn of customers as they provide incentive for customers to return. If other companies were to offer their services in a transactional model, Lavalife could lose market share, which could materially adversely affect Lavalife's business, financial condition and results of operations. Lavalife may be unable to compete effectively with other companies in its industry that have financial or other advantages. The online dating industry is characterized by the need to achieve a critical mass of users in each geographic area in order to attract and offer services to customers. In order to compete effectively, Lavalife must attract new users through marketing, brand recognition, competitive and innovative pricing and quality technology. Lavalife's competitors, such as Match.com, a subsidiary of InterActiveCorp., and Yahoo! Personals, as well as other similar companies, offer services similar to Lavalife's. Some of these competitors have larger customer bases and greater financial and other resources than Lavalife. To date, Lavalife has effectively competed with such companies. However, there can be no assurance that: o the competitors will not increase their emphasis on programs similar to those offered by Lavalife; o the competitors will not provide services comparable or superior to those provided by Lavalife at a lower cost to the user; o the competitors will not adapt more quickly than Lavalife to evolving industry trends or changing market requirements; or o additional competitors with greater financial or other resources will emerge. Such increased competition may result in price reductions, reduced operating margins or loss of market share, any of which could materially adversely affect Lavalife's business, financial condition and results of operations. Lavalife depends on its ability to attract and retain active members. Lavalife's future success depends in large part upon continued demand for its services. A number of factors could affect the frequency with which customers utilize Lavalife's services or whether they use them at all. These factors include the popularity of online dating and the availability of alternative services. Any significant decline in usage could have a material adverse effect on Lavalife's business, financial condition and results of operations. The online dating market is still young and rapidly evolving. The adoption of online dating requires the acceptance of a new way of meeting other singles and exchanging information. Many of Lavalife's potential customers have little or no experience using the Internet as a dating tool, and therefore, Lavalife also competes with traditional methods of meeting other singles. If online dating acceptance declines or if Lavalife is not able to anticipate changes in the online dating market, its business, results of operations and financial condition could be adversely affected. 19 Lavalife relies heavily on its information technology and if access to this technology is impaired or interrupted, or if Lavalife fails to further develop this technology, Lavalife's business could be harmed. Lavalife's success depends in large part upon its ability to process and manage substantial amounts of information. Lavalife must continue developing and enhancing its information systems to remain competitive. This may require the acquisition of equipment and software and the development, either internally or through independent consultants, of new proprietary software. Any interruption or loss of its information technology capabilities could harm Lavalife's business, financial condition, results of operations and cash flows. If competitors introduce new products with new technologies, or if new industry standards emerge, Lavalife's existing technology may become obsolete. Lavalife's future success will depend on its ability to do the following: o enhance existing products; o develop and license new products and technologies; and o respond to technological advances and emerging industry trends on a cost-effective and timely basis. The market for online dating services is characterized by rapid technological developments, new product introductions and evolving industry standards. The emerging character of these products and services and their rapid evolution will require continuous improvement in the performance, features and reliability of Lavalife's service, particularly in response to competitive offerings. Lavalife may not be successful in responding to these developments in a timely and cost-effective manner. In addition, the widespread adoption of new online technologies or standards could require Lavalife to make substantial expenditures to modify or adapt its websites and services. Any substantial expenditures could have a material adverse effect on Lavalife's business, financial condition and results of operations. A critical part of Lavalife's service is its website that produces search results, provides opportunities for interaction and tracks member activity for billing purposes. A failure to adapt its website, transaction processing, systems and network infrastructure to consumer requirements or emerging trends could lead users to move to competitor's services and could have a material adverse effect on Lavalife's business, financial condition, results of operations and cash flows. Lavalife relies on computer and communication systems. Computer viruses or other system failures may cause Lavalife's systems to incur delays or interruptions. Lavalife's business is highly dependent on computer and telecommunications systems and any temporary or permanent loss of either system could have a material adverse effect on Lavalife. In particular, computer viruses may cause Lavalife's systems to incur delays or other service interruptions and could damage its reputation which, in turn, could significantly harm Lavalife's business, financial condition and results of operations. The inadvertent transmission of computer viruses could expose Lavalife to a material risk of loss or litigation and possible liability. The continuing and uninterrupted performance of Lavalife's systems is critical to its success, as members may become dissatisfied by any service interruptions. Sustained or repeated system failures would reduce the attractiveness of Lavalife's system services and could result in reduced traffic and revenues. The success of Lavalife's business depends on maintaining the integrity of its systems and infrastructure. A fundamental requirement for online commerce and communications is the secure transmission of confidential information, such as credit card numbers or other personal information, over public networks. If any compromise of Lavalife's security were to occur, it could have a detrimental effect on its reputation and adversely affect Lavalife's ability to attract customers. As Lavalife's operations continue to grow in both size and scope, Lavalife will need to improve and upgrade its systems and infrastructure. This may require Lavalife to commit substantial financial, operational and technical resources before the volume of business increases, with no assurance that the volume of business will increase. 20 A portion of Lavalife's revenues and expenses are denominated in foreign currencies and its results may be affected by foreign currency exchange rate fluctuations. Lavalife is exposed to currency exchange rate fluctuations because a portion of its sales and expenses are denominated in currencies other than the U.S. dollar. In addition, a significant portion of Lavalife's sales are denominated in a different currency than their expenses. As a result, Lavalife's financial performance may be negatively affected by currency fluctuations. For example, changes in exchange rates between the U.S. dollar and other currencies, particularly the Canadian dollar, affect Lavalife's sales and expenses denominated in currencies other than the U.S. dollar and may have a negative impact on the value of Lavalife's assets located outside the United States. In addition, Lavalife may expand its international operations in the future. Although Lavalife has historically entered into hedging transactions designed to mitigate these currency risks, there can be no assurance that we will be successful in doing so in the future and that currency fluctuations will not have a material adverse effect on Lavalife's business, financial condition and results of operations. Lavalife depends on key executives. Lavalife is dependent on certain key members of its management, particularly Chairman and Chief Executive Officer, Bruce Croxon, Vice President of International Corporate Development Nicholas Paine and Vice President of Product Design Ed Lum. In addition, Lavalife's future success will depend in part upon its ability to attract and retain highly skilled personnel. The failure to hire and retain such personnel could have a material adverse effect on its business, financial condition and results of operations. Changing laws and regulations and legal uncertainties regarding the Internet may impair Lavalife's growth and harm its businesses. A number of proposed laws and regulations regarding the Internet that could impact Lavalife's businesses, including with respect to consumer privacy, have been proposed or considered. Lavalife cannot predict whether any of these types of laws or regulations will be enacted or amended and what effect, if any, such laws or regulations would have on its businesses, financial condition or results of operations. In addition, the application of various sales, use and other tax provisions under state and local law could have a material adverse effect on Lavalife's businesses, financial condition and results of operations. Risks Related to Our Combined Business We depend in part on the communication channels through which we market and service our products, such as telephone, internet and the united States Postal Service. An interruption of, or an increase in the billing rate for, such communication channels could adversely affect our business. We market and service our product and programs by various communication channels, including telephone, internet and mail, and accordingly, our business is dependent on the quality of service of providers of these communication channels. Any significant interruption in these communication channels could adversely affect us. In addition, rate increases imposed by providers would increase our and our clients' operating expenses and could have a material adverse effect on our business, financial condition, results of operations and cash flows. The success of our business depends on introduction of popular new programs or services or the enhancement of existing programs or services. Our business is substantially dependent on our ability to develop and successfully introduce popular new programs or provide enhancements to existing programs which generate consumer loyalty. Failure to introduce new programs in a timely manner could result in our competitors acquiring additional market share. In addition, the introduction or announcement of new innovative programs by us or by others, could render existing programs obsolete or result in a delay or decrease in orders for existing programs as customers evaluate new programs. Similarly, Lavalife's business is substantially dependent on its ability to refine existing service offerings and to introduce new interactive services. Therefore, the announcement or introduction of new innovative programs by us or others, or our failure to introduce new programs which generate broad consumer appeal, or Lavalife's inability to refine its service offerings or introduce new services could have a material adverse effect on our business, financial condition, results of operations and cash flows. 21 We may need to raise additional capital in the future to fund liquidity and capital requirements, which may not be available to us on favorable terms. Our future liquidity and capital requirements will depend upon numerous factors, including the success of our membership programs, market developments, potential acquisitions and additional repurchases of our common stock. We may need to raise additional funds to support expansion, develop new membership programs, respond to competitive pressures, acquire complementary businesses or take advantage of unanticipated opportunities. The indenture governing the notes and the credit agreement under our senior secured credit facility will contain covenants that may restrict our ability to finance operations or capital needs. We experienced negative cash flow in the period following the terrorist attacks of September 11, 2001 and may experience negative cash flow in the future as a result of various factors, some of which are outside of our control. We cannot be certain that we will be able to obtain adequate financing on favorable terms or at all. We rely on our computer and communication systems. If such systems fail or are unable to keep pace with technological advances, our business would suffer. Our business is highly dependent on our computer and telecommunications systems and any temporary or permanent loss of either system, for whatever reason, could have a material adverse effect on our business, financial condition and results of operations. In addition, the technologies on which we are dependent to compete effectively and meet our clients' needs are rapidly evolving and in many instances are characterized by short product life cycles. As a result, we are dependent on ongoing, significant investment in advanced computer and telecommunications technology, including automated call distributors and digital switches. Our inability to anticipate and adapt to technological shifts and to develop new and enhanced technology on a timely basis could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our operating results fluctuate from quarter to quarter. Our quarterly revenues, expenses and operating results have varied significantly in the past and may vary significantly from quarter to quarter in the future. Factors which could cause our financial results to fluctuate include: o increased or decreased cancellation of member enrollments; o the rate of renewal by existing members; o our ability to introduce new programs or products or enhance existing programs or products on a timely basis and the introduction of programs or products by our competitors; o the mix of our client base; o seasonality of the businesses of our clients; o market acceptance and demand for our and our clients' membership programs generally; o the mix of programs we offer and the price points of such programs; o increased commission rates and other compensation required by our clients; o the mix of our marketing channels; o unanticipated service interruptions; o movement in foreign exchange rates; o adverse outcomes of litigation or regulatory matters; o the availability of vendors to support programs we offer; 22 o the level of enthusiasm for health and fitness, travel, entertainment and leisure activities, and other lifestyle elements underlying our programs; and o competitive pressures on selling prices. Many of these factors are beyond our control. Operating results would be adversely affected if projected revenues for a given quarter are not achieved. In addition, any future acquisitions by us could have a material adverse effect on our results of operations, particularly in quarters immediately following consummation of such transactions, while the operations of the acquired business are being integrated into our operations. Risks Related to the Notes Increased leverage as a result of this offering may harm our financial condition and results of operations, and could prevent us from fulfilling our obligations under the notes. We are highly leveraged and have significant fixed debt service obligations in addition to our operating expenses. At December 31, 2003, after giving pro forma effect to the Transactions, we had $237.6 million of outstanding indebtedness, $5.5 million of issued and undrawn letters of credit, and $25.6 million in borrowing capacity under the senior secured credit facility. The indenture governing the notes will permit us to incur additional debt in certain circumstances. If we incur additional debt in the future, the related risks could intensify. For example, our indebtedness could: o reduce the availability of our cash flow, as a greater portion of our cash flow from operations will be dedicated to the payment of any interest required with respect to outstanding indebtedness; o limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; o place us at a competitive disadvantage compared to our competitors that have less debt; o increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure; and o limit our ability to obtain additional financing for working capital, capital expenditures, general corporate and other purposes. If our indebtedness affects our operations in these ways, our business, financial condition and results of operations could suffer, making it more difficult for us to satisfy our obligations under the notes. Our ability to make payments of principal, premium and interest on our indebtedness depends upon our future performance, which will be subject to the success of the marketing of our programs, general economic conditions, and financial, business and other factors affecting our operations, many of which are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us, in an amount sufficient to enable us to pay our debt or to fund other liquidity needs. If we are not able generate sufficient cash flow from operations in the future to service our indebtedness, we may be required, among other things: o to seek additional financing in the debt or equity markets; o to refinance or restructure all or a portion of our indebtedness, including the notes; o to sell selected assets; and/or o to reduce or delay planned expenditures on new marketing or capital expenditures. Such measures might not be sufficient to enable us to service our debt. In addition, any such financing, refinancing or sale of assets might not be available on economically favorable terms. 23 The notes will effectively be subordinated to our secured indebtedness and the liabilities of our non-guarantor subsidiaries. The notes will be unsecured and therefore are effectively subordinated to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness. As of December 31, 2003, after giving pro forma effect to the Transactions, we would not have had any senior secured indebtedness and would have had $5.5 million of issued and undrawn letters of credit under our senior secured credit facility, in addition to $25.6 million of availability under our senior secured credit facility. The indenture permits us to incur additional secured indebtedness provided that certain conditions are met. See "Description of the New Notes -- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." Consequently, in the event we are the subject of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding, the holders of any secured indebtedness will be entitled to proceed against the collateral that secures the secured indebtedness and the collateral will not be available for satisfaction of any amounts owed under our unsecured indebtedness, including the notes. Our right to receive any assets of any of our non-guarantor subsidiaries upon their liquidation or reorganization, and therefore the right of the holders of the notes to participate in those assets, will be effectively subordinated to the claim of that subsidiary's creditors, including trade creditors. In addition, even if we were a creditor of any of our non-guarantor subsidiaries, our rights as a creditor would be subordinate to any security interest in the assets of our subsidiaries and any indebtedness of such subsidiaries senior to that held by us. Our non-guarantor subsidiaries have no obligation to pay any amounts due on the notes or to provide us with funds for our payment obligations, whether by dividends, distributions, loans or other payments. As of February 29, 2004, our non-guarantor subsidiaries had approximately $4.9 million of indebtedness and other liabilities outstanding excluding intercompany notes, but including trade payables. Covenant restrictions under our credit facility and the indenture governing the notes may limit our operating flexibility. Our credit facility currently contains, and the indenture governing the notes will contain, covenants that may restrict our ability to finance future operations or capital needs or to engage in other business activities. Agreements governing future indebtedness could also contain significant financial and operating restrictions. In addition, our bank credit facility and the indenture governing the notes will restrict, and other future agreements governing our debt may restrict, among other things, our ability to: o incur additional debt; o prepay principal of or redeem or repurchase subordinated debt or unsecured debt; o dispose of property; o merge, consolidate or sell our assets; o make acquisitions and investments in other persons or entities; o pay dividends or make distributions on, or redeem or repurchase, our capital stock; o grant liens and negative pledges with respect to our assets; and o make capital expenditures. We cannot assure you that we will meet the covenants in our debt agreements or that the lenders that are party to such agreements will waive any failure to meet those covenants. A breach of any of these covenants would result in a default under the applicable agreement, which would in turn cause a default under our other agreements, including our bank credit facility and the indenture, as applicable. If an event of default occurs under one of our debt agreements and continues beyond any applicable cure period, the lenders could elect to declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable. If our indebtedness were to be accelerated, there can be no assurance that we would be able to pay it. Such acceleration would have a material adverse effect on our financial condition. See "Description of Other Indebtedness" and "Description of the New Notes." 24 Federal and state statutes allow courts under specific circumstances to void guarantees and require note holders to return payments received from subsidiary guarantors. Our incurrence of debt, such as the notes, as well as the guarantees of our subsidiary guarantors, may be subject to review under U.S. federal bankruptcy laws or relevant state fraudulent conveyance laws if a bankruptcy case or lawsuit is commenced by, or on behalf of, our or the guarantors' unpaid creditors. Under these laws, if a court were to find that, at the time we or a guarantor incurred debt (including debt represented by the notes or the guarantee of such guarantor): o we, or a guarantor, incurred this debt with the intent of hindering, delaying or defrauding current or future creditors; or o we, or a guarantor, received less than reasonably equivalent value or fair consideration for incurring this debt and we, or a guarantor, as the case may be: o were insolvent or were rendered insolvent by reason of the related financing transactions; o were engaged, or were about to engage, in a business or transaction for which our or its, as the case may be, remaining assets constituted unreasonably small capital to carry on our business; or o intended to incur, or believed that we or it would incur, debts beyond our or its, as the case may be, ability to pay as these debts matured (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes); then such court could set aside the notes or such guarantee, subordinate the amounts owing under the notes or such guarantee to our or such guarantor's presently existing or future debt or take other actions detrimental to you. The standards for determining insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied in any such proceeding. Generally, a company would be considered insolvent if, at the time it incurred the debt or issued the guarantee, either: o the sum of its debts (including contingent liabilities) is greater than its assets, at fair value, or o the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured. We believe that, at the time we and the guarantors initially incur the debt represented by the notes and the guarantees, we and the guarantors will not be insolvent or rendered insolvent by the incurrence of the debt, be lacking sufficient capital to run our businesses effectively or be unable to pay obligations on the notes and the guarantees as they mature or become due. In reaching the foregoing conclusions, we have relied upon our analyses of internal cash flow projections and estimated values of our assets and liabilities and the assets and liabilities of the guarantors. We cannot assure you, however, that a court passing on the same questions would reach the same conclusions. If a note or guarantee is voided as a fraudulent conveyance or found to be unenforceable for any other reason, you will not have a claim against us or that particular guarantor and you will only be our creditor or a creditor of any guarantor whose obligation was not set aside or found to be unenforceable. In addition, any payment by a guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor. If an active trading market for the notes does not develop, the market price of the notes may decline or you may not be able to sell your notes. The notes are a new issue of securities for which there is currently no trading market. We do not intend to list the notes on any national securities exchange or automated quotation system. If the notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar 25 securities, our financial condition, performance or prospects and other factors. The initial purchasers of the old notes have advised us that they currently intend to make a market in the new notes. However, they are not obligated to make a market and may discontinue this market activity at any time without notice. As a result, we do not know whether an active trading market will develop for the notes. To the extent that an active trading market does not develop, the price at which you may be able to sell the notes, if at all, may be less than the price you pay for them. We may not have sufficient funds to repurchase notes upon a change of control. Upon certain change of control events, as that term is defined in the indenture, including a change of control caused by an unsolicited third party, we will be required to make an offer in cash to repurchase all or any part of each holder's notes at a repurchase price equal to 101% of the principal thereof, plus accrued interest. The source of funds for any such repurchase would be our available cash or cash generated from operations or other sources, including borrowings, sales of equity or funds provided by a new controlling person or entity. We cannot assure you that sufficient funds will be available at the time of any change of control event to repurchase all tendered notes pursuant to this requirement. Our failure to offer to repurchase notes, or to repurchase notes tendered, following a change of control will result in a default under the indenture, which could lead to a cross-default under our senior secured credit facility and under the terms of our other indebtedness. Upon a change of control event, we will also be required to purchase all of our outstanding 5.50% convertible senior subordinated notes due 2010, and a failure to repurchase tendered convertible notes will constitute an event of default under the indenture governing the convertible notes. In addition, our future credit facilities or other agreements relating to our debt may restrict our ability to make any such required repurchases. Prior to repurchasing the notes upon a change of control event, we must either repay outstanding indebtedness under or obtain the consent of the lenders under such credit facilities or agreements in order to repurchase the notes. If we do not obtain the required consents or repay our outstanding indebtedness under such credit facilities or agreements, we would remain effectively prohibited from offering to purchase the notes. See "Description of the New Notes -- Repurchase at the Option of Holders - -- Change of Control," "Description of the New Notes -- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" and "Description of Other Indebtedness". If you do not tender your old notes to be exchanged in this exchange offer, your notes will remain subject to transfer restrictions If you do not tender your old notes to be exchanged in this exchange offer, your notes will remain restricted securities and will be subject to transfer restrictions. As restricted securities, your old notes: o may be resold only if registered pursuant to the Securities Act, if an exemption from registration is available thereunder, or if neither such registration nor such exemption is required by law; and o shall bear a legend restricting transfer in the absence of registration or an exemption therefrom. In addition, a holder of old notes who desires to sell or otherwise dispose of all or any part of its old notes under an exemption from registration under the Securities Act, if requested by us, must deliver to us an opinion of counsel, reasonably satisfactory in form and substance to us, that such exemption is available. 26 THE LAVALIFE ACQUISITION The Acquisition On April 1, 2004, MemberWorks completed the acquisition of all of the assets and outstanding capital stock of Lavalife for approximately Cdn$152.5 million ($116.4 million) in cash. We financed the purchase price with cash on hand and borrowings of approximately $15.0 million under our $45.0 million senior secured credit facility. Lavalife now operates as a wholly owned restricted subsidiary of MemberWorks, guarantees the old notes and will guarantee the new notes. For the twelve months ended December 31, 2003, Lavalife had revenues of Cdn$98.6 million ($70.6 million). As a part of the Lavalife acquisition, members of Lavalife's senior management entered into employment agreements with MemberWorks, including Bruce Croxon, Chairman and Chief Executive Officer, Nicholas Paine, Vice President of International Corporate Development, and Ed Lum, Vice President of Product Design. In addition, these members of Lavalife's senior management purchased approximately Cdn$11.9 million ($9.1 million) in MemberWorks' restricted common stock at the closing of the acquisition. The Master Transaction Agreement The purchase price for the acquisition was approximately Cdn$152.5 million ($116.4 million) in cash, subject to certain adjustments and excluding fees and expenses. In addition, the purchase price reflects certain assumptions of MemberWorks related to its tax liabilities to be incurred in connection with the Lavalife acquisition. The master transaction agreement contains customary representations, warranties and covenants. Each of the shareholders of Lavalife has agreed to indemnify MemberWorks for losses arising from, among other things, breaches of representations and warranties, breaches of covenants and certain liabilities. MemberWorks has agreed to indemnify the shareholders of Lavalife for losses arising from, among other things, breaches of representations and warranties and the failure to perform any of its covenants. Such indemnification obligations of the shareholders of Lavalife and of MemberWorks in relation to representations and warranties survive for a period of eighteen months following the closing. Certain other indemnification obligations of the shareholders of Lavalife and of MemberWorks are not triggered unless the liabilities exceed certain minimum amounts. 27 USE OF PROCEEDS There will be no cash proceeds payable to us from the issuance of the new notes pursuant to the exchange offer. Any old notes that are properly tendered and exchanged pursuant to the exchange offer will be retired and cancelled. The issuance of the new notes will not result in any change in our indebtedness. The net proceeds less estimated debt issue costs received by us from the sale of the outstanding old notes in the private offering completed on April 13, 2004, were approximately $141.6 million. We used approximately $15.0 million of the net proceeds from the offering of the old notes to repay amounts borrowed under our senior secured credit facility to fund a portion of the Lavalife acquisition price. We intend to use the remainder of the net proceeds from the private offering for general corporate purposes, including working capital, future acquisitions and purchases of our common stock under our stock buyback program to the extent permitted under the indenture governing the notes and the senior secured credit facility. 28 CAPITALIZATION The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2003 on an actual basis and an as adjusted basis, after giving effect to: o the borrowings under our senior secured credit facility and the use of proceeds therefrom; o our acquisition of Lavalife for a price of approximately $118.0 million in cash and the concurrent purchase by Lavalife's senior management of approximately $9.0 million of MemberWorks' restricted common stock; and o the offering of the old notes and the use of proceeds therefrom. This table should be read together with "Use of Proceeds," "Unaudited Pro Forma Condensed Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes incorporated by reference in this prospectus.
December 31, 2003 ---------------------------- Actual As Adjusted ----------- ------------- ($ in thousands) Cash and cash equivalents(1)............................. $ 119,995 $ 152,939 Restricted cash.......................................... 3,169 3,169 ---------- ---------- Total cash and cash equivalents....................... 123,164 156,108 ========== ========== Senior secured credit facility(2)........................ $ -- $ -- ========== ========== 9 1/4% Senior notes, net of discount of $2,373........... $ -- $ 147,627 5.50% Convertible senior subordinated notes due 2010..... 90,000 90,000 ---------- ---------- Total debt............................................ 90,000 237,627 Total shareholders deficit(1)............................ (63,552) (54,552) ---------- ---------- Total capitalization.................................. $ 26,448 $ 183,075 ========== ==========
- --------------- (1) Concurrently with our acquisition of Lavalife, Lavalife's senior management purchased approximately $9.0 million in MemberWorks' restricted common stock. (2) A portion of the proceeds from the offering of the old notes were used to repay approximately $15.0 million of borrowings incurred under the senior secured credit facility to fund a portion of the Lavalife acquisition purchase price. On an as adjusted basis, we had $25.6 million of borrowing capacity remaining under the $45.0 million senior secured credit facility due to a $5.5 million letter of credit outstanding thereunder and other restrictions under the senior secured credit facility. The senior secured credit facility is a 364-day facility, which is renewable for two additional 364-day periods upon our request, unless written notice of non-renewal is provided by all lenders under the facility no less than 60 days prior to expiration. See "Description of Other Indebtedness." 29 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA The unaudited pro forma condensed combined financial data are based on the consolidated financial statements of MemberWorks and the consolidated financial statements of Lavalife. The unaudited pro forma condensed combined balance sheet at December 31, 2003 is adjusted to give effect to (i) the execution of our amended and restated senior secured credit facility, borrowings thereunder and the use of proceeds therefrom, (ii) the acquisition of Lavalife and the concurrent purchase by Lavalife's senior management of MemberWorks' restricted common stock and (iii) the offering of the old notes and the application of the net proceeds from the offering of the old notes, as if each of these transactions had occurred on December 31, 2003. The unaudited pro forma condensed combined statements of operations for the year ended June 30, 2003, the six months ended December 31, 2003 and the twelve months ended December 31, 2003 are adjusted to give effect to (i) the execution of our amended and restated senior secured credit facility, borrowings thereunder and the use of proceeds therefrom, (ii) the acquisition of Lavalife, and (iii) the offering of the old notes and the application of the net proceeds from the offering of the old notes, as if each of these transactions had occurred at the beginning of the respective periods presented. Lavalife's consolidated financial statements were prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), which differ in certain respects from accounting principles generally accepted in the United States ("US GAAP") and were adjusted to US GAAP. Lavalife's condensed consolidated statements of earnings were prepared in Canadian dollars and translated to U.S. dollars at the average exchange rate of the daily noon buying rates in New York City for the periods presented. Lavalife's condensed consolidated balance sheet as of December 31, 2003 was translated to U.S. dollars at the December 31, 2003 noon buying rate in New York City. Certain reclassifications were made to the Lavalife's consolidated financial statements to conform them to MemberWorks' presentation. Adjustments for the Transactions are based upon the historical financial information of MemberWorks and Lavalife and certain assumptions that management of MemberWorks believes are reasonable. The acquisition will be accounted for using the purchase method of accounting. Under this method, the purchase price has been allocated to the assets and liabilities acquired based on preliminary estimates of fair value. The actual fair value will be determined upon the consummation of the acquisition and may vary from the preliminary estimates. The pro forma financial data does not necessarily reflect our results of operations or the financial position that actually would have resulted had the transactions occurred at the date indicated, or project our results of operations or financial position for any future date or period. You should read the following unaudited pro forma condensed combined financial data in conjunction with MemberWorks' and Lavalife's audited and unaudited consolidated historical financial statements and the related notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are included elsewhere or incorporated by reference in this prospectus. 30 UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET As of December 31, 2003
Lavalife Historical Acquisition Total Financing MemberWorks US Pro Forma Pro Forma Pro Forma Pro Forma Historical GAAP(1) Adjustments(2) Acquisition Adjustments Total ------------ ---------- -------------- ----------- -------------- ----------- ($ in thousands) Assets Cash and cash equivalents........ $ 119,995 $ 17,557 $ (111,240)(a) $ 26,312 $ 126,627(k) $ 152,939 Restricted cash.................. 3,169 -- -- 3,169 -- 3,169 Accounts receivable.............. 11,477 1,857 -- 13,334 -- 13,334 Other current assets............. 10,674 1,250 -- 11,924 600(k) 12,524 Deferred tax assets.............. -- 4,195 -- 4,195 -- 4,195 Membership solicitation and other deferred costs................ 62,618 -- -- 62,618 -- 62,618 ---------- ---------- ----------- ---------- ----------- ---------- Total current assets............. 207,933 24,859 (111,240) 121,552 127,227 248,779 Fixed assets, net................ 22,855 11,368 -- 34,223 -- 34,223 Goodwill......................... 42,039 -- 77,060 (b) 119,099 -- 119,099 Intangible and other assets...... 12,379 -- 37,916 (b) 50,295 5,400(k) 55,695 ---------- ---------- ----------- ---------- ----------- ---------- Total assets..................... $ 285,206 $ 36,227 $ 3,736 $ 325,169 $ 132,627 $ 457,796 ========== ========== =========== ========== =========== ========== Liabilities and Shareholders' (Deficit) Equity Current maturities............... $ 28 $ -- $ 15,000 (c) $ 15,028 $ (15,000)(k) $ 28 Accounts payable................. 29,365 1,348 -- 30,713 -- 30,713 Accrued liabilities.............. 64,982 10,273 -- 75,255 -- 75,255 Deferred revenue................. 150,062 3,487 -- 153,549 -- 153,549 Deferred income taxes............ 6,171 -- -- 6,171 -- 6,171 ---------- ---------- ----------- ---------- ----------- ---------- Total current liabilities........ 250,608 15,108 15,000 280,716 (15,000) 265,716 Deferred income taxes............ 5,157 855 -- 6,012 -- 6,012 Other long-terns liabilities..... 2,993 -- -- 2,993 -- 2,993 Long-term debt................... 90,000 -- -- 90,000 147,627(k) 237,627 ---------- ---------- ----------- ---------- ----------- ---------- Total liabilities................ 348,758 15,963 15,000 379,721 132,627 512,348 ---------- ---------- ----------- ---------- ----------- ---------- Convertible preferred stock...... -- 19,145 (19,145) (d) -- -- -- Common stock..................... 190 -- 3 (e) 193 -- 193 Capital in excess of par......... 146,646 6,086 19,145 (d) 155,643 -- 155,643 -- (15,235) (f) (9,996) (g) 8,997 (h) Accumulated deficit.............. (6,269) (5,824) 5,824 (i) (6,269) -- (6,269) Accumulated other comprehensive income (loss)................. (453) 857 (857) (j) (453) -- (453) Treasury stock................... (203,666) -- -- (203,666) -- (203,666) ---------- ---------- ----------- ---------- ----------- ---------- Total shareholders' (deficit) equity........................ (63,552) 1,119 7,881 (54,552) -- (54,552) ---------- ---------- ----------- ---------- ----------- ---------- Total liabilities and shareholders' (deficit) equity $ 285,206 $ 36,227 $ 3,736 $ 325,169 $ 132,627 $ 457,796 ========== ========== =========== ========== =========== ==========
- ------------- (1) Reconciliation of Canadian GAAP to US GAAP is included on page 38 of this prospectus. (2) Footnote explanations of pro forma adjustments are included on page 32 of this prospectus. 31 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ($ in thousands) (a) Reflects the following adjustments to the cash and cash equivalents balance resulting from the acquisition of Lavalife:
Distribution of excess cash to Lavalife's shareholders prior to closing...................... $ (15,235) Cash received from Lavalife's senior management to purchase MemberWorks Incorporated's common stock............................................................................. 9,000 Funding of a portion of the Lavalife acquisition purchase price.............................. (105,005) ------------ Total cash adjustment.................................................................... $ (111,240) ============
(b) The total estimated purchase price as shown in the table below is allocated to the tangible and intangible assets and liabilities of Lavalife based on their estimated fair values as if the acquisition of Lavalife had occurred on December 31, 2003. The estimated purchase price and preliminary allocation thereof is as follows:
Total estimated purchase price: Cash purchase price paid.................................................................. $ 118,005 Acquisition related costs, including certain financing costs.............................. 2,000 ------------ Total purchase price paid including acquisition related costs........................... $ 120,005 ============ Preliminary allocation of purchase price: Identifiable intangible assets............................................................ $ 37,916 Goodwill.................................................................................. 77,060 Book value of acquired assets and liabilities............................................. 5,029 ------------ Total purchase price allocated.......................................................... $ 120,005 ============
A final determination of the fair values and useful lives of such assets cannot be made prior to the completion of the purchase accounting and may differ materially from the preliminary estimates made by management. This preliminary allocation includes an estimate that all intangible assets will be acquired through a purchase transaction which yields a tax basis equal to book basis and therefore no deferred tax liability has been recorded. Any final adjustments may change the allocation of purchase price which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro forma combined financial data. (c) Represents borrowings under our senior secured credit facility to fund a portion of the purchase price. (d) Reflects conversion of Lavalife's convertible preferred stock to Lavalife's common stock immediately prior to the closing of the acquisition. (e) Reflects the par value of the MemberWorks' restricted common stock purchased by Lavalife's senior management. (f) Reflects the reduction in shareholders' equity as a result of the distribution of excess cash to Lavalife's shareholders prior to closing. (g) Reflects the elimination of the balance of Lavalife's capital in excess of par after giving effect to (d) and (f) above. (h) Reflects the capital in excess of par resulting from the purchase of MemberWorks' restricted common stock by Lavalife's senior management. (i) Reflects elimination of Lavalife's accumulated deficit. 32 (j) Reflects elimination of Lavalife's other comprehensive income. (k) Reflects issuance of the senior notes (including the incurrence of debt issuance costs) and the use of proceeds therefrom, including the repayment of $15,000 under the senior secured credit facility. Issuance of the notes, net of discount....................... $ 147,627 Payment of debt issuance costs*.............................. (6,000) Repayment of senior secured credit facility.................. (15,000) ------------ Net cash proceeds......................................... $ 126,627 ============ - --------- * $600 represents the current portion of debt issuance costs. 33 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS Twelve Months Ended December 31, 2003
Lavalife MemberWorks Historical Acquisition Total Financing Pro Forma Historical US Pro Forma Pro Forma Pro Forma Total US GAAP GAAP(1) Adjustments(2) Acquisition Adjustments(2) US GAAP ------------ ---------- -------------- ----------- -------------- ---------- ($ in thousands, except per share data) Revenues......................... $ 474,820 $ 70,576 $ -- $ 545,396 $ -- $ 545,396 Expenses: Marketing .................... 278,626 25,795 -- 304,421 -- 304,421 Operating .................... 85,697 14,780 -- 100,477 -- 100,477 General and Administrative.... 74,420 22,296 -- 96,716 -- 96,716 Amortization of intangibles... 1,243 -- 6,493 (a) 7,736 -- 7,736 ---------- --------- ---------- --------- ---------- ---------- Operating income ................ 34,834 7,705 (6,493) 36,046 -- 36,046 Interest income (expense), net... (1,117) 287 (600)(b) (1,430) (14,025)(e) (15,455) Other income (expense), net...... (162) 88 -- (74) -- (74) ---------- --------- ---------- --------- ---------- ---------- Income before income taxes....... 33,555 8,080 (7,093) 34,542 (14,025) 20,517 Provision for income taxes....... 13,422 2,515 (2,837)(c) 13,100 (5,610)(c) 7,490 ---------- --------- ---------- --------- ---------- ---------- Net income ...................... $ 20,133 $ 5,565 $ (4,256) $ 21,442 $ (8,415) $ 13,027 ========== ========= ========== ========= ========== ========== Earnings per share Basic ........................ $ 1.73 $ 1.77 $ 1.07 ========== ========= ========== Diluted ...................... $ 1.63 $ 1.67 $ 1.03 ========== ========= ========== Weighted average shares Basic ........................ 11,638 501 (d) 12,139 12,139 ========== ========== ========= ========== Diluted ...................... 12,821 501 13,322 13,322 ========== ========== ========= ==========
- --------------- (1) Reconciliation of Canadian GAAP to US GAAP is included on page 40 of this prospectus. (2) Footnote explanations of pro forma adjustments are included on page 37 of this prospectus. 34 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS Six Months Ended December 31, 2003
Lavalife Historical Acquisition Total Financing MemberWorks US Pro Forma Pro Forma Pro Forma Pro Forma Historical GAAP(1)(3) Adjustments(2) Acquisition(2) Adjustments(2) Total ------------ ----------- --------------- -------------- -------------- ---------- ($ in thousands, except per share data) Revenues........................ $ 236,988 $ 35,543 $ -- $ 272,531 $ -- $ 272,531 Expenses: Marketing.................... 133,401 12,455 -- 145,856 -- 145,856 Operating.................... 44,505 7,426 -- 51,931 -- 51,931 General and Administrative............. 37,962 11,646 -- 49,608 -- 49,608 Amortization of intangibles................ 589 -- 3,247 (a) 3,836 -- 3,836 ---------- ---------- ---------- ---------- ---------- ---------- Operating income................ 20,531 4,016 (3,247) 21,300 -- 21,300 Interest income (expense), net.......................... (1,082) 183 (300)(b) (1,199) (7,012)(e) (8,211) Other income (expense), net.......................... (183) 999 -- 816 -- 816 ---------- ---------- ---------- ---------- ---------- ---------- Income before income taxes...... 19,266 5,198 (3,547) 20,917 (7,012) 13,905 Provision for income taxes...... 7,706 1,474 (1,419)(c) 7,761 (2,805)(c) 4,956 ---------- ---------- ---------- ---------- ---------- ---------- Net income...................... $ 11,560 $ 3,724 $ (2,128) $ 13,156 $ (4,207) $ 8,949 ========== ========== ========== ========== =========== ========== Earnings per share Basic........................ $ 1.03 $ 1.13 $ 0.77 ========== ========== ========== Diluted...................... $ 0.91 $ 0.99 $ 0.69 ========== ========== ========== Weighted average shares Basic........................ 11,192 452(d) 11,644 11,644 ========== ========== ========== ========== Diluted...................... 13,541 452 13,993 13,993 ========== ========== ========== ==========
- -------------- (1) Reconciliation of Canadian GAAP to US GAAP is included on page 41 of this prospectus. (2) Footnote explanations of pro forma adjustments are included on page 37 of this prospectus. (3) Includes $18,746 of revenue, $3,324 of operating income and $3,165 of net income for the three months ended September 30, 2003, which is also included in the unaudited pro forma condensed combined statement of operations for the year ended June 30, 2003. 35 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS Year Ended June 30, 2003
Lavalife Historical Acquisition Total Financing MemberWorks US Pro Forma Pro Forma Pro Forma Pro Forma Historical GAAP(1)(3) Adjustments(2) Acquisition(2) Adjustments(2) Total ------------ ----------- --------------- ------------- --------------- ($ in thousands, except per share data) Revenues......................... $ 456,881 $ 70,751 $ -- $ 527,632 $ -- $ 527,632 Expenses: Marketing..................... 280,673 26,055 -- 306,728 -- 306,728 Operating..................... 78,444 14,657 -- 93,101 -- 93,101 General and Administrative.... 74,085 21,003 -- 95,088 -- 95,088 Amortization of intangibles... 1,393 -- 6,493 (a) 7,886 -- 7,886 ---------- ---------- ---------- ---------- ---------- ---------- Operating income................. 22,286 9,036 (6,493) 24,829 -- 24,829 Settlement of investment related litigation............ 19,148 -- -- 19,148 -- 19,148 Interest income (expense), net... 570 200 (600)(b) 170 (14,025)(e) (13,855) Other income (expense), net...... (1,409) 142 -- (1,267) -- (1,267) ---------- ---------- ---------- ---------- ---------- ---------- Income before income taxes....... 40,595 9,378 (7,093) 42,880 (14,025) 28,855 Provision for income taxes....... 16,239 3,484 (2,837)(c) 16,886 (5,610)(c) 11,276 ---------- ---------- ---------- ---------- ---------- ---------- Net income....................... $ 24,356 $ 5,894 $ (4,256) $ 25,994 $ (8,415) $ 17,579 ========== ========== ========== ========== ========== ========== Earnings per share Basic......................... $ 1.93 $ 1.99 $ 1.34 ========== ========== =========== Diluted....................... $ 1.84 $ 1.90 $ 1.28 ========== ========== ========== Weighted average shares Basic......................... 12,596 481(d) 13,077 13,077 ========== ========== ========== ========== Diluted....................... 13,233 481 13,714 13,714 ========== ========== ========== ==========
- ------------- (1) Reconciliation of Canadian GAAP to US GAAP is included on page 42 of this prospectus. (2) Footnote explanations of pro forma adjustments are included on page 37 of this prospectus. (3) Lavalife's statement of income is for the year ended September 30, 2003. 36 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS ($ in thousands) (a) Reflects the amortization of acquired identifiable intangible assets deemed to have determinable useful lives. Preliminary estimates of identifiable intangible assets include trade names of approximately $18,800 with a useful life of 12 years, customer relationships of $14,700 with useful lives of 3-5 years and other intangibles of $4,400 with useful lives of 3-5 years. (b) Reflects increased interest expense incurred due to borrowings of $15,000 under our senior secured credit facility to fund a portion of the Lavalife acquisition purchase price. (c) Reflects the income tax effect of the acquisition pro forma adjustments at a 40% effective tax rate. (d) Reflects the purchase of MemberWorks' restricted common stock by Lavalife's senior management. (e) Reflects interest expense, including amortization of debt issuance costs and discount related to the senior notes, and the elimination of interest expenses under the senior secured credit facility. 37 RECONCILIATION OF CANADIAN GAAP TO US GAAP UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET December 31, 2003 The following table reconciles the Lavalife's unaudited condensed consolidated balance sheet as of December 31, 2003, derived from the December 31, 2003 unaudited condensed consolidated financial statements, from Canadian GAAP to US GAAP. The amounts have been translated at the December 31, 2003 noon buying rate in New York City of $0.7738 to Cdn$ 1.00.
Reclassifications Lavalife US Lavalife to GAAP Canadian US GAAP Lavalife MemberWorks in MemberWorks Lavalife GAAP Adjustments US GAAP Presentation Presentation US GAAP (Cdn$) (Cdn$)(1) (Cdn$) (Cdn$) (Cdn$) (US$) --------- ------------- ---------- ----------------- -------------- ----------- ($ in thousands) Assets Cash and cash equivalents......... $ 22,689 $ -- $ 22,689 $ -- $ 22,689 $ 17,557 Accounts receivable............... 2,041 -- 2,041 359 2,400 1,857 Income taxes receivable........... 359 -- 359 (359) -- -- Prepaid membership materials...... -- -- -- -- -- -- Prepaid expenses and other current assets......................... 1,616 -- 1,616 -- 1,616 1,250 Future tax assets................. 5,052 369 (a) 5,421 -- 5,421 4,195 --------- -------- --------- ---------- ---------- -------- Total current assets.............. 31,757 369 32,126 -- 32,126 24,859 Fixed assets, net................. 14,691 -- 14,691 -- 14,691 11,368 Share purchase loans.............. 47 (47)(b) -- -- -- -- Deferred charges.................. 45 (45)(c) -- -- -- -- Intangible assets................. 25 (25)(d) -- -- -- -- --------- -------- --------- ---------- ---------- -------- Total assets...................... $ 46,565 $ 252 $ 46,817 $ -- $ 46,817 $ 36,227 ========= ======== ========= ========== ========== ======== Liabilities and Shareholders' Equity Accounts payable(2)............... $ 9,517 $ 1,798 (e) $ 11,315 $ (9,572) $ 1,743 $ 1,348 Accrued liabilities............... -- -- -- 13,276 13,276 10,273 Income and other taxes payable.... 3,704 -- 3,704 (3,704) -- -- Deferred revenue.................. 3,512 994 (f) 4,506 -- 4,506 3,487 --------- -------- --------- ---------- ---------- -------- Total current liabilities......... 16,733 2,792 19,525 -- 19,525 15,108 Deferred income taxes............. 1,105 -- 1,105 -- 1,105 855 Liability component of convertible preferred shares............... 18,678 (18,678)(c) -- -- -- -- --------- -------- --------- ---------- ---------- -------- Total liabilities................. 36,516 (15,886) 20,630 -- 20,630 15,963 --------- -------- --------- ---------- ---------- -------- Convertible preferred stock....... -- 24,741 (c) 24,741 -- 24,741 19,145 Share capital..................... 18,123 (10,258)(c),(b) 7,865 (7,865) -- -- Capital in excess of par.......... -- -- -- 7,865 7,865 6,086 Accumulated deficit............... (9,181) 1,655 (7,526) -- (7,526) (5,824) Accumulated other comprehensive income 1,107 -- 1,107 -- 1,107 857 --------- -------- --------- ---------- ---------- -------- Total shareholders' equity........ 10,049 (8,603) 1,446 -- 1,446 1,119 --------- -------- --------- ---------- ---------- -------- Total liabilities and shareholders' equity......................... $ 46,565 $ 252 $ 46,817 $ -- $ 46,817 $ 36,227 ========= ======== ========= ========== ========== ========
- ------------- (1) Footnote explanations of reconciliation of Canadian GAAP to US GAAP are included on page 39 of this prospectus. (2) The accounts payable amount of Cdn$9,517 for Lavalife Canadian GAAP includes Cdn$7,774 in accrued liabilities. 38 NOTES TO CANADIAN GAAP TO US GAAP RECONCILIATION OF LAVALIFE'S UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) The following notes should be read in conjunction with Note 21 of Lavalife's consolidated financial statements for the year ended September 30, 2003 incorporated by reference in this prospectus. (a) Current and deferred taxes have been provided on all adjustments at the applicable local statutory rate to which the adjustment relates. (b) Shareholder Loans. Lavalife records loans to shareholders to purchase shares of Lavalife as receivables under Canadian GAAP. Under US GAAP, these amounts are deducted from shareholders' equity. (c) Financial Instruments. Under Canadian GAAP, Lavalife accounts for its convertible preferred shares in accordance with their substance and, as such, they are presented in the financial statements in their liability and equity components. The liability component is accreted to the face amount of the convertible preferred shares as interest expense. Financing costs associated with the convertible preferred shares have been allocated between the liability and equity components whereby those costs allocated to the liability component are recorded as deferred financing costs and those allocated to the equity component are recorded as a reduction of the carrying value of the equity component. Under US GAAP the convertible preferred shares are treated as mezzanine equity and the associated financing costs have been recorded as a reduction of the carrying value of the convertible preferred shares. During the year ended September 30, 2003, Lavalife made a payment to the holders of the convertible preferred shares in the amount of Cdn$3,125 that, under Canadian GAAP, was recorded as a reduction in the carrying value of the equity component of the convertible preferred shares. Under US GAAP, this payment is recorded as a direct charge to deficit. (d) Intangible Assets. Marketing costs related to launching new services are deferred until launch under Canadian GAAP. Under US GAAP, these costs are expensed as incurred. (e) Stock Based Compensation. Lavalife's stock option plan allows for the redemption of the employees' vested options whereby the difference between the grant price and the market price is paid by Lavalife under certain conditions. Under Canadian GAAP, Lavalife records amounts paid on redemption as a direct charge to deficit. Under US GAAP, Emerging Issues Task Force Abstract No. 00-23 requires that all options with such a feature be marked-to-market and the obligation be recognized through the income statement of Lavalife. (f) Revenue Recognition. Under US GAAP, Lavalife has adopted the recommendations of Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements." Based on these recommendations, which require a more restrictive analysis of management's best estimates of deferred revenue, Lavalife defers revenue from the sale of voice-based meeting services based on usage and management's estimate that unused minutes aged less than one year will be used by customers. Revenue from web-based meeting services is deferred ratably over the estimated average expected usage of the customer. 39 RECONCILIATION OF CANADIAN GAAP TO US GAAP UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME For the Twelve Months Ended December 31, 2003 The following table reconciles from Canadian GAAP to US GAAP Lavalife's unaudited condensed combined statement of income for the twelve months ended December 31, 2003 that has been derived from Lavalife's unaudited condensed consolidated financial statements for the three months ended December 31, 2003 and December 31, 2002 and the audited consolidated financial statements for the year ended September 30, 2003. The amounts have been translated at an average daily rate for the period of $0.7159 to Cdn$1.00.
Reclassifications Lavalife US Lavalife to GAAP Canadian US GAAP Lavalife MemberWorks in MemberWorks Lavalife GAAP Adjustments US GAAP Presentation Presentation US GAAP (Cdn$) (Cdn$)(1) (Cdn$) (Cdn$) (Cdn$) (US$) ---------- ------------ -------- ----------------- -------------- ----------- ($ in thousands) Revenues............................ $ 98,561 $ 23(a) $ 98,584 $ -- $ 98,584 $ 70,576 Expenses: Cost of services sold............ 13,400 (15)(b) 13,385 (13,385) -- -- Marketing expense................ -- -- -- 36,032 36,032 25,795 Operating expense................ -- -- -- 20,646 20,646 14,780 Salaries and benefits............ 19,570 (249)(c) 19,321 (19,321) -- -- Selling, office and general...... 50,307 (152)(6) 50,155 (50,155) -- -- General and administrative....... -- -- -- 31,143 31,143 22,296 Intangible amortization.......... -- -- -- -- -- -- ---------- ------------ -------- ----------------- -------------- ----------- Operating income.................... 15,284 439 15,723 (4,960) 10,763 7,705 Other income........................ 246 -- 246 (123) 123 88 Amortization........................ (4,929) 18(d) (4,911) 4,911 -- -- Accretion of liability component of convertible preferred shares..... (2,001) 2,001(d) -- -- -- -- Loss on disposal of capital assets.. (172) -- (172) 172 -- -- Interest income..................... 432 -- 432 (432) -- -- Interest expense.................... (31) -- (31) 432 401 287 ---------- ------------ -------- ----------------- -------------- ----------- Income before income taxes.......... 8,829 2,458 11,287 -- 11,287 8,080 Current provision for taxes......... 275 -- 275 (275) -- -- Future provision for taxes.......... 3,266 (27)(e) 3,239 (3,239) -- -- Provision for income taxes.......... -- -- -- 3,514 3,514 2,515 ---------- ------------ -------- ----------------- -------------- ----------- Net income.......................... $ 5,288 $ 2,485 $ 7,773 $ -- $ 7,773 $ 5,565 ========== ============ ======== ================= ============== ===========
- ------------ (1) Footnote explanations of reconciliation of Canadian GAAP to US GAAP are included on page 43 of this prospectus. 40 RECONCILIATION OF CANADIAN GAAP TO US GAAP UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME For the Six Months Ended December 31, 2003 The following table reconciles from Canadian GAAP to US GAAP Lavalife's unaudited condensed consolidated statement of income for the six months ended December 31, 2003 that has been derived from Lavalife's unaudited condensed consolidated financial statements for the three months ended September 30, 2003 and December 31, 2003. The amounts have been translated at an average daily rate for the period of $0.7419 to Cdn$ l.00.
Lavalife US Reclassifications GAAP Lavalife to in Canadian US GAAP Lavalife MemberWorks MemberWorks Lavalife GAAP Adjustments US GAAP Presentation Presentation US GAAP (Cdn$) (Cdn$)(1) (Cdn$) (Cdn$) (Cdn$) (US$) -------- ------------- --------- ----------------- ------------ --------- ($ in thousands) Revenues.......................... $ 48,305 $ (397)(a) $ 47,908 $ -- $ 47,908 $ 35,543 Expenses: Cost of services sold.......... 6,778 -- 6,778 (6,778) -- -- Marketing expense.............. -- -- -- 16,788 16,788 12,455 Operating expense.............. -- -- -- 10,009 10,009 7,426 Salaries and benefits.......... 9,588 19(b) 9,607 (9,607) -- -- Selling, office and general.... 23,683 25(c) 23,708 (23,708) -- -- General and administrative..... -- -- -- 15,698 15,698 11,646 Intangible amortization........ -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Operating income.................. 8,256 (441) 7,815 (2,402) 5,413 4,016 Other income...................... 1,411 1,411 (65) 1,346 999 Amortization...................... (2,304) 8(d) (2,296) 2,296 -- -- Accretion of liability component of convertible preferred shares... (1,030) 1,030(d) -- -- -- -- Loss on disposal of capital assets......................... (171) -- (171) 171 -- -- Interest income................... 247 -- 247 (247) -- -- Interest expense.................. -- -- -- 247 247 183 -------- -------- -------- -------- -------- -------- Income before income taxes........ 6,409 597 7,006 -- 7,006 5,198 Current provision for taxes....... 58 -- 58 (58) -- -- Future provision for taxes........ 2,105 (177)(e) 1,928 (1,928) -- -- Provision for income taxes........ -- -- -- 1,986 1,986 1,474 -------- -------- -------- -------- -------- -------- Net income........................ $ 4,246 $ 774 $ 5,020 $ -- $ 5,020 $ 3,724 ======== ======== ======== ======== ======== ========
- ------------ (1) Footnote explanations of reconciliation of Canadian GAAP to US GAAP are included on page 43 of this prospectus. 41 RECONCILIATION OF CANADIAN GAAP TO US GAAP UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME For the Year Ended September 30, 2003 The following table reconciles from Canadian GAAP to US GAAP Lavalife's unaudited condensed consolidated statement of income for the year ended September 30, 2003 derived from the audited consolidated financial statements for the year ended September 30, 2003. The amounts have been translated at an average daily rate for the period of $0.6853 to Cdn$l.00.
Lavalife US Reclassifications GAAP Lavalife to in Canadian US GAAP Lavalife MemberWorks MemberWorks Lavalife GAAP Adjustments US GAAP Presentation Presentation US GAAP -------- ------------- --------- ----------------- ------------ --------- (Cdn$) (Cdn$)(1) (Cdn$) (Cdn$) (Cdn$) (US$) ($ in thousands) Revenues.......................... $ 102,613 $ 626(a) $ 103,239 $ -- $ 103,239 $70,751 Expenses: Cost of services sold.......... 13,831 -- 13,831 (13,831) -- -- Marketing expense.............. -- -- -- 38,020 38,020 26,055 Operating expense.............. -- -- -- 21,388 21,388 14,657 Salaries and benefits.......... 19,406 (452)(b) 18,954 (18,954) -- -- Selling, office and general.... 52,260 (124)(c) 52,136 (52,136) -- -- General and administrative..... -- -- -- 30,646 30,646 21,003 Intangible amortization........ -- -- -- -- -- -- --------- --------- ---------- ----------- ------------ -------- Operating income.................. 17,116 1,202 18,318 (5,133) 13,185 9,036 Other income...................... 335 -- 335 (128) 207 142 Amortization...................... (5,107) 18(d) (5,089) 5,089 -- -- Accretion of liability component of convertible preferred shares... (1,943) 1,943(d) -- -- -- -- Loss on disposal of capital assets......................... (172) -- (172) 172 -- -- Interest income................... 385 -- 385 (385) -- -- Interest expense.................. (93) -- (93) 385 292 200 ---------- --------- ----------- ----------- ------------ -------- Income before income taxes........ 10,521 3,163 13,684 -- 13,684 9,378 Current provision for taxes....... 708 -- 708 (708) -- -- Future provision for taxes........ 4,172 203(e) 4,375 (4,375) -- -- Provision for income taxes........ -- -- -- 5,083 5,083 3,484 --------- --------- ---------- ----------- ------------ -------- Net income........................ $ 5,641 $ 2,960 $ 8,601 $ -- $ 8,601 $ 5,894 ========= ========= ========== =========== ============ ========
- ------------ (1) Footnote explanations of reconciliation of Canadian GAAP to US GAAP are included on page 43 of this prospectus. 42 NOTES TO CANADIAN GAAP TO US GAAP RECONCILIATION OF LAVALIFE'S UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME (in thousands) The following notes should be read in conjunction with Note 21 of Lavalife's consolidated financial statements for the year ended September 30, 2003 incorporated by reference in this prospectus. (a) Revenue Recognition. Under US GAAP, Lavalife has adopted the recommendations of Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements." Based on these recommendations, which require a more restrictive analysis of management's best estimates of deferred revenue, Lavalife defers revenue from the sale of voice-based meeting services based on usage and management's estimate that unused minutes aged less than one year will be used by customers. Revenue from web-based meeting services is deferred ratably over the estimated average expected usage of the customer. (b) Stock Based Compensation. Lavalife's stock option plan allows for the redemption of the employees' vested options whereby the difference between the grant price and the market price is paid by Lavalife under certain conditions. Under Canadian GAAP, Lavalife records amounts paid on redemption as a direct charge to deficit. Under US GAAP, Emerging Issues Task Force Abstract No. 00-23 requires that all options with such a feature be marked-to-market and the obligation be recognized through the income statement of Lavalife. (c) Intangible Assets. Marketing costs related to launching new services are deferred until launch under Canadian GAAP. Under US GAAP, these costs are expensed as incurred. (d) Financial Instruments. Under Canadian GAAP, Lavalife accounts for its convertible preferred shares in accordance with their substance and, as such, they are presented in the financial statements in their liability and equity components. The liability component is accreted to the face amount of the convertible preferred shares as interest expense. Financing costs associated with the convertible preferred shares have been allocated between the liability and equity components whereby those costs allocated to the liability component are recorded as deferred financing costs and those allocated to the equity component are recorded as a reduction of the carrying value of the equity component. Under U.S. GAAP the convertible preferred shares are treated as mezzanine equity and the associated financing costs have been recorded as a reduction of the carrying value of the convertible preferred shares. During the year ended September 30, 2003, Lavalife made a payment to the holders of the convertible preferred shares in the amount of Cdn$3,125 that, under Canadian GAAP, was recorded as a reduction in the carrying value of the equity component of the convertible preferred shares. Under U.S. GAAP, this payment is recorded as a direct charge to deficit. (e) Current and deferred taxes have been provided on all adjustments at the applicable local statutory rate to which the adjustment relates. 43 SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA MemberWorks The following table sets forth selected historical consolidated financial data for MemberWorks. The selected consolidated financial data as of and for each of the fiscal years ended June 30, 1999 through 2003 have been derived from MemberWorks' audited consolidated financial statements. The selected consolidated financial data as of and for the six months ended December 31, 2003 and 2002 have been derived from MemberWorks' unaudited condensed consolidated financial statements and in the opinion of MemberWorks' management, include all adjustments of a normal recurring nature necessary to present fairly the financial position and results of operations for the interim periods. The historical consolidated results for these respective six months are not necessarily indicative of MemberWorks' results of operations for the full years. The selected consolidated financial information is qualified by reference to and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and MemberWorks' consolidated financial statements, including the related notes thereto, contained in this prospectus.
Six Months Ended Year Ended June 30, December 31, ----------------------------------------------------- ------------------- 1999 2000 2001 2002 2003 2002 2003 --------- ---------- ---------- ---------- ---------- --------- --------- ($ in thousands) Statement of Operations Data: Revenues.............................. $218,086 $330,107 $475,726 $427,602 $456,881 $219,049 $236,988 Total expenses........................ 212,292 331,547 509,050 415,713 434,595 211,066 216,457 -------- -------- -------- -------- -------- -------- -------- Operating income (loss)............... 5,794 (1,440) (33,324) 11,889 22,286 7,983 20,531 Settlement of investment related litigation......................... -- -- -- -- 19,148 19,148 -- (Loss) gain on sale of subsidiary..... -- -- -- 65,608 (959) (959) -- Net (loss) gain on investment......... -- 8,854 (2,172) (33,628) (206) (206) -- Other income (expense), net........... 2,154 873 (450) (401) 326 340 (1,265) -------- -------- -------- -------- -------- -------- -------- Income (loss) before equity in affiliate and minority interest.............. 7,948 8,287 (35,946) 43,468 40,595 26,306 19,266 Equity in income (loss) of affiliate.. (1,912) 19 83 -- -- -- -- Minority interest..................... -- 2,027 9,106 450 -- -- -- -------- -------- -------- -------- -------- -------- -------- Net income (loss) before provision for income taxes....................... 6,036 10,333 (26,757) 43,918 40,595 26,306 19,266 Provision for income taxes............ -- -- -- -- 16,239 10,523 7,706 -------- -------- -------- -------- -------- -------- -------- Net income (loss) before cumulative effect of accounting change........ 6,036 10,333 (26,757) 43,918 24,356 15,783 11,560 Cumulative effect of accounting change (3,367) -- (25,730) (5,907) -- -- -- -------- -------- -------- -------- -------- -------- -------- Net income (loss)..................... $ 2,669 $ 10,333 $(52,487) $ 38,011 $ 24,356 $ 15,783 $ 11,560 ======== ======== ========= ======== ======== ======== ======== Other Financial Data: Cash flow provided by operating activities......................... $ 50,573 $ 44,910 $ 12,022 $ 17,014 $ 48,533 $ 32,877 $ 20,441 Depreciation and amortization......... 5,517 13,002 20,498 13,252 12,120 6,169 5,242 Capital expenditures.................. 12,101 20,326 15,133 5,761 5,463 2,762 2,538 Ratio of earnings to fixed charges(1). 8.60x 6.75x NM 17.69x 15.52x 18.28x 8.22x Consolidated Balance Sheet (at period end): Cash and cash equivalents............. $ 50,939 $ 30,169 $ 21,745 $ 45,502 $ 72,260 $ 79,950 $119,995 Restricted cash....................... -- -- 991 5,683 2,732 2,842 3,169 Total assets.......................... 209,827 316,772 348,461 280,817 248,505 290,016 285,206 Total debt............................ 6 1,083 3,057 3,627 8,273 3,079 98,150 Shareholders' (deficit) equity........ 30,287 19,021 (25,965) (20,630) (20,283) (9,786) (63,552)
- ------------ (1) The ratio of earnings to fixed charges is computed by dividing pre-tax income from continuing operations (before adjustment for minority interests in consolidated subsidiaries and loss from equity investees) by fixed charges. Fixed charges consist of interest charges, whether expensed or capitalized, and that portion of rental expense we believe to be representative of interest. For the year ended June 30, 2001, earnings were insufficient to cover fixed charges of $3.8 million. 44 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MemberWorks Overview We design and manage innovative membership programs and provide organizations with an opportunity to leverage the expertise of an outside provider in offering these membership programs. Our membership service programs offer selected products and services from a variety of vendors for either an annual fee or a monthly fee. We derive our revenues principally from renewable membership fees which are billed to the customer either on an annual or monthly basis. In the case of annual programs, we receive full payment at or near the beginning of the membership period, but recognize the revenue as the member's refund privilege expires. Membership fees that are billed monthly are recognized when earned. We have traditionally marketed membership programs which have an up-front annual membership fee. However, during fiscal 2003, we expanded our marketing of membership programs in which the membership fee is payable in monthly installments. We intend to further increase the mix of monthly payment programs during fiscal 2004. Profitability and cash flow generated from renewal memberships exceed that of new memberships due to the absence of solicitation costs associated with new member procurement. The Lavalife Acquisition On April 1, 2004, we completed the acquisition of all of the assets and outstanding capital stock of Lavalife for approximately Cdn$152.5 million ($116.4 million) in cash. Lavalife's senior management purchased approximately Cdn$11.9 million ($9.1 million) in MemberWorks' restricted common stock at closing of the acquisition. We financed the purchase price with cash on hand and borrowings of approximately $15.0 million under our $45.0 million senior secured credit facility. For the twelve months ended December 31, 2003, Lavalife had revenues of Cdn$98.6 million ($70.6 million). Critical Accounting Policies Critical accounting policies are those policies that are important to our financial condition and results of operations and involve subjective or complex judgments on the part of management, often as a result of the need to make estimates. The following areas all require the use of judgments and estimates: membership cancellation rates, deferred marketing costs, valuation of goodwill and intangible assets, estimation of remaining useful lives of intangible assets and valuation of deferred tax assets. Estimates in each of these areas are based on historical experience and various assumptions that we believe are appropriate. Actual results may differ from these estimates. We believe the following represent our critical accounting policies as contemplated by Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure about Critical Accounting Policies." For a summary of all of our significant accounting policies, see Note 2 of MemberWorks' consolidated financial statements on page F-7 of this prospectus. Revenue Recognition Membership fees are billed through our clients primarily through credit cards. In the case of annually billed membership programs, a member may cancel their membership in the program generally for a pro rata refund of the membership fee based on the remaining portion of the membership period. In accordance with Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"), deferred membership fees are recorded, net of estimated cancellations, and are amortized as revenues from membership fees upon the expiration of membership refund privileges. An allowance for membership cancellations is established based on our estimates and is updated regularly. In determining the estimate of allowance for membership cancellations, we analyze historical cancellation experience, current economic trends and changes in customer demand for the our products. Actual membership cancellations are charged against the allowance for membership cancellations on a current basis. If actual cancellations differ from the estimate, the revenues would be impacted. Membership solicitation and other deferred costs Our marketing expenses are comprised of telemarketing, direct mail, refundable royalty payments, nonrefundable royalty payments and advertising costs. Telemarketing and direct mail costs are direct response advertising costs which are accounted for in accordance with American Institute of Certified Public Accountants 45 Statement of Position 93-7, "Reporting on Advertising Costs" ("SOP 93-7"). Under SOP 93-7, direct response advertising costs are deferred and charged to operations over the membership period as revenues from membership fees are recognized. Refundable royalty payments are also deferred and charged to operations over the membership period in order to match the marketing costs with the associated revenues from membership fees. Advertising costs and non-refundable royalty payments, which include fee per pitch, fee per sale and fee per impression marketing arrangements, are expensed when incurred. Total membership solicitation costs incurred to obtain a new member are generally less than the estimated total membership fees. However, if total membership solicitation costs were to exceed total estimated membership margins, an adjustment would be made to the membership solicitation and other deferred costs balance and marketing expenses to the extent of any impairment. Valuation of goodwill and other intangibles We review the carrying value of its goodwill and other intangible assets and assesses the remaining estimated useful lives of its intangible assets in accordance with FASB Statement No. 142, "Goodwill and Other Intangible Assets." We review the carrying value of our goodwill and other intangible assets for impairment by comparing such amounts to their fair values. We are required to perform this comparison at least annually or more frequently if circumstances indicate possible impairment. When determining fair value, we utilize various assumptions, including projections of future cash flows. A change in these underlying assumptions would cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts. In such an event, we would then be required to record a corresponding charge which would negatively impact earnings. Goodwill at July 1, 2003 and 2002, was tested for impairment during the quarters ended September 30, 2003 and 2002, respectively. We concluded that none of our goodwill was impaired as of July 1, 2003 nor 2002. Income Taxes We account for income taxes under the provisions of FASB Statement No. 109, "Accounting for Income Taxes." Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We estimate current tax provisions or benefits based on a projected effective tax rate for the fiscal year ended June 30, 2004 using the most currently available information and forecasts. The projected effective tax rate is updated for actual results and estimates when they become known. In addition, we assess the realization of deferred tax assets considering various assumptions, including estimates of future taxable income and ongoing tax strategies. A change in these underlying assumptions would impact the results of operations. Six Month Period Ended December 31, 2003 and December 31, 2002 Revenues. Revenues increased 8% to $237.0 million for the six months ended December 31, 2003 from $219.0 million for the six months ended December 31, 2002. The increase in revenues is primarily due to an increase in the weighted average program price point. As a result of our strategic initiative to shift new marketing towards members on a monthly payment program, renewal revenues from annual payment programs as a percent of total revenues decreased to 41% in 2003 from 48% in 2002. Revenues from members who are charged on a monthly payment program increased to $67.7 million for the six months ended December 31, 2003 from $33.8 million for the six months ended December 31, 2002 due to an increase in members enrolled in a monthly payment plan. Marketing Expenses. Marketing expenses decreased 2% to $133.4 million for the six months ended December 31, 2003 from $135.4 million for the six months ended December 31, 2002 and, as a percentage of revenue, marketing expenses decreased to 56.3% in 2003 from 61.8% in 2002. The improvement in the marketing expense ratio is primarily due to the increase in the mix of marketing in our more profitable MemberLinksm and online channels. Operating Expenses. Operating expenses increased 19% to $44.5 million for the six months ended December 31, 2003 from $37.3 million for the six months ended December 31, 2002. As a percentage of revenues, operating expenses increased to 18.8% for the six months ended December 31, 2003 from 17.0% for the six months ended December 31, 2002. These increases were due to increased call center and other related costs incurred to service the membership base. 46 General and Administrative Expenses. General and administrative expenses were $38.0 million for the six months ended December 31, 2003 versus $37.6 million for the six months ended December 31, 2002. As a percentage of revenues, general and administrative expenses decreased to 16.0% in 2003 from 17.2% in 2002 primarily due to leveraging the increase in our reported revenues. Interest Expense. Interest expense increased to $1.6 million for the six months ended December 31, 2003 from $57,000 for the six months ended December 31, 2002. The increase is due to the issuance of the convertible senior subordinated notes in September 2003. Provision for Income Taxes. During the six months ended December 31, 2003, we recorded a tax provision of $7.7 million based on an effective tax rate of approximately 40%. The effective tax rate was higher than the United States federal statutory rate for the six months ended December 31, 2003 primarily due to state taxes and other non-deductible items. During the six months ended December 31, 2002, we recorded a tax provision of $10.5 million based on an effective tax rate of approximately 40%. Fiscal 2003 Compared to Fiscal 2002 Revenues. Revenues increased 7% to $456.9 million in 2003 from $427.6 million in 2002. Excluding $9.4 million of revenue generated from iPlace, Inc., which was sold in the first quarter of fiscal 2002, revenues would have increased 9% over the prior year. The increase in revenues is due to the effect of our strategic initiative to migrate our members participating in a full-money-back refund policy program to a pro rata refund policy program, in addition to increased levels of monthly member marketing and an increase in the average program price point. As of December 31, 2002, virtually all of our membership base was enrolled in a pro rata refund policy program. As a result of our strategic initiative to move our members to a pro rata refund policy program, revenues which would have been recognized at the end of a membership year are now recognized ratably during the membership year as the refund privileges expire in accordance with SAB 101. This strategic move to pro rata refund policy programs increased the revenue recognized in fiscal 2003 under SAB 101. Revenue from members who are charged on a monthly payment program increased to $76.9 million from $41.3 million due to an increase in members enrolled in a monthly payment plan. As a percentage of total revenues, renewal revenues from annual payment programs were 47% in 2003 and 48% in 2002. Operating Expenses. Operating expenses consist of member service call center costs, membership benefit costs and membership program fulfillment costs. Operating expenses decreased slightly to $78.4 million in 2003 from $78.7 million in 2002 primarily due to the sale of iPlace, Inc., offset by an increase in costs to support the Company's strategy to improve member satisfaction. As a percentage of revenues, operating expenses decreased to 17.2% in 2003 from 18.4% in 2002 primarily due to the cost savings initiatives implemented in the beginning of the December 2001 quarter and operating expense language gained from increased revenues. Marketing Expenses. Marketing expenses consist of costs incurred to obtain new members and royalties paid to clients. Those costs that are considered direct response advertising costs and refundable royalties paid to clients are generally amortized in the same manner as the related revenue as required by SOP 93-7 and SAB 101. Marketing expenses increased 13% to $280.7 million in 2003 from $249.0 million in 2002. As a percent of revenue, marketing expenses increased to 61.4% in 2003 from 58.2% in 2002 primarily due to a higher level of non-refundable royalties and advertising costs incurred during fiscal 2003 due to the Company's shift away from telemarketing. General and Administrative Expenses. General and administrative expenses primarily include personnel-related costs, occupancy costs and other overhead costs. General and administrative expenses decreased 7% to $74.1 million in 2003 from $79.2 million in 2002. As a percentage of revenues, general and administrative expenses decreased to 16.2% in 2003 from 18.5% in 2002. These decreases were primarily due to the sale of iPlace, Inc. and the closing of the United Kingdom operations. Amortization of Goodwill and Other Intangibles. Intangible amortization decreased to $1.4 million in 2003 from $1.9 million in 2002 primarily due to the effect of the sale of iPlace, Inc. Settlement of Investment-Related Litigation. During fiscal 2003, we, along with certain of the other former shareholders of iPlace, Inc., settled our lawsuit against Homestore.com, Inc. The total settlement amount in favor of the plaintiffs was $23.0 million, of which we received $19.1 million. 47 Gain on Sale of Subsidiary. During fiscal 2002, we sold our investment in iPlace, Inc. for $50.1 million in cash and 1.6 million shares of Homestore.com, Inc. common stock. We reported a gain of $65.6 million on the sale. During fiscal 2003, we settled with Homestore.com, Inc. all issues pending related to amounts held in escrow in connection with the sale. We recorded a net loss of $1.0 million related to this settlement in fiscal 2003. Net Loss on Investment. During fiscal 2002, we reported a loss of $33.6 million reflecting the write-down of our investment in Homestore.com, Inc. common stock to its fair market value. During fiscal 2003, we sold all of our Homestore.com, Inc. common stock and recognized a loss of $0.2 million. Other Income/Expense, Net. Other income/expense, net is primarily composed of interest income from cash and cash equivalents and bank fees related to our line of credit. Other income increased to $0.3 million in 2003 from expense of $0.4 million in 2002 due to the increase in our cash balance. Provision for Income Taxes. For the year ended June 30, 2003, we recorded a provision for income taxes of $16.2 million based on an effective tax rate of 40%. The effective tax rate was higher than the U.S. federal statutory rate for the year ended June 30, 2003 primarily due to state taxes and other non-deductible items. During fiscal 2002, we were not required to record a provision for income taxes due to the ability to utilize net operating loss carryforwards against which we had carried a full valuation allowance. The valuation allowance recognized in prior periods has been fully reversed in 2003 based upon our belief that it is more likely than not that we will realize our deferred tax assets. As of June 30, 2003, we had accumulated federal net operating loss carryforwards of $41.4 million. Fiscal 2002 Compared to Fiscal 2001 Revenues. Revenues decreased 10% to $427.6 million in 2002 from $475.7 million in 2001. Excluding iPlace, Inc. revenues of $9.4 million and $42.4 million in 2002 and 2001, respectively, revenues would have decreased 3%. The decrease in revenues is due to the controlled slow down in new member marketing implemented in the beginning of fiscal 2002. This controlled slow down was a reaction to decreased consumer response rates. Revenue from members who are charged on a monthly payment program increased to $41.3 million in 2002 from $27.6 million in 2001. As a percentage of total revenues, renewal revenues from annual payment programs were 48% in 2002 and 41% in 2001. The increase in renewal revenues as a percentage of total revenues is due to the controlled slow down in new member marketing implemented in the beginning of the fiscal year. Operating Expenses. Operating expenses decreased 13% to $78.7 million in 2002 from $90.4 million in 2001 primarily due to the sale of iPlace, Inc., the closing of the United Kingdom operations and lower revenues during the year. As a percentage of revenues, operating expenses decreased to 18.4% in 2002 from 19.0% in 2001 primarily due to the sale of iPlace, Inc., which had higher operating costs as a percentage of revenues. Marketing Expenses. Marketing expenses decreased 18% to $249.0 million in 2002 from $305.0 million in 2001 primarily due to the effect of the controlled slow down in new member marketing implemented in the beginning of fiscal 2002 and the effect of the sale of iPlace, Inc. As a percent of revenue, marketing expenses decreased to 58.2% in 2002 from 64.1% in 2001 primarily due to the increase in the mix of renewal revenue as a percent of total revenue. The lower level of new member marketing resulted in an increase in the ratio of renewal member revenues to total revenues. Marketing expenses related to renewal revenues are typically significantly lower than expenses related to new member revenues. Expenses related to new member marketing, as a percent of new member revenues, increased in 2002 compared to 2001 primarily due to a decrease in consumer response rates. General and Administrative Expenses. General and administrative expenses decreased 21% to $79.2 million in 2002 from $99.7 million in 2001, and as a percentage of revenues, decreased to 18.5% in 2002 from 21.0% in 2001. These decreases were primarily due to the sale of iPlace, Inc. and the effect of cost saving initiatives related to the restructuring, as described below. Restructuring Charges. In October 2001, we implemented certain cost saving initiatives due to a slowdown in consumer response rates and increased economic uncertainty in both the U.S. and abroad. This restructuring program included a workforce reduction of approximately 190 employees, the closing of our United Kingdom operations and the downsizing of our operational infrastructure. As a result of this restructuring program, we recorded restructuring charges of $6.9 million during the second quarter ended December 31, 2001. See Note 12 of MemberWorks' consolidated financial statements on page F-19 of this prospectus. 48 Amortization of Goodwill and Other Intangibles. Intangible amortization decreased to $1.9 million in 2002 from $10.9 million in 2001 due to the adoption of SFAS 142, which no longer requires the amortization of indefinite lived intangible assets, and the sale of iPlace, Inc. Excluding the amortization of indefinite lived intangible assets of $7.8 million in 2001, amortization of goodwill and other intangibles would have been $3.1 million. This decrease was due to the sale of iPlace, Inc. Gain on Sale of Subsidiary. During the quarter ended September 30, 2001, we sold our investment in iPlace, Inc. for $50.1 million in cash and 1.6 million shares of Homestore.com, Inc. stock. We reported a gain of $65.6 million on the sale. Net Loss on Investment. During fiscal 2002, we reported a loss of $33.6 million reflecting the write-down of our investment in Homestore.com, Inc. common stock to its fair market value. Other Expense, Net. Other expense, net is primarily composed of interest income from cash and cash equivalents, bank fees related to our borrowings under our line of credit and interest expense related to our notes payable. Other expense decreased to $0.4 million in 2002 from $0.5 million in 2001. We had no borrowings outstanding under our line of credit as of June 30, 2002. Provision for Income Taxes. We were not required to record a provision for income taxes for the year ended June 30, 2002 due to the ability to utilize net operating loss carryforwards against which we had carried a full valuation allowance. We were not required to record a provision for income taxes for the year ended June 30, 2001, due to tax losses realized. As of June 30, 2002, we had accumulated federal net operating loss carryforwards of $68.7 million. Liquidity and Capital Resources Net cash provided by operating activities was $20.4 million for the six months ended December 31, 2003 versus $32.9 million for the six months ended December 31, 2002. The decrease in operating cash flow in the six months ended December 31, 2003 versus the prior year was primarily due to the impact of changes in assets and liabilities which reduced cash by $1.6 million in the six months ended December 31, 2003 and increased cash by $7.6 million in the six months ended December 31, 2002. The decrease in changes in assets and liabilities over the prior year was primarily driven by the timing of vendor payments. Also contributing to the decrease in operating cash flow were increased operating expenses partially offset by an increase in marketing margin before deferral (revenues before deferral less marketing costs before deferral). As a percent of revenue before deferral, marketing costs before deferral were 53.8% in the six months ended December 31, 2003 compared to 54.8% in the six months ended December 31, 2002. Net cash provided by operating activities was $48.5 million, $17.0 million and $12.0 million for the years ended June 30, 2003, 2002 and 2001, respectively. The increase in operating cash flow in fiscal 2003 was due to a shift in the marketing mix to more profitable marketing channels, cost savings as a result of the restructuring plan and the actual costs incurred in December 2001 related to the restructuring plan. The shift in marketing mix to more profitable marketing channels is demonstrated by the decrease in marketing costs before deferral as a percentage of revenues before deferral. Our management believes that revenues before deferral and marketing costs before deferral are important measures of liquidity. Revenues before deferral are revenues before the application of SAB 101 and represent the actual membership fees billed during the current reporting period less an allowance for membership cancellations. Marketing costs before deferral are marketing costs before the application of SAB 101 and SOP 93-7 and represent our obligation for marketing efforts that occurred during the current reporting period. Revenues before deferral are calculated as follows (in thousands):
Six Months Ended December 31, Fiscal Year ------------------------ ------------------------------------ 2003 2002 2003 2002 2001 ---------- ---------- ---------- ---------- --------- Revenues reported in the Statements of Operations ................................. $ 236,988 $ 219,049 $ 456,881 $ 427,602 $ 475,726 Change in deferred membership fees............. (17,733) (9,909) (39,003) (17,116) 9,266 ---------- --------- --------- --------- --------- Revenues before deferral ...................... $ 219,255 $ 209,140 $ 417,878 $ 410,486 $ 484,992 ========= ========= ========= ========= =========
49 Revenues before deferral increased 5% to $219.3 million for the six months ended December 31, 2003 from $209.1 million for the six months ended December 31, 2002. The increase in revenues is primarily due to an increase in the weighted average program price point. Revenues before deferral were $417.9 million, $410.5 million and $485.0 million for the years ended June 30, 2003, 2002 and 2001, respectively. Revenues before deferral increased 2% in fiscal 2003 from the prior year. Excluding revenue from iPlace, Inc. of $11.0 million and the United Kingdom of $1.9 million from the prior year, revenues before deferral increased 5% in fiscal 2003. The United Kingdom operations were closed in fiscal 2002 and iPlace, Inc. was sold in fiscal 2002. Revenues before deferral increased in fiscal 2003 compared to the prior year primarily due to an increase in the average program price point. The following table summarizes the weighted average price points: Fiscal Year ----------------------------- 2004 2003 2002 --------- --------- -------- Weighted Average Annual Price Points: First Quarter ................................ $ 105 $ 96 $ 80 Second Quarter ............................... $ 107 $ 104 $ 84 Third Quarter ................................ n/a $ 111 $ 95 Fourth Quarter ............................... n/a $ 112 $ 96 Weighted Average Monthly Price Points: First Quarter ................................ $10.72 $ 9.44 n/a Second Quarter ............................... $11.54 $ 9.76 $8.58 Third Quarter ................................ n/a $10.14 $9.00 Fourth Quarter ............................... n/a $10.22 $9.33 Revenues before deferral from members who are charged on a monthly payment program were $74.7 million during the six months ended December 31, 2003 and $33.8 million during the six months ended December 31, 2002. Revenues before deferral from members who are charged on a monthly payment program were $76.9 million, $41.3 million and $27.6 million, respectively, for the fiscal years ended June 30, 2003, 2002 and 2001. The following table summarizes the average monthly members billed each month: Fiscal Year ----------------------------- 2004 2003 2002 --------- --------- -------- First Quarter .................................. 955 576 292 Second Quarter ................................. 1,239 588 300 Third Quarter .................................. NA 664 395 Fourth Quarter ................................. NA 739 538 The following table summarizes the components of revenues before deferral: Six Months Ended December 31, Fiscal Year ----------------- -------------------------- 2003 2002 2003 2002 2001 -------- -------- -------- ------- -------- New annual ..................... 19% 35% 37% 39% 50% Renewal annual ................. 47% 49% 45% 51% 44% Monthly ........................ 34% 16% 18% 10% 6% As a percentage of total revenues before deferral, renewal revenues from annual payment programs decreased to 47% in the six months ended December 31, 2003 from 49% in the six months ended December 31, 2002 due to our strategic initiative to shift new marketing towards members on a monthly payment program. This shift to monthly payment programs has a near-term negative impact on operating cash flow due to the timing of revenues collected relative to the corresponding timing of marketing expenditures. As a percentage of total revenues before deferral, renewal revenues from annual payment programs were 45% in fiscal 2003, 51% in fiscal 2002 and 44% in fiscal 2001. The decrease in renewal revenues from annual payment programs in fiscal 2003 is due to the controlled marketing slowdown implemented in the beginning of fiscal 2002, the growth in monthly payment programs and the sale of iPlace, Inc. 50 Active members were approximately 6.3 million at December 31, 2003 and December 31, 2002. Active members at June 30, 2003, June 30, 2002 and June 30, 2001 were 6.3 million, 6.6 million and 7.9 million, respectively. Marketing costs before deferral are calculated as follows (in thousands):
Six Months Ended December 31, Fiscal Year ------------------------ -------------------------------------- 2003 2002 2003 2002 2001 ---------- ---------- ----------- ------------ ---------- Marketing expenses reported in the Statements of Operations ........................... $ 133,401 $ 135,448 $ 280,673 $ 248,974 $ 305,032 Change in membership solicitation and other deferred costs .......................... (15,368) (20,775) (51,411) (15,038) (17,177) --------- --------- --------- --------- --------- Marketing costs before deferral ............ $ 118,033 $ 114,673 $ 229,262 $ 233,936 $ 287,855 ========= ========= ========= ========= =========
Marketing costs before deferral increased 3% to $118.0 million for the six months ended December 31, 2003 from $114.7 million for the six months ended December 31, 2002. As a percent of revenues before deferral, marketing expenses before deferral were 53.8% for the six months ended December 31, 2003 and 54.8% for the six months ended December 31, 2002. The decrease is primarily due to the increase in the mix of marketing in our more profitable MemberLinkssm and online channels. Marketing costs before deferral were $229.3 million, $233.9 million and $287.9 million in 2003, 2002 and 2001, respectively. Marketing costs before deferral decreased 2.0% in fiscal 2003 from the prior year. As a percent of revenues before deferral, marketing expenses before deferral were 54.9% in 2003, 57.0% in 2002 and 59.4% in 2001. These decreases were primarily due to a shift in the marketing mix to more profitable marketing channels and have a direct positive impact on our net cash flow provided by operating activities. See "Risk Factors -- MemberWorks' efforts to increase the share of monthly payment programs in its program mix may adversely affect its cash flow." Net cash used in investing activities was $2.5 million during the six months ended December 31, 2003 versus net cash provided by investing activities of $15.6 million during the six months ended December 31, 2002. Net cash provided by investing activities during the six months ended December 31, 2002 included $19.1 million proceeds related to the settlement of a lawsuit and $0.8 million of funds paid in connection with a purchase price adjustment related to the sale of iPlace, Inc. Capital expenditures were $2.5 million during the six months ended December 31, 2003 and $2.8 million during the six months ended December 31, 2002. Net cash provided by investing activities was $12.4 million in 2003 and $40.2 million in 2002, while net cash used in investing activities was $18.2 million in 2001. Fiscal 2003 included $19.1 million of proceeds related to the settlement of a lawsuit and $0.8 million of funds paid in connection with a purchase price adjustment related to the sale of iPlace, Inc. In fiscal 2003, we made a $0.5 million investment in a small business outsource marketing company. Net cash provided by investing activities in 2002 reflects the receipt of $46.0 million in net proceeds from the sale of iPlace, Inc. In fiscal 2001, we paid $8.2 million in cash to acquire the remaining 81% of Discount Development Services, LLC. In addition, during fiscal 2001, we received $4.1 million in proceeds from the sale of our investment in 24/7 Media Inc. Capital expenditures were $5.5 million, $5.8 million and $15.1 million in 2003, 2002 and 2001, respectively. Net cash provided by financing activities was $29.8 million for the six months ended December 31, 2003 versus net cash used in financing activities of $14.0 million for the six months ended December 31, 2002. The increase in cash provided by financing activities was primarily due to the issuance of $90.0 million aggregate principal amount 5.50% convertible senior subordinated notes due September 2010. In addition, we received $22.6 million from the exercise of stock options during the six months ended December 31, 2003. These increases in financing activities during the six months ended December 31, 2003 were offset by increased spending under our stock repurchase program. We purchased 2.5 million shares for $79.1 million, an average price of $31.91, during the six months ended December 31, 2003 compared to 0.9 million shares for $15.0 million, an average price of $17.13, during the six months ended December 31, 2002. Net cash used in financing activities was $34.2 million, $33.5 million and $2.1 million in 2003, 2002 and 2001, respectively. The increase in cash used in financing activities was primarily due to an increase in spending under our stock repurchase program. We purchased 2.0 million shares for $37.2 million, an average price of $18.67, during the year ended June 30, 2003 compared to 2.2 million shares for $34.3 million, an average price of $15.40, during the year ended June 30, 2002 and compared to 0.3 million shares for $8.9 million, an average price of $26.30, during the year ended June 30, 2001. We utilize cash from operations and stock option exercises to repurchase shares, as we believe this enhances shareholder value. During the six months ended December 31, 2003, the Board of Directors authorized 2.0 million additional shares to be repurchased under the buyback program. As of December 31, 2003, we had 500,000 shares available for 51 repurchase under our buyback program. In January 2004, the Board of Directors authorized an additional 1.0 million shares to be repurchased under the buyback program. We have purchased approximately 184,000 shares of our common stock for $5.9 million at an average price of $31.90, since December 31, 2003. On April 1, 2004, we completed the acquisition of all of the assets and outstanding capital stock of Lavalife for approximately Cdn$152.5 million ($116.4 million) in cash. Lavalife's senior management purchased approximately Cdn$11.9 million ($9.1 million) in MemberWorks restricted common stock at closing. We financed the purchase price with cash on hand and borrowings under our $45.0 million senior secured credit facility. Lavalife now operates as our wholly owned restricted subsidiary. As of December 31, 2003, we had cash and cash equivalents of $120.0 million. In addition, on March 25, 2004, we entered into a $45.0 million amended and restated senior secured credit facility. As of April 29, 2004, we had $25.6 million of borrowing capacity remaining under the senior secured credit facility due to a $5.5 million letter of credit outstanding thereunder and other restrictions under the senior secured credit facility. As of April 29, 2004, the effective interest rate for borrowings was 4.00%. See "Description of Other Indebtedness" for additional information on the senior secured credit facility. The senior secured credit facility has certain financial covenants, including a maximum debt coverage ratio, minimum EBITDA requirement, restrictions on additional borrowings and potential restrictions on additional stock repurchases. We believe that existing cash balances, together with the availability under our senior secured credit facility, will be sufficient to meet our funding requirements for at least the next twelve months. We did not have any material commitments for capital expenditures as of December 31, 2003. We intend to utilize cash generated from operations to fulfill any capital expenditure requirements for the remainder of fiscal 2004. Commitments We are not aware of factors that are reasonably likely to adversely affect liquidity trends, other than the risk factors presented in this prospectus under "Forward Looking Statements" and "Risk Factors." We do not have off-balance sheet arrangements, non-exchange traded contracts or material related party transactions. Future minimum payments of contractual obligations as of December 31, 2003 are as follows (amounts in thousands):
Payments Due by Period ---------------------------------------------------------------- Less than 1 After 5 Total year 1-3years 4-5years years ---------- ------------ ---------- --------- ---------- Operating leases ........................... $ 24,314 $ 6,630 $ 9,363 $ 4,838 $ 3,483 Convertible notes payable .................. 90,000 -- -- -- 90,000 Purchase obligations........................ 1,407 1,407 -- -- -- Other long-term obligations................. 28 28 -- -- -- --------- --------- --------- --------- --------- Total payments due.......................... $ 115,749 $ 8,065 $ 9,363 $ 4,838 $ 93,483 ========= ========= ========= ========= =========
We operate in leased facilities. We expect that leases currently in effect will be renewed or replaced by other leases of a similar nature and term. See Notes 10 and 11 of MemberWorks' consolidated financial statements on page F-16. Lavalife operates in leased facilities. (See Note 14 to the Lavalife's consolidated financial statements incorporated by reference into this prospectus). As of December 31, 2003, Lavalife had certain purchase commitments. (See Note 3 to the Lavalife's unaudited consolidated financial statements incorporated by reference into this prospectus). New Accounting Pronouncements In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 clarifies the application of Accounting Research Bulletin No. 51 and applies immediately to any variable interest entities created after January 31, 2003 and to variable interest entities in which an interest is obtained after that date. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. While we will continue 52 to evaluate the requirements of FIN 46, we do not believe that the adoption of FIN 46 will have a material impact on our financial statements. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150"). This statement requires that certain financial instruments that were accounted for as equity under previous guidance be classified as liabilities in statements of financial position. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. We do not believe that the adoption of SFAS 150 will have a material impact on our financial statements. In December 2003, the SEC issued Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition," which supercedes SAB 101. The primary purpose of SAB 104 is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, which was superseded as a result of the issuance of EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables." SAB 104 did not have a significant impact on our financial statements. Lavalife Overview Lavalife is a leading independent provider of web-based and IVR based personals services. Lavalife offers its services to its approximately 700,000 active web-based and IVR-based users and had approximately 8.2 million unique web visitors during January 2004. These interactive services allow users who want to enhance their social lives to search for a date, meet new people and communicate with other users. Lavalife serves customers in the United States, Canada and other regions, principally Australia, which accounted for approximately 69%, 25% and 6%, respectively, of its net sales for the fiscal year ended September 30, 2003. To acquire new users and retain existing users, Lavalife relies on its innovative products, marketing relationships with major media groups, advertising campaigns in large markets, widely recognized brand and advanced technology infrastructure. Lavalife employs a transactional business model, in which users buy non-refundable credits up front and spend those credits when they want to interact with other users. The customer determines when to use the credits to communicate with other users. Lavalife derives its revenues from the sale of these credits to its users. Revenue is recognized on the basis of credits consumed. Deferred revenue represents credits purchased by customers remaining unused at the end of the period and estimated to be used in the future. Lavalife is a Canadian company and is exposed to currency exchange rate fluctuations because a significant portion of its revenues and expenses are denominated in currencies other than the Canadian dollar. For the year ended September 30, 2003, 81% of the revenue generated was denominated in U.S. dollars, 14% was denominated in Canadian dollars and 5% in Australian dollars. For the year ended September 30, 2003, 48% of the costs were denominated in Canadian dollars, 47% in U.S. dollars and 5% in Australian dollars. Three Month Period Ended December 31, 2003 and December 31, 2002 Sales. Sales decreased Cdn$4.1 million, or 15%, to Cdn$23.1 million during the three months ended December 31, 2003 from Cdn$27.2 million during the three months ended December 31, 2002. The decrease was driven by the decrease in sales of Cdn$3.5 million, or 13%, due to a decline in value of U.S. dollars relative to Canadian dollars, which had a negative impact on the sales generated in U.S. dollars. The average foreign exchange rate for U.S. dollars, expressed in Canadian dollars, for the three months ended December 31, 2003 decreased 16% over the prior year period. Excluding the negative impact of the foreign exchange rate movement, sales decreased by Cdn$0.6 million, or 2%, due to continued growth in its web based business, which was offset by a decline in the IVR business experienced during the upgrade of its dating systems technology. Operating income. Operating income decreased Cdn$l.8 million, or 41%, to Cdn$2.6 million during the three months ended December 31, 2003 from Cdn$4.4 million during the three months ended December 31, 2002. The decrease was primarily driven by the negative impact of the foreign exchange rate movement described above, which reduced operating income by Cdn$1.7 million. Excluding the negative impact of the foreign exchange rate movement, operating income decreased by Cdn$0.2 million. 53 Fiscal Year Ended September 30, 2003 Compared to Fiscal Year Ended September 30, 2002 Sales. Sales decreased Cdn$5.6 million, or 5% to Cdn$102.6 million in fiscal 2003 from Cdn$l08.2 million in fiscal 2002. The decrease was driven by a decrease in sales of Cdn$5.8 million, or 5%, due to a decline in value of U.S. dollars relative to Canadian dollars, which had a negative impact on the sales generated in U.S. dollars. The average foreign exchange rate for U.S. dollars expressed in Canadian dollars, for the 2003 fiscal year decreased 7% over the prior year. Excluding the negative impact of the foreign exchange movement, Lavalife's sales would have increased by $0.2 million due to continued growth in its web-based business, which was offset by a decline in the IVR business experienced during the upgrade of its dating systems technology. Operating income. Operating income decreased Cdn$2.8 million, or 14%, to Cdn$l7.1 million in fiscal 2003 from Cdn$19.9 million in fiscal 2002. The decrease was primarily driven by the negative impact of foreign exchange rate movement on sales discussed above, which reduced operating income by Cdn$3.1 million. Excluding the negative impact of the foreign exchange rate movement, operating income increased by Cdn$0.3 million or 0.3% of sales, which was primarily due to the recovery of disputed telecommunications charges, partially offset by the increase in advertising expenses to promote Lavalife's web-based services. Liquidity and Capital Resources Cash flows from operating activities increased to Cdn$4.4 million during the three months ended December 31, 2003 from Cdn$l.7 million during the three months ended December 31, 2002 primarily due to an increase in changes in working capital. Cash flows from operating activities increased to Cdn$16.3 million in fiscal 2003 from Cdn$14.6 million in fiscal 2002 primarily due to an increase in changes in working capital. Cash used in investing activities decreased to Cdn$0.2 million during the three months ended December 31, 2003 from Cdn$0.9 million during the three months ended December 31, 2002 primarily driven by a decrease in capital expenditures. Capital expenditures during the three months ended December 31, 2003 decreased to Cdn$0.2 million from Cdn$0.8 million during the three months ended December 31, 2002. Cash used in investing activities decreased to Cdn$2.8 million in fiscal 2003 from Cdn$5.9 million in fiscal 2002 primarily driven by a decrease in capital expenditures. Capital expenditures in fiscal 2003 decreased to Cdn$2.9 million from Cdn$5.7 million fiscal 2002 primarily due to the completion of the upgrade of the dating systems technology in the year ended September 30, 2003. Cash used in financing activities was Cdn$21.0 thousand during the three months ended December 31, 2003 versus cash provided by financing activities of Cdn$9.6 million during the three months ended December 31, 2002. Financing activities during the three months ended December 31, 2002 included the net cash received from the issuance of capital of Cdn$9.7 million. Cash used in financing activities decreased to Cdn$8.5 million in fiscal 2003 from Cdn$9.7 million in fiscal 2002. Financing activities during fiscal 2003 included a return of capital of Cdn$17.0 million and a premium paid on the cancellation of common stock and stock options of Cdn$l.0 million offset by net cash received from the issuance of capital of Cdn$9.8 million. Financing activities during fiscal 2002 included the repayment of subordinated debt of Cdn$9.7 million. 54 BUSINESS MemberWorks Overview We are a leading provider of innovative membership programs to consumers. Our members benefit by receiving significant discounts and insightful information on everyday items in areas which include healthcare, personal finance, insurance, travel, entertainment, fashion and personal security. As of December 31, 2003, we had approximately 6.3 million members and had over 6 million members as of the end of each of the last four fiscal years. Our clients (who offer the membership programs to their customers), including Citibank N.A. and West Corporation, benefit by receiving royalty payments in exchange for providing us with new members or access to potential members. Our participating vendors (who offer products and/or services through our membership programs), have an incentive to provide discounts to our members in order to reach a large number of demographically attractive consumers while incurring minimal incremental marketing costs. For the twelve months ended December 31, 2003, after giving pro forma effect to the acquisition of Lavalife, our revenues would have been $545.4 million. Membership Programs We design our membership programs to address the particular needs and preferences of our members by combining various features and benefits to customize our programs. Our membership programs are for either annual or monthly renewable terms. Traditionally, we marketed membership programs which had an up-front annual membership fee. However, in fiscal 2003, we expanded our marketing of membership programs for which membership fees are payable in monthly installments, which generally have higher margins. During the six months ended December 31, 2003, more than 60% of our new member enrollments were in monthly payment programs, and we expect the proportion of our monthly payment programs to increase going forward. In general, membership fees vary depending upon the particular services offered by the membership program. In the first half of fiscal 2004, annual membership fees averaged approximately $106 per year and monthly membership fees averaged $11.18 per month, compared to $100 and $9.60, respectively, for the same period in fiscal 2003. We continue to enhance our existing membership programs to add more member value by continuously monitoring and addressing the needs and preferences of our members, which, in turn, has enabled us to increase the average membership fees year over year. We generally design membership programs to provide our members with potential savings of at least twenty times their membership fees. Our money-saving programs fall into the following four key categories: o Health and Insurance -- The health and fitness membership programs offer significant savings on a comprehensive array of products, including prescription drugs, vitamins and supplements, eye glasses and contact lenses, hearing aides, durable medical equipment and select consumer health products. Also offered are discounts on professional services, including medical, dental, chiropractic, alternative medicine, elder care and personal health services. Our insurance programs offer competitively priced insurance products, including life, accidental death, short-term and catastrophic disability and supplemental medical, warranty and identity theft insurance coverage. o Travel, Entertainment and Shopping -- These membership programs offer exclusive, members-only savings with leading brand name partners. Members have multiple opportunities to save on airfare, hotel rates, car rental and cruise packages, theme and amusement parks, restaurants and movie theaters. Members also have access to savings on a wide range of merchandise, apparel and personal services. o Privacy, Protection and Home Improvement -- Members have access to bundles of services that enable them to better manage their privacy and protection through identity theft insurance, card registration, credit reporting, scoring and monitoring, and personal information monitoring services, and savings on security systems, 24-hour protection services, roadside assistance, financial, tax and retirement planning and extended warranty protection. Members also have access to discounts on home improvement, consumer electronics and family entertainment. o Specialty Markets and Custom Programs -- We partner with well known clients to offer custom, private label or co-branded membership programs to meet the specific needs of our client's defined 55 customer base. In addition, we also offer membership materials and customer service in Spanish and French. If the membership is not cancelled during the trial period, the consumer is charged the annual or monthly membership fee, depending upon the applicable billing method. For annual members, in the event that the member does not cancel the membership after the initial one-year membership term, he or she generally receives a renewal notice in the mail in advance of each membership year and is charged for the succeeding year's membership fee. During the course of an initial annual membership term or renewal term, a member may cancel his or her membership in the program, generally for a pro rata refund of the membership fee based on the remaining portion of the membership period. Monthly members are billed each month after the trial period ends and continue to be billed each month until the member cancels. Clients Our programs are primarily marketed to customers through arrangements with our clients, which include banks and other financial institutions, e-commerce companies, direct response television companies, catalog companies, retailers, major oil companies and other organizations with large numbers of individual customers. In some cases, these businesses lack the core competency to successfully design, market and manage membership programs. As a result, these businesses seek to outsource the implementation of membership programs to providers that are able to apply advanced database systems to capture, process and store market information, are able to use their experience to provide effective membership programs and are able to realize economies of scale. In addition, businesses demand that the program providers have the expertise to continue to introduce innovative new programs and have resources, such as an extensive vendor network and experienced management team, to launch membership programs quickly and successfully. Membership programs sponsored by our two largest clients, West Corporation and Citibank N.A. (and its affiliates), accounted for 16% and 21% of our revenue, respectively, for the fiscal year ended June 30, 2003 and 18% and 13% of revenue, respectively, for the six months ended December 31, 2003. Vendors In most cases, the products and services accessed through our programs are offered and provided directly to members by independent benefit providers, or vendors. We evaluate and engage only those vendors who we believe can cost-effectively deliver high quality products and services. Vendors generally benefit by gaining access to a large number of demographically attractive consumers with minimal incremental marketing costs. Vendors provide a members-only discount on their products or services pursuant to contractual arrangements with us. We generally do not receive payments from our vendors for offering their products or services to our members and, in certain cases, we pay our vendors a fee based on the number of members in our program or based on other agreed upon factors. Our contracts with vendors are generally for one year or more, with subsequent one-year renewal terms at our option. In most cases, vendors may cancel contracts only for cause and subject to notice provisions to provide us time to locate a substitute vendor. Most vendor contracts are non-exclusive but require vendors to maintain the confidentiality of the terms of the contract. Marketing and Distribution We solicit members for our programs primarily by direct marketing methods, including inbound call marketing through MemberLinkSM, online marketing, outbound telemarketing, which we outsource to third party contractors, and direct mail, which is mailed either at our expense or our client's expense. We have effectively diversified our distribution channels since our initial public offering in 1996, at which time our primary method of solicitation was outbound telemarketing. For the six months ended December 31, 2003, outbound telemarketing was the source for only approximately 10% of our new member enrollments. MemberLinkSM inbound call marketing occurs when inbound callers to a client meeting certain criteria are offered our membership service programs by the client's service representative or by one of our membership service representatives through a call transfer. This type of marketing method essentially turns the client call center into a profit center. We pay the client either a royalty for initial and renewal membership fees or a fee per marketing pitch 56 or per sale. Generally, MemberLinksm arrangements serve as a more efficient and cost effective way to acquire members than our traditional outbound telemarketing marketing model. Online marketing is executed through arrangements with Internet service providers ("ISPs"), online retailers and online marketers. The marketing methods include banner ads, pop-up boxes and e-commerce cross-sells. We pay the client either a royalty for membership fees or a fee per impression or per sale. All outbound telemarketing is outsourced to third party contractors. Under outbound telemarketing arrangements, participating marketing partners, such as banks and other financial institutions and other organizations with large numbers of individual account holders and customers, provide lists of consumers which we input into our database management system to model, analyze and identify likely members. We only collect and maintain customer data that is required to administer our business activities, such as a customer's name, address and encrypted billing information. We pay participating marketing partners an annual royalty for initial and renewal membership fees received from consumers who were provided to us by the marketing partner. Substantially all of the information necessary for our marketing efforts is supplied by our clients in accordance with strict consumer privacy safeguards. As a result, our ability to market new programs to our existing customer base or an existing program to a new customer base is generally dependent upon first obtaining client approval. Our contracts with our clients typically grant us the right to continue providing membership services directly to the clients' individual account holders even if the client terminates the contract. Many client relationships are pursuant to contracts that may be terminated by the client upon 30 to 90 days' notice without cause and without penalty. Upon termination, we generally have the right to continue the relationship with the client's customers who have become program members, either indefinitely or for a specified period of time, but we may not re-solicit those members upon their cancellation or non-renewal of their membership. In addition to marketing our programs directly to consumers through MemberLinksm marketing, online marketing, outbound telemarketing and direct mail marketing, we also deliver our membership service programs through our wholesale arrangements. We work with a wholesale client to incorporate elements from one or more of our standard service programs and design a custom program for the client. The client will then either provide the customized membership program to its customers as a value-added feature or resell the customized membership program. In some cases, the client may provide wholesale memberships to its customers free of charge and pay us the periodic membership fee for each customer's membership. In other cases, the client may charge a reduced fee to its customer. The client pays us membership fees for the customers who receive the customized membership program. Under our wholesale programs, we do not pay for the marketing costs to solicit memberships. Instead, the client offering the memberships is responsible for marketing, usually with our assistance. Since we do not pay for the marketing costs, wholesale programs have substantially lower acquisition costs, which result in higher profit margins for us. We also provide membership programs internationally through our subsidiary MemberWorks Canada. MemberWorks Canada provides retail membership programs similar to those offered in the U.S. as well as credit card enhancement services to Canadian financial institutions through wholesale arrangements. Our revenues from international operations represented 4%, 3%, 3% and 2% of total revenues for the six months ended December 31, 2003, and fiscal years ended June 30, 2003, 2002 and 2001, respectively. Membership Service We believe that providing high quality service to our members is extremely important in order to retain members and to strengthen the affinity of the clients' members that were offered the membership program. Currently, we maintain four call centers located in Montreal, Canada; Houston, Texas; Omaha, Nebraska and Chicago, Illinois with a total of almost 800 membership service representatives. All new membership service representatives are required to attend on-the-job training. Through our training programs, systems and software, we seek to provide members with friendly, rapid and effective answers to questions. Members can access their benefits 24 hours a day via the program's web site or automated telephone response technology. We also work closely with our clients' customer service staff to ensure that their representatives are knowledgeable in matters relating to membership service programs we offer. 57 Technology We have invested substantially in new technology, including a state-of-the-art fulfillment center, a sophisticated customer service customer relationship management, or CRM, platform, data warehousing and mining capabilities, and various Internet applications, all of which work together to allow us to effectively and efficiently service our members. We receive new member information from our marketing partners daily, and that information is maintained on core infrastructure systems that drive information constantly to call center, fulfillment, billing and financial systems. This allows for rapid fulfillment of member information kits as well as other benefits. All membership information is maintained on a state-of-the-art CRM system, which allows extremely responsive targeted call center interactions. We receive confirmation of billing data from our merchant processors on a regular basis, permitting us to update the status of each member, including member profile information. In providing quality service to our members, our management information systems interact with our advanced call routing system in order to display member profile information prior to answering the call, allowing our membership service representatives to have the best possible information prior to serving the members. Our telecommunications systems also monitor the performance quality of our membership service representatives and other aspects of our business through sophisticated reporting capabilities. In addition, our marketing experts use proprietary systems in combination with advanced systems from outside vendors to review, analyze and model the demographics of lists of prospective members supplied by clients in order to determine which customers are most likely to respond to an offer and retain their membership. Government Regulation and Litigation We market membership programs through various distribution channels including MemberLinksm, online marketing, outbound telemarketing and direct mail. These channels are regulated on both the state and federal levels and we believe that these marketing methods will increasingly be subject to regulation, particularly in the area of consumer privacy. Regulation may limit our ability to solicit new members or to offer one or more products or services to existing members. The telemarketing industry has become subject to an increasing amount of federal and state regulation as well as general public scrutiny in the past several years. For example, the Federal Telephone Consumer Protection Act of 1991 limits the hours during which telemarketers may call consumers and prohibits the use of automated telephone dialing equipment to call certain telephone numbers. Additionally, the Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 and Federal Trade Commission ("FTC") regulations, including the Telemarketing Sales Rule, as amended, promulgated thereunder prohibit deceptive, unfair or abusive practices in telemarketing sales. Both the FTC and state attorneys general have authority to prevent telemarketing activities deemed by them to be "unfair or deceptive acts or practices." Further, some states have enacted laws and others are considering enacting laws targeted directly at regulating telemarketing practices, and there can be no assurance that any such laws, if enacted, will not adversely affect or limit our current or future operations. Compliance with these regulations is generally our responsibility, and we could be subject to a variety of enforcement and/or private actions for any failure to comply with such regulations. Our provision of membership programs requires us to comply with certain state regulations, changes in which could materially increase our operating costs associated with complying with such regulations. The risk of noncompliance with any rules and regulations enforced by a federal or state consumer protection authority may subject us or our management to fines or various forms of civil or criminal prosecution, any of which could have a material adverse affect on our business, financial condition and results of operations. Also, the media often publicizes perceived noncompliance with consumer protection regulations and violations of notions of fair dealing with consumers, and the membership programs industry is susceptible to peremptory charges of regulatory noncompliance and unfair dealing by the media. We currently maintain rigorous security and quality controls to ensure that all of our marketing practices meet or exceed industry standards and all applicable state and federal laws and regulations. We only collect and maintain customer data that is required to administer our business activities, such as a customer's name, address and encrypted billing information and only public information is used for marketing and modeling purposes, such as demographic, neighborhood and lifestyle data. We neither resell any confidential customer information we obtain or derive in marketing efforts nor purchase consumer information from financial institutions. Except as set forth below, in management's opinion, there are no significant legal proceedings to which we or any of our subsidiaries are a party or to which any of our properties are subject. We are involved in other lawsuits and claims generally incidental to our business, including, but not limited to, various suits, including previously disclosed suits, brought against us by individual consumers seeking monetary and/or injunctive relief 58 relating to the marketing of our programs. In addition, from time to time, and in the regular course of its business, we receive inquiries from various federal and/or state regulatory authorities. In March 2001, an action was instituted by plaintiff Teresa McClain against Coverdell & Company, a wholly owned subsidiary of ours, Monumental Life Insurance Company and other defendants in the United States District Court for the Eastern District of Michigan, Southern Division. The suit, which seeks unspecified monetary damages, alleges that Coverdell and the other defendants violated the Michigan Consumer Protection Act and other applicable Michigan laws in connection with the marketing of Monumental Life Insurance Company insurance products. The complaint includes a claim that the suit should be certified as a class action and the plaintiff has filed a motion for class certification to which all of the defendants have filed opposing papers regarding the same. The Court certified a class of Michigan residents. The Court of Appeals denied the defendants' petition for leave to appeal the certification order. No discovery scheduling order has been set. We believe that the claims made against Coverdell are unfounded, and we and Coverdell will vigorously defend our interests against this suit. On January 24, 2003, we filed a motion with the Superior Court for the Judicial District of Hartford, Connecticut to vacate and oppose the confirmation of an arbitration award issued in December 2002. The arbitration, filed against us by MedValUSA Health Programs, Inc. in September 2000, involved claims of breach of contract, breach of the duty of good faith and fair dealing, and violation of the Connecticut Unfair Trade Practices Act ("CUTPA"). Even though the arbitrators found that we were not liable to MedVal for any compensatory damages, they awarded $5,495,000 in punitive damages and costs against us solely under CUTPA. We believe that this arbitration award is unjustified and not based on any existing legal precedent. Specifically, we are challenging the award on a number of grounds, including that it violates a well defined public policy against excessive punitive damage awards, raises constitutional issues and disregards certain legal requirements for a valid award under CUTPA. The hearing on our motion was held on February 10, 2003. On June 22, 2003, the Superior Court denied our motion to vacate the award, and we filed an appeal of that decision. While we intend to take action to prevent the enforcement of the award by, among other things, vigorously pursuing an appeal, there can be no assurance that we will be successful in our efforts. We have made no provision in our financial statements for this contingency because we believe that a loss is not probable. If we were ultimately unsuccessful in this or other available appeals, and a final non-appealable court order confirming the arbitration award is rendered, the payment of the award could have a material adverse effect on our results of operations in the period in which the final order is entered. On October 21, 2003, the Florida Attorney General's Office filed a civil complaint against us based upon concerns that some of our past marketing practices may have violated various consumer laws. We believe that any legitimate concerns have previously been fully addressed, including the implementation of industry-leading Best Marketing Practices and voluntary agreements incorporating those practices, such as the nationwide assurance agreement that we entered into with the State of Nebraska in 2001. We believe that the allegations of the complaint are unfounded and we intend to vigorously defend our interests in this matter. We further believe that the potential liability represented by the lawsuit and the final resolution of this matter will not be material to us. Competition We believe the principal competitive factors in the membership services industry include the ability to identify, develop and offer innovative membership programs, the quality and breadth of membership programs offered, competitive prices and in-house marketing expertise. Our competitors offer membership programs which provide services similar to, or which directly compete with, those we provide. Some of these competitors have substantially larger customer bases and greater financial and other resources than we have. To date, we have effectively competed with such competitors. However, there can be no assurance that our competitors will not increase their emphasis on programs similar to those we offer to more directly compete with us; provide programs comparable or superior to those we provide at lower membership prices; adapt more quickly than we do to evolving industry trends or changing market requirements; or that new competitors will not enter the market or that other businesses will not themselves introduce competing programs. This increased competition may result in price reductions, reduced marketing margins or loss of market share, any of which could materially adversely affect our business, financial condition and results of operations. Additionally, because contracts between clients and program providers are often exclusive with respect to a particular service, potential clients may be prohibited from contracting with us to promote a program if the services we provide are similar to, or merely overlap with, the services provided by an existing program of a competitor. 59 Employees As of December 31, 2003, we employed 1,164 persons on a full-time basis and 133 on a part-time basis. None of our employees is represented by a labor union. We believe that our employee relations are good. Lavalife Overview Through our subsidiary Lavalife, we are a leading global provider of web-based and interactive voice response ("IVR") based personals services. Founded in 1987, Lavalife markets its web and telephone products in approximately 60 markets principally across the United States, Canada and Australia. Lavalife's open-minded approach to dating allows members to choose how they want to "click" with other singles by offering three unique categories: dating, relationships and intimate encounters. Lavalife has had over 8 million unique users since its inception. During 2003, Lavalife's users on average exchanged 1.3 million messages every day. Lavalife offers both web-based and IVR-based personals services to its users. These services allow them to interact with each other from anywhere in real time by phone, email, text chat or video. To acquire new users and retain existing users, Lavalife relies on its innovative products, marketing relationships with major media groups, advertising campaigns in large markets, widely recognized brand and advanced technology infrastructure. These interactive services allow users who want to enhance their social lives to search for a date, meet new people and communicate with other users in a real time, "Anywhere," "Anytime" and "Anyhow" environment. Lavalife's global revenues are estimated to rank 2nd in 2003 for interactive personals services. Lavalife.com, the company's interactive web site, had 8.2 million unique visitors in January 2004, ranking 5th globally and 1st in Canada, according to comScore Media Metrix. Lavalife currently has over 700,000 active web-based and IVR-based users. Lavalife serves customers in the United States, Canada and other regions, principally Australia, which accounted for approximately 69%, 25% and 6%, respectively, of its net sales for the fiscal year ended September 30. 2003. We believe that Lavalife has developed a unique personals services brand that focuses on outgoing singles living in major metropolitan areas. Lavalife employs a transactional business model, in which users buy non-refundable credits up front and spend those credits only when they want to interact with other users. Lavalife's competitors generally employ a subscription model, in which users pay a fixed periodic fee. We believe a transactional model is more attractive to new users, who will join due to a lower initial cost and the ability to easily control their spending. The customer determines when to use the credits to communicate with other users. Furthermore, once a user has an account balance, the user has a strong financial incentive to return to use their remaining credits. To further encourage return visits, Lavalife continues to refine its existing service offerings and introduce new interactive services, such as video. Lavalife continues to refine its product offerings and introduce innovative interactive products including video and real time online social networking. Lavalife's web personals services business started in 1996 as a free service and began charging users on a transaction basis in 1998. Currently, Lavalife is adding approximately 6,500 new users per day. We believe Lavalife is well positioned to capitalize on anticipated expansion of online personals services market generated by the growth in consumer participation driven by social, practical and economic factors. We believe Lavalife is currently the only company in the world offering both web-based and IVR-based services on a global scale. The online dating industry is characterized by two significant barriers to entry: critical mass and technology. A critical mass of users in each geographic area is required to offer value to and attract customers. In addition, highly responsive and technologically advanced applications are required to attract and retain customers. With an already strong market presence in the major North American metropolitan areas and advanced technology, we believe Lavalife is well positioned to benefit from these market dynamics. Technology Lavalife has recently upgraded its integrated global network to support both its IVR and web operations from two network operations centers. These centers, located in Toronto, Canada and Sydney, Australia, allow Lavalife to scale both its web and IVR operations, as well as support mobile operations, with full remote 60 management capabilities of all services. Lavalife invested approximately Cdn$50 million in the current system, which was completed in April 2003. Employees As of February 29, 2004, Lavalife had 302 full-time equivalent employees in two locations, Toronto, Ontario and Sydney, Australia. None of Lavalife's employees are unionized. Lavalife has had no labor-related work stoppages and believes that its labor relations are good. 61 MANAGEMENT Directors and Executive Officers The following table provides information regarding our directors and executive officers. Name Age Position ----------------------------- --- -------------------------------------- Gary A. Johnson ............. 49 President and Chief Executive Officer, Director Vincent DiBenedetto ......... 47 Executive Vice President, Health and Insurance Services James B. Duffy .............. 50 Executive Vice President and Chief Financial Officer William Olson ............... 46 Executive Vice President, Client Development David Schachne .............. 43 Executive Vice President, Internet Business Development and Strategic Planning Alec L. Ellison ............. 41 Director Scott N. Flanders ........... 47 Director Robert Kamerschen ........... 68 Director Michael T. McClorey ......... 44 Director Edward M. Stern ............. 45 Director Marc S. Tesler .............. 58 Director Gary A. Johnson, one of our co-founders, has served as our President and Chief Executive Officer and a director since our inception in 1989. From 1987 to 1989, Mr. Johnson founded and served as President of American Target Group Marketing, a marketer of membership services for magazine publishers. Mr. Johnson received a B.S. from Tufts University and an M.B.A. from Harvard Business School. Vincent DiBenedetto joined us in October 2000 and currently serves as Executive Vice President, Health and Insurance Services. Prior to joining us, Mr. DiBenedetto was President of our subsidiary Discount Development Services, L.L.C., which we acquired in October 2000. Mr. DiBenedetto received a B.S. from Loyola University. James B. Duffy joined us in 1996 and currently serves as Executive Vice President and Chief Financial Officer. Prior to joining us, Mr. Duffy served in various senior financial executive positions, including Senior Vice President, Business Planning, at Merck Medco Managed Care, Inc., a prescription benefit company, from 1986 to November 1995. Mr. Duffy received a B.B.A. from Pace University. William Olson joined us in March 2001 and currently serves as Executive Vice President, Client Development. Prior to joining us, Mr. Olson served in various senior positions, including President and Chief Executive Officer of Dunlop/Maxfli Sports Corporation, President and Chief Executive Officer of Gold Coast Beverage Distributors and President and Chief Executive Officer of Guinness Brewing North America Corporation. Mr. Olson received a B.A. from Temple University. David Schachne joined us in 1990 and currently serves as Executive Vice President, Internet Business Development and Strategic Planning. He has held various senior management positions with us in the Marketing and Business Development departments. Mr. Schachne received a B.A. from the State University of New York, Albany and an M.B.A. from Harvard Business School. Alec L. Ellison has been a director since 1989. Mr. Ellison has been affiliated with Broadview International LLC, an investment bank, since 1988 and has served as a Managing Director since 1993 and President since 2001. Mr. Ellison holds a B.A. from Yale University and an M.B.A. from Harvard Business School, where he was a Baker Scholar. 62 Scott N. Flanders has been a director since July 2002. Mr. Flanders has been the Chairman and Chief Executive Officer of Columbia House since September 1999. Prior to joining Columbia House, Mr. Flanders co-founded and served as the Chairman of Telstreet.com, an e-commerce company, from January 1999 to September 1999. Previously, Mr. Flanders served as President of Macmillan Publishing, a unit of Viacom, from January 1993 through December 1998. Mr. Flanders also serves on the Board of Directors of Freedom Communications and the Gazelle Fund. Mr. Flanders, a certified public accountant, holds a B.A. from the University of Colorado and a J.D. from Indiana University. Robert Kamerschen is a retired Chairman and Chief Executive Officer of DIMAC Corporation, a direct marketing services company. He served as the Chairman and Chief Executive Officer from September 1999 to February 2002. DIMAC Corporation filed a voluntary petition for reorganization under the U.S. bankruptcy laws in April 2000 and successfully emerged from bankruptcy in February 2001. Prior to joining DIMAC Corporation, he was the Chairman and Chief Executive Officer of ADVO, Inc., a leading full-service direct mail marketing services company, and served in key senior leadership roles in a number of prominent sales and marketing driven businesses involving significant turnaround and/or transformation initiatives. Mr. Kamerschen currently serves on the boards of IMS Health Incorporated, Linens-N-Things, Inc., RadioShack Corporation and R.H. Donnelley Corporation. Mr. Kamerschen is a Regent for the University of Hartford and Trustee of Wadsworth Antheneum Museum. Mr. Kamerschen received a B.S. and an M.B.A. from Miami University (Ohio). Michael T. McClorey has been a director since April 2001. Mr. McClorey served as President of Health Services Marketing, an operating unit of the Catalina Marketing Corporation, and as a member of the Office of the President from February 2000 through August 2002. He also served as Chief Executive Officer of Health Resource Publishing Company, a subsidiary of Catalina Marketing Corporation, from April 1995 through August 2002, and as President from April 1995 to February 2002. Catalina Marketing Corporation is a targeted marketing firm. Mr. McClorey holds a B.B.A. in finance from the University of Cincinnati. Edward M. Stern has been a director since April 2002. Mr. Stern has been the President and Chief Executive Officer of Neptune Regional Transmission System, LLC, a company which is developing an undersea electronic transmission system that will connect New Jersey and Long Island, New York since April 2004. From April 1991 through February 2004, Mr. Stern held various executive management positions, including President and Chief Executive Officer, at CHI Energy Inc., an energy company specializing in renewable technologies and a wholly owned subsidiary of Enel S.p.A. Mr. Stern also serves on the Board of Directors of Energy Photovoltaics, Inc., a manufacturer of solar energy products and systems. Mr. Stern holds B.A., J.D. and M.B.A. degrees from Boston University. Marc S. Tesler has been a director since January 1996. From July 1995 to January 2001, he was a general partner of Technology Crossover Ventures, L.P., a private partnership specializing in information technology investments. Mr. Tesler received his B.S. from the University of Massachusetts and his M.B.A. from New York University. 63 DESCRIPTION OF OTHER INDEBTEDNESS Senior Secured Credit Facility On March 25, 2004, we entered into an amended and restated senior secured credit facility that allows borrowings of up to $45.0 million. The senior secured credit facility was provided by a syndicate of banks led by LaSalle Bank National Association. As of April 29, 2004, we had $25.6 million of borrowing capacity remaining under the senior secured credit facility due to a $5.5 million letter of credit outstanding thereunder and other restrictions reducing availability by an amount equal to twelve months' interest on the outstanding notes. The senior secured credit facility is a 364-day facility, which is renewable for two additional 364-day periods upon our request, unless written notice of non-renewal is provided by all of the lenders under the facility no less than 60 days prior to expiration. At our option, interest on all borrowings under the senior secured credit facility accrue at either LIBOR or the base commercial lending rate for the bank, plus an applicable margin. The applicable margin on the base rate will be between 0% and 0.50% based on our leverage ratio as defined in the senior secured credit agreement. On April 29, 2004, the effective interest rate was 4.0%. The senior secured credit facility will be guaranteed by all of MemberWorks' present and future domestic subsidiaries and certain material foreign subsidiaries, including Lavalife. Our borrowings under the senior secured credit facility and the guarantees will be secured by a first priority perfected security interest in: o all the capital stock of our existing and future direct or indirect domestic subsidiaries (in the case of a foreign subsidiary, such pledge shall be limited to 65% of the shares of such capital stock); and o substantially all of our tangible and intangible property and the tangible and intangible property of each of the guarantors, with certain exceptions as set forth in the senior secured credit facility. The senior secured credit facility contains customary negative covenants and financial covenants. During the term of the senior secured credit facility, the negative covenants restrict MemberWorks' and its subsidiaries' ability to do certain things, including but not limited to: incur or guarantee additional indebtedness; create, incur, assume or permit to exist liens on property, assets or revenues; liquidate or dissolve; merge or consolidate with another entity; make loans and investments; make capital expenditures or enter into operating leases; engage in acquisitions and asset dispositions; declare or pay dividends and make distributions or restrict the ability of our subsidiaries to pay dividends and make distributions; repurchase our stock; and enter into transactions with affiliates. The financial covenants impose minimum EBITDA requirements and a maximum debt coverage ratio. Upon the closing of the offering of the old notes, we became subject to a liquidity covenant under which we will not permit the sum of (1) the unused availability under the senior secured credit facility and (2) cash and cash equivalents, to be less than $30.0 million. The credit agreement also contains customary events of default, including, but not limited to, cross defaults to MemberWorks' other material debt. 5.50% Convertible Senior Subordinated Notes due 2010 On September 30, 2003, we issued $90.0 million aggregate principal amount of 5.50% convertible senior subordinated notes due September 2010. The notes bear interest at the rate of 5.50% per year, which is payable semi-annually in arrears on April 1 and October 1 of each year. The notes are convertible into our common stock at a conversion price of approximately $40.37, subject to adjustment. We may redeem the notes for cash any time on or after October 6, 2008, at 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the redemption date. Upon a change of control, holders of the notes may require us to repurchase for cash all or a portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest thereon to, but excluding, the repurchase date. 64 THE EXCHANGE OFFER Registration Rights In connection with the sale of the old notes, the purchasers of the old notes became entitled to the benefits of certain registration rights. Pursuant to the registration rights agreement executed as part of the offering of the old notes, we agreed to: o file within 120 days, and cause to become effective within 210 days, from the date of the original issue of the outstanding old notes, the registration statement of which this prospectus is a part with respect to the exchange of the old notes for the new notes to be issued in the exchange offer; and o use our reasonable best efforts to issue on or prior to 30 business days, or longer, after the date on which the exchange offer registration statement was declared effective, new notes in exchange for the old notes. If: (1) we are not required to file the exchange offer registration statement or permitted to consummate the exchange offer because the exchange offer is not permitted by applicable law or Commission policy; or (2) any holder of old notes notifies us within 20 business days following consummation of the exchange offer that: (a) it is prohibited by law or Commission policy from participating in the exchange offer; or (b) that it may not resell the new notes acquired by it in the exchange offer to the public without delivering a prospectus and the prospectus contained in the exchange offer registration statement is not appropriate or available for such resales; or (c) that it is a broker-dealer and owns notes acquired directly from the Company or an affiliate of the Company; we will file with the Commission a shelf registration statement to cover resales of the notes by the holders who satisfy certain conditions relating to the provision of information in connection with the shelf registration statement. In the event the exchange offer is consummated, we will not be required to file a shelf registration statement relating to any outstanding old notes other than those held by persons not eligible to participate in the exchange offer. The exchange offer shall be deemed to have been consummated upon the earlier to occur of: o our having exchanged new notes for all outstanding old notes (other than old notes held by persons not eligible to participate in the exchange offer) pursuant to the exchange offer and o our having exchanged, pursuant to the exchange offer, new notes for all old notes that have been tendered and not withdrawn on the expiration date. Upon consummation, holders of old notes seeking liquidity in their investment would have to rely on exemptions to registration requirements under the Securities Act. See "Risk Factors--If you do not tender your old notes to be exchanged in this exchange offer, your notes will remain subject to transfer restrictions." Liquidated Damages In the registration rights agreement, we also agreed that in the event that: (1) we fail to file any of the registration statements required by the registration rights agreement on or before the date specified for such filing; 65 (2) any of such registration statements is not declared effective by the Commission on or prior to the date specified for such effectiveness; (3) we fail to consummate the exchange offer within 30 business days after the exchange offer registration statement is declared effective by the Commission; or (4) the shelf registration statement or the exchange offer registration statement is declared effective but thereafter ceases to be effective or fails to be usable for its intended purposes during the periods specified in the registration rights agreement, then we will pay liquidated damages to each holder, with respect to the first 90-day period immediately following the occurrence of the first registration default in an amount equal to 0.50% per annum per $1,000 principal amount of notes held by such holder. The amount of the liquidated damages will increase by an additional 0.50% per annum per $1,000 principal amount of notes with respect to each subsequent 90-day period until all registration defaults have been cured, up to a maximum amount of liquidated damages for all registration defaults equal to 1.0% per annum. Terms of the Exchange Offer Upon the terms and subject to the conditions set forth in this prospectus and in the accompanying Letter of Transmittal, we will accept all old notes validly tendered prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer. We will issue $1,000 principal amount of new notes in exchange for each $1,000 principal amount of outstanding old notes accepted in the exchange offer. Holders may tender some or all of their old notes pursuant to the exchange offer in denominations of $1,000 and integral multiples thereof. As of the date of this prospectus, $150 million aggregate principal amount of old notes are outstanding. In connection with the issuance of the old notes, we arranged for the old notes initially purchased by Qualified Institutional Buyers to be issued and transferable in book-entry form through the facilities of DTC, acting as depositary. The new notes will also be issuable and transferable in book-entry form through DTC. This prospectus, together with the accompanying Letter of Transmittal, is being sent to all registered holders as of , 2004, which is the record date for purposes of the exchange offer. We shall be deemed to have accepted validly tendered old notes when, as and if we have given oral or written notice thereof to the exchange agent. See "--Exchange Agent." The exchange agent will act as agent for the tendering holders of old notes for the purpose of receiving new notes from us and delivering new notes to such holders. If any tendered old notes are not accepted for any exchange because of an invalid tender or the occurrence of certain other events set forth herein, certificates for any such unaccepted old notes will be returned, without expenses, to the tendering holder thereof promptly after the expiration date. Holders of old notes who tender in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of old notes pursuant to the exchange offer. We will pay all charges and expenses, other than certain applicable taxes in connection with the exchange offer. See "--Fees and Expenses." Expiration Dates, Extensions, and Amendments The term "expiration date" shall mean , 2004 unless we, in our sole discretion, extend the exchange offer, in which case the term "expiration date" shall mean the latest date to which the exchange offer is extended. In order to extend the expiration date, we will notify the exchange agent of any extension by oral or written notice and will mail to the record holders of old notes an announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Such announcement may state that we are extending the exchange offer for a specified period of time. 66 We reserve the right: o to delay acceptance of any old notes in the event that the exchange offer is extended, to extend the exchange offer or to terminate the exchange offer and to refuse to accept any old notes, if any of the conditions set forth herein under "--Termination" shall have occurred and shall not have been waived by us (if permitted to be waived by us) prior to the expiration date, by giving oral or written notice of such delay, extension or termination to the exchange agent; and o to amend the terms of the exchange offer in any manner deemed by us to be advantageous to the holders of the old notes. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof. If the exchange offer is amended in a manner determined by us to constitute a material change, we will promptly disclose such amendment in a manner reasonably calculated to inform the holders of the old notes of such amendment. Without limiting the manner by which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we shall have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to the Dow Jones News Service. Interest on the New Notes The new notes will bear interest from April 13, 2004 payable semiannually on April 1 and October 1 of each year commencing on October 1, 2004 at the rate of 9 1/4% per annum. Holders of old notes whose old notes are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on the old notes accrued from April 13, 2004 until the date of the issuance of the new notes. Consequently, holders who exchange their old notes for new notes will receive the same interest payment on October 1, 2004 (the first interest payment date with respect to the old notes and the new notes) that they would have received had they not accepted the exchange offer. Resale of the New Notes Based on no-action letters issued by the staff of the Commission to third parties, we believe that the new notes issued pursuant to the exchange offer in exchange for old notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than a broker-dealer who purchased the notes directly from us to resell pursuant to an exemption under the Securities Act or a person that is an "affiliate" of ours within the meaning of Rule 405 under the Securities Act) without a compliance with the registration and prospectus delivery requirements of the Securities Act, provided that: o the new notes were acquired in the ordinary course of business; and o the holder is not participating, and has no arrangements or understanding with any person to participate, in the distribution of the new notes. Holders of old notes wishing to accept the exchange offer must represent to us that these conditions have been met. Each broker-dealer that receives new notes in exchange for old notes held for its own account, as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by such broker-dealer in connection with resales of new notes received in exchange for old notes. We have agreed that, for a period of one year after the expiration date, we will make this prospectus and any amendment or supplement to this prospectus available to any such broker-dealer for use in connection with any such resale. See "Plan of Distribution." 67 Procedure for Tendering To tender in the exchange offer, a holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signature thereon guaranteed if required by the Letter of Transmittal and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with the old notes (unless such tender is being effected pursuant to the procedure for book-entry transfer described below) and any other required documents, to the exchange agent prior to 5:00 p.m., New York City time, on the expiration date. Any financial institution that is a participant in DTC's Book-Entry Transfer Facility system may make book-entry delivery of the old notes by causing DTC to transfer such old notes into the exchange agent's account in accordance with DTC's procedure for such transfer. Although delivery of old notes may be effected through book-entry transfer into the exchange agent's account at DTC, the Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received or confirmed by the exchange agent at its addresses set forth herein under "--Exchange Agent" prior to 5:00 p.m., New York City time, on the expiration date. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. The tender by a holder of old notes will constitute an agreement between such holder and us in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. Delivery of all documents must be made to the exchange agent at its address set forth herein. Holders may also request that their respective brokers, dealers, commercial banks, trust companies, or nominees effect such tender for such holders. The method of delivery of old notes and the Letters of Transmittal and all other required documents to the exchange agent is at the election and risk of the holders. Instead of delivery by mail, it is recommended that holders use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. No Letter of Transmittal or old notes should be sent to us. Only a holder of old notes may tender such old notes in the exchange offer. The term "holder" with respect to the exchange offer means any person in whose name old notes are registered on the books of the company or any other person who has obtained a properly completed bond power from the registered holder, or any person whose old notes are held of record by DTC who desires to deliver such old notes by book-entry transfer at DTC. Any beneficial holder whose old notes are registered in the name of his broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on his behalf. If such beneficial holder wishes to tender on his own behalf, such beneficial holder must, prior to completing and executing the Letter of Transmittal and delivering his old notes, either make appropriate arrangements to register ownership of the old notes in such holder's name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution") unless the old notes tendered pursuant thereto are tendered: o by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal; or o for the account of an Eligible Institution. If the Letter of Transmittal is signed by a person other than the registered holder of any old notes listed therein, such old notes must be endorsed or accompanied by appropriate bond powers which authorize such person to tender the old notes on behalf of the registered holder, in either case signed as the name of the registered holder or holders that appears on the old notes. 68 If the Letter of Transmittal or any old notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by us, evidence satisfactory to us of their authority to so act must be submitted with the Letter of Transmittal. All the questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of the tendered old notes will be determined by us in our sole discretion, which determinations will be final and binding. We reserve the absolute right to reject any and all old notes not validly tendered or any old notes our acceptance of which would, in the opinion of counsel for us, be unlawful. We also reserve the absolute right to waive any irregularities as to particular old notes and any conditions of tender as to all of the old notes. Our interpretation of the terms and conditions of the exchange offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of old notes must be cured within such time as we shall determine. Neither we, the exchange agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of old notes nor shall any of them incur any liability for failure to give such notification. Tenders of old notes will not be deemed to have been made until such irregularities have been cured or waived. Any old notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned without cost by the exchange agent to the tendering holder of such old notes unless otherwise provided in the Letter of Transmittal promptly following the expiration date. In addition, we reserve the right in our sole discretion to: o purchase or make offers for any old notes that remain outstanding subsequent to the expiration date, or, as set forth under "--Termination," to terminate the exchange offer; and o to the extent permitted by applicable law, purchase old notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchase or offers may differ from the terms of the exchange offer. By tendering, each holder of old notes will represent to us that among other things, the new notes acquired pursuant to the exchange offer are being obtained in the ordinary course of business of the person receiving such new notes, whether or not such person is the holder, that neither the holder nor any other person has an arrangement or understanding with any person to participate in the distribution of the new notes and that neither the holder nor any such other person in an "affiliate" of our company within the meaning of Rule 405 under the Securities Act. Guaranteed Delivery Procedure Holders who wish to tender their old notes and whose old notes are not immediately available, or who cannot deliver their old notes, the Letter of Transmittal, or any other required documents to the exchange agent prior to the expiration date, or if such holder cannot complete the procedure for book-entry transfer on a timely basis, may effect a tender if: o The tender is made through an Eligible Institution; o Prior to the expiration date, the exchange agent receives from such eligible institution properly competed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery): o setting forth the name and address of the holder of the old notes, the certificate number or numbers of such old notes and the principal amount of old notes tendered; o stating that the tender is being made by guaranteed delivery; and o guaranteeing that, within five business days after the expiration date, the Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing the old notes to be tendered in proper form for transfer and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Institution with the exchange agent; and 69 o the exchange agent receives the properly completed and executed Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing all tendered old notes in proper form for transfer (or confirmation of a book-entry transfer into the exchange agents' account at DTC of old notes delivered electronically) and all other documents required by the Letter of Transmittal within five business days after the expiration date. Withdrawal of Tenders Except as otherwise provided herein, tenders of old notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the business day prior to the expiration date. To withdraw a tender of old notes in the exchange offer, a written or facsimile transmission notice of withdrawal must be received by the exchange agent at its address set forth herein prior to 5:00 p.m., New York City time, on the business day prior to the expiration date. Any such notice of withdrawal must: o specify the name of the person having deposited the old notes to be withdrawn (the "Depositor"); o identify the old notes to be withdrawn (including the certificate number or numbers and principal amount of the old notes); o be signed by the Depositor in the same manner as the original signature on the Letter of Transmittal by which the old notes were tendered (including any required signature guarantees) or be accompanied by documents of transfers sufficient to permit the Trustee with respect to the old notes to register the transfer of the old notes into the name of the Depositor withdrawing the tender; and o specify the name in which the old notes are to be registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time of receipt) for such withdrawal notices will be determined by us, and our determination shall be final and binding on all parties. Any old notes so withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer and no new notes will be issued with respect thereto unless the old notes so withdrawn are validly tendered. Any old notes which have been tendered but which are not accepted for exchange will be returned to the holder thereof without cost to such holder promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn old notes may be tendered by following one of the procedures described above under "--Procedures for Tendering" at any time prior to the expiration date. Termination Notwithstanding any other term of the exchange offer, we will not be required to accept for exchange, or exchange new notes for, any old notes not therefore accepted for exchange, and may terminate or amend the exchange offer as provided herein before the acceptance of such old notes if: o any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer, which, in our judgment, might materially impair our ability to proceed with the exchange offer; or o any law, statute, rule or regulation is proposed, adopted or enacted, or any existing law, statute rule or regulation is interpreted by the staff of the Commission or court of competent jurisdiction in a manner, which, in our judgment, might materially impair our ability to proceed with the exchange offer. If we determine that we may terminate the exchange offer, as set forth above, we may: o refuse to accept any old notes and return any old notes that have been tendered to the holders thereof; o extend the exchange offer and retain all old notes that have been tendered prior to the expiration of the exchange offer, subject to the rights of such holders of tendered old notes to withdraw their tendered old notes; or 70 o waive such termination event with respect to the exchange offer and accept all properly tendered old notes that have not been withdrawn. If such waiver constitutes a material change in the exchange offer, we will disclose the change by means of a supplement to this prospectus that will be distributed to each registered holder of old notes and we will extend the exchange offer for a period of five to ten business days, depending upon the significance of the waiver and the manner of disclosure to the registered holders of the old notes, if the exchange offer would otherwise expire during such period. Exchange Agent LaSalle Bank National Association has been appointed as exchange agent for the exchange offer. Questions and requests for assistance and requests for additional copies of this prospectus or of the Letter of Transmittal should be directed to the exchange agent addressed as follows: By Mail or Hand Delivery: LaSalle Bank N.A. 135 LaSalle Street, Suite 1960 Chicago, IL 60603 Attention: Christine Linde, Vice President Facsimile Transmission: (312) 904-2236 Confirm by Telephone: (312) 904-5532 Fees and Expenses The expense of soliciting tenders pursuant to the exchange offer will be borne by us. The principal solicitation for tenders pursuant to the exchange offer is being made by mail. Additional solicitations may be made by officers and regular employees of ours and our affiliates in person, by facsimile or telephone. We will not make any payments to brokers, dealers or other persons soliciting acceptances of the exchange offer. We, however, will pay the exchange agent reasonable and customary fees for its services and will reimburse the exchange agent's reasonable out-of-pocket expenses in connection therewith. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus, Letters of Transmittal and related documents to the beneficial owners of the old notes and in handling or forwarding tenders for exchange. The expenses to be incurred in connection with the exchange offer, including fees and expenses of the exchange agent and trustee and accounting and legal fees, will be paid by us. We will pay all transfer taxes, if any, applicable to the exchange of old notes pursuant to the exchange offer. If, however, certificates representing new notes or old notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any other person other than the registered holder of the old notes tendered, or if tendered old notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of old notes pursuant to the exchange offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other person) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. Consequences of Failure to Exchange If you do not tender your old notes to be exchanged in this exchange offer, they will remain "restricted securities" within the meaning of Rule 144(a)(3) of the Securities Act. Accordingly, they may only be resold if: o registered pursuant to the Securities Act; o an exemption from registration is available; or 71 o neither registration nor an exemption is required by law; and they shall continue to bear a legend restricting transfer in the absence of registration or an exemption from registration. As a result of the restrictions on transfer and the availability of the new notes, the old notes are likely to be much less liquid than before the exchange offer. Following the consummation of the exchange offer, in general, holders of old notes will have no further registration rights under the registration rights agreement. 72 Description of the New Notes You can find the definitions of certain terms used in this description under the subheading "Certain Definitions." In this description, the terms "Company," "we," "us" and "our" refer only to MemberWorks Incorporated and not to any of its Subsidiaries. The Company issued the outstanding old notes under an indenture dated as of April 13, 2004 among itself, the Guarantors and LaSalle Bank National Association, as trustee, a copy of the form of which will be made available upon request. Upon the issuance of the new notes, the indenture will be subject to and governed by the Trust Indenture Act of 1939, as amended. We refer to the new notes throughout this description as the "new notes," the older outstanding notes as the "old notes" and the new notes and old notes together as the "notes." The following description is a summary of the material provisions of the indenture. It does not restate those agreements in their entirety. We urge you to read the indenture because it, and not this description, define your rights as holders of the notes. Certain defined terms used in this description but not defined below under "--Certain Definitions" have the meanings assigned to them in the indenture. The registered Holder will be treated as the owner of it for all purposes. Only registered Holders will have rights under the indenture. General The new notes will be unsecured, senior obligations of the Company. The old notes were issued in an initial principal amount of $150 million. The new notes will be issued solely in exchange for an equal principal amount of old notes pursuant to the exchange offer. The form and terms of the new notes will be identical in all material respects to the form and terms of the old notes except that: (1) the new notes will have been registered under the Securities Act and (2) the registration rights and liquidated damages provisions, which are triggered if the filing and declaration of effectiveness of the required registration statement and subsequent consummation of an exchange offer pursuant to the registration statement do not occur within the time periods specified in the registration rights agreement, applicable to the old notes are not applicable to the new notes. See "The Exchange Offer--Registration Rights." Brief Description of the Notes and the Guarantees The Notes The notes: o are general unsecured obligations of the Company; o are pari passu in right of payment with any existing and future senior unsecured Indebtedness of the Company; o are senior in right of payment to any future Indebtedness of the Company that expressly provides for its subordination to the notes; o will be effectively subordinated to all existing and future secured Indebtedness of the Company; and o are unconditionally guaranteed by the Guarantors on a senior unsecured basis. The Guarantees The notes are jointly and severally guaranteed by each of our Domestic Subsidiaries that guarantee our Credit Facilities. As of the Issue Date, none of our Foreign Subsidiaries, other than Lavalife Corp. (formerly Lavalife Inc.), will guarantee the notes. Our Subsidiaries that will not guarantee the notes as of the Issue Date accounted for, after giving pro forma effect to the Transactions as if they occurred on January 1, 2003, 3% of our revenues for the twelve month period ended December 31, 2003 and represented 4% of our assets as of December 31, 2003. 73 Each Guarantee of the notes: o is a general unsecured obligation of the Guarantor; o is pari passu in right of payment with any existing and future senior unsecured Indebtedness of the Guarantor; o is senior in right of payment to any future Indebtedness of the Guarantor that expressly provides for its subordination to the Guarantee of the Guarantor; and o will be effectively subordinated to all existing and future secured Indebtedness of the Guarantor. Assuming we had completed this offering and the other Transactions as of December 31, 2003, the Company and the Guarantors would have had an issued and undrawn letter of credit of $5.5 million under the Credit Agreement and $25.6 million available for borrowing under the Credit Agreement and the non-Guarantor Subsidiaries would have had $5.6 million of outstanding Indebtedness. The indenture will permit the Company, the Guarantors and the non-Guarantor Subsidiaries to incur additional secured and unsecured Indebtedness. On the Issue Date, all of our Domestic Subsidiaries and none of our Foreign Subsidiaries, other than Lavalife Corp., will guarantee the notes. In the future, it is possible that we will have additional Subsidiaries that will not guarantee the notes. In the event of a bankruptcy, liquidation or reorganization of any of these non-Guarantor Subsidiaries, the non-Guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to us. On the Issue Date, all of our Subsidiaries will be "Restricted Subsidiaries." However, under the circumstances described below under the caption "--Certain Covenants--Designation of Restricted and Unrestricted Subsidiaries," we will be permitted to designate certain of our Subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the indenture. Our Unrestricted Subsidiaries will not guarantee the notes. Principal, Maturity and Interest The Company issued $150,000,000 aggregate principal amount of notes in the private offering on April 13, 2004. The Company may issue additional notes under the indenture from time to time. Any issuance of additional notes ("Additional Notes") is subject to the covenant described below under the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." The notes and any Additional Notes subsequently issued under the indenture will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The Company issued notes in denominations of $1,000 and integral multiples of $1,000. The notes will mature on April 1, 2014. Interest on the notes will accrue at the rate of 9 1/4% per annum and will be payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2004. The Company will make each interest payment to the Holders of record on the immediately preceding March 15 and September 15. Interest on the notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Methods of Receiving Payments on the Notes If a Holder owning more than $1.0 million principal amount of the notes has given wire transfer instructions to the Company, the Company will pay all principal, interest and premium and Liquidated Damages, if any, on that Holder's notes in accordance with those instructions. All other payments on notes will be made at the office or agency of the paying agent and registrar within the City and State of New York unless the Company elects to make interest payments by check mailed to the Holders at their respective addresses set forth in the register of Holders. 74 Paying Agent and Registrar for the Notes The trustee will initially act as paying agent and registrar. The Company may change the paying agent or registrar without prior notice to the Holders, and the Company or any of its Restricted Subsidiaries may act as paying agent or registrar. Transfer and Exchange A Holder may transfer or exchange notes in accordance with the indenture. The registrar and the trustee may require a Holder to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders will be required to pay all taxes due on transfer. The Company is not required to transfer or exchange any note selected for redemption. Also, the Company is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed. Subsidiary Guarantees The notes will be guaranteed by each of our current and future Domestic Subsidiaries, Lavalife Corp. and any other Foreign Subsidiary that is a Restricted Subsidiary that Guarantees any Credit Facility. The Guarantees will be joint and several Obligations of the Guarantors. The Obligations of each Guarantor under its Guarantee will be limited as necessary to prevent that Guarantee from constituting a fraudulent conveyance under applicable law. See "Risk Factors -- Federal and state statutes allow courts under specific circumstances to void guarantees and require note holders to return payments received from subsidiary guarantors." A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless: (1) immediately after giving effect to that transaction, no Default or Event of Default exists; and (2) either: (a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the Obligations of that Guarantor under the indenture, the notes, its Guarantee and the registration rights agreement pursuant to a supplemental indenture satisfactory to the trustee; or (b) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the indenture. The Guarantee of a Guarantor will be released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale or other disposition complies with the "Asset Sale" and other provisions of the indenture; (2) in connection with any sale of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale complies with the "Asset Sale" and other provisions of the indenture; (3) if the Company designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of the indenture; (4) in connection with any Legal Defeasance or Covenant Defeasance of the notes in accordance with the terms of the indenture; or 75 (5) if the applicable Guarantor no longer Guarantees Obligations under any Credit Facilities. Optional Redemption At any time prior to April 1, 2007, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of notes issued under the indenture at a redemption price of 109.250% of the principal amount, plus accrued and unpaid interest and Liquidated Damages, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings by the Company or from the cash contribution of equity capital (other than Disqualified Stock) to the Company, provided that: (1) at least 65% of the aggregate principal amount of notes (including Additional Notes, if any) issued under the indenture remains outstanding immediately after the occurrence of such redemption (excluding notes held by the Company and its Subsidiaries); and (2) the redemption occurs within 90 days of the date of the closing of such Equity Offering. Notice of any redemption upon an Equity Offering may be given prior to completion of the related Equity Offering. At the Company's discretion, any such redemption or notice may be subject to one or more conditions precedent, including, but not limited to completion of the related Equity Offering. At any time prior to April 1, 2009, the Company may also redeem all or a part of the notes, upon not less than 30 nor more than 60 days prior notice mailed by first class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Liquidated Damages, if any, to, the date of redemption (the "Redemption Date"). Except pursuant to the preceding paragraphs, the notes will not be redeemable at the Company's option prior to April 1, 2009. After April 1, 2009, the Company may redeem all or a part of the notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, on the notes redeemed to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on April 1 of the years indicated below: Year Percentage ---- ---------- 2009....................................................... 104.625% 2010....................................................... 103.083% 2011....................................................... 101.542% 2012 and thereafter ....................................... 100.00% Redemption, Selection and Notice If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption as follows: (1) if the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or (2) if the notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the trustee deems fair and appropriate. No notes of $1,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder to be redeemed at its registered 76 address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the indenture. Notice of any redemption may, at the Company's discretion, be subject to one or more conditions precedent. If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the Holder upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption. Mandatory Redemption The Company is not required to make any mandatory redemption or sinking fund payments with respect to the notes. However, under certain circumstances, the Company may be required to offer to purchase notes as described under the captions "--Repurchase at the Option of Holders--Asset Sales" and "Change of Control." The Company may at any time and from time to time purchase notes in the open market or otherwise. Repurchase at the Option of Holders Change of Control If a Change of Control occurs, each Holder will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of that Holder's notes pursuant to a Change of Control Offer on the terms set forth in the indenture. In the Change of Control Offer, the Company will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, on the notes repurchased to the date of purchase. Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the Change of Control Payment Date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the indenture by virtue of such conflict. On the Change of Control Payment Date, the Company will, to the extent lawful: (1) accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer; (2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and (3) deliver or cause to be delivered to the trustee the notes properly accepted together with an officers' certificate stating the aggregate principal amount of notes or portions of notes being purchased by the Company. The paying agent will promptly mail to each Holder of notes properly tendered, the Change of Control Payment for such notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each new note will be in a principal amount of $1,000 or an integral multiple of $1,000. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the indenture are applicable. Except as 77 described above with respect to a Change of Control, the indenture does not contain provisions that permit the Holders to require that the Company repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction. A Change of Control Offer may be made in advance of a Change of Control, and conditional upon the occurrence of such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by the Company and purchases all notes properly tendered and not withdrawn under the Change of Control Offer. The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the properties or assets of the Company and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder to require the Company to repurchase its notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain. Asset Sales The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (1) The Company (or its Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of, (2) the fair market value is determined by the Company's Board of Directors and evidenced by a resolution of such Board of Directors set forth in an officers' certificate delivered to the trustee; and (3) at least 75% of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash: (a) any liabilities, as shown on the Company's or such Restricted Subsidiary's most recent balance sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes or any Guarantee) that are assumed by the transferee of any such assets as a result of which assumption the Company or such Restricted Subsidiary is released from further liability; (b) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are within 90 days of such Asset Sale converted into cash by the Company or such Restricted Subsidiary, to the extent of the cash received in that conversion; and (c) any stock or assets of the kind referred to in clause (II) or (IV) of the next paragraph of this covenant. Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company (or the applicable Restricted Subsidiary, as the case may be) may apply those Net Proceeds at its option: (I) to repay secured Indebtedness of the Company or any Guarantor under a Credit Facility; (II) to acquire (or enter into a binding agreement to acquire; provided that such commitment will be subject only to customary conditions (other than financing) and such acquisition will be 78 consummated within 90 days after the end of such 360-day period) all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business; (III) to make a capital expenditure; or (IV) to acquire (or enter into a binding agreement to acquire; provided that such commitment will be subject only to customary conditions (other than financing) and such acquisition will be consummated within 90 days after the end of such 360-day period) other long-term assets that are used or useful in a Permitted Business or the minority interest in any Restricted Subsidiary that is not a Wholly-Owned Restricted Subsidiary. Pending the final application of any Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will make an Asset Sale Offer to all Holders and all holders of other Indebtedness that is pari passu with the notes containing provisions similar to those set forth in the indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee will select the notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the indenture by virtue of such conflict. The Credit Agreement provides that certain change of control or asset sale events with respect to the Company would constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Indebtedness to which the Company becomes a party may prohibit the Company from purchasing notes or provide that certain change of control or asset sale events with respect to the Company would constitute a default thereunder. In the event a Change of Control or Asset Sale occurs at a time when the Company is prohibited from purchasing notes, the Company could seek the consent of its lenders to the purchase of notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing notes. In such case, the Company's failure to purchase tendered notes would constitute an Event of Default under the indenture which would, in turn, constitute a default under such Indebtedness. Certain Covenants Restricted Payments The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any other payment or distribution (A) on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or (B) to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions (i) payable in Equity Interests (other than Disqualified Stock) of the Company or (ii) to the Company or a Restricted Subsidiary of the Company; 79 (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness that is subordinated to the notes or the Guarantees (excluding any intercompany Indebtedness between the Company and any of its Restricted Subsidiaries), except a payment of interest or principal at the Stated Maturity thereof; or (4) make any Restricted Investment (all such payments and other actions set forth in these clauses (l) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; and (2) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"; and (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (6), (7), (8), (9) and (10) of the next succeeding paragraph), is less than the sum, without duplication, of: (a) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the fiscal quarter in which the Issue Date occurs to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (b) 100% of the fair market value of the aggregate net proceeds received by the Company since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company); provided that such aggregate net proceeds are limited to cash and Cash Equivalents and other assets used or useful in a Permitted Business or the Capital Stock of a Person engaged in a Permitted Business, plus (c) the sum of (1) the aggregate amount returned in cash on or with respect to any Restricted Investment in or to a Person that was made after the Issue Date whether through interest payments, principal payments, dividends or other distributions or payments, plus (2) the net cash proceeds received by the Company or any of its Restricted Subsidiaries from the disposition of all or any portion of such Restricted Investment, provided, however, that the sum of clauses (1) and (2) above shall not exceed the sum of (i) the aggregate amount of all such Restricted Investments made in or to such Person subsequent to the Issue Date and (ii) without duplication of clause (i), one half of the gain from any disposition of all or any portion of such Restricted Investments made subsequent to the Issue Date, plus (d) to the extent that after the Issue Date, any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary or is merged, consolidated or amalgamated with or into or transfers or conveys assets to, or is liquidated into the 80 Company or any of its Restricted Subsidiaries, the lesser of (i) the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation, merger, consolidation or amalgamation (or of the assets transferred or conveyed, as applicable) and (ii) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary; plus (e) $7.5 million. The preceding provisions will not prohibit: (1) the payment of any dividend or the consummation of any irrevocable redemption of debt that is subordinate to the notes within 60 days after the date of declaration of the dividend or giving of any such redemption notice, as the case may be, if at the date of declaration or notice the dividend or redemption payment would have complied with the provisions of the indenture; (2) the redemption, repurchase, retirement or other acquisition of subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3)(b) of the preceding paragraph; (3) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (4) so long as no Default or Event of Default has occurred and is continuing, the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (5) so long as no Default or Event of Default has occurred and is continuing, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company (A) held by any current or former director, officer or employee of the Company or any of its Restricted Subsidiaries (or permitted transferees of such directors, officers or employees) and (B) in the open market to the extent such shares are acquired to satisfy a current obligation to deliver shares in connection with the exercise of stock options or similar rights or the matching contributions under any 401(k) plan subject to the provisions of Section 401 of the Internal Revenue Code of 1986, as amended, in each case pursuant to the terms of the agreements (including any equity subscription agreement, stock option agreement, shareholders' agreement, employment agreement or similar agreement) or plans (or amendments thereto); provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not in any fiscal year exceed $3.0 million unless the aggregate amount of such repurchases, redemptions, acquisitions and retirement in any fiscal year was less than $3.0 million in which case the Company may carry-forward the unused amounts to the immediately succeeding fiscal year; provided, however, the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $6.0 million in any one fiscal year; (6) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; (7) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or preferred stock of any Restricted Subsidiary of the Company issued on or after the Issue Date in accordance with the Fixed Charge Coverage Ratio test described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" to the extent such dividends are included in the definition of "Fixed Charges"; provided that no Default or Event of Default shall have occurred and be continuing immediately after making such Restricted Payment; 81 (8) so long as no Default or Event of Default has occurred and is continuing, the purchase by the Company of fractional shares arising out of stock dividends, splits or combinations or business combinations; (9) so long as no Default or Event of Default has occurred and is continuing, the repurchase, redemption or other acquisition of the Company's issued and outstanding common stock pursuant to the Company's stock repurchase program as in effect from time to time in an amount not to exceed $10.0 million; and (10) so long as no Default or Event of Default has occurred and is continuing, other Restricted Payments since the Issue Date in an aggregate amount not to exceed $12.5 million. The amount of all Restricted Payments (other than cash) will be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant will be determined by the Board of Directors of the Company whose good faith determination will be conclusive and will be delivered to the trustee. Such Board of Directors' determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the fair market value exceeds $10.0 million. Not later than the last day of each fiscal quarter in which any Restricted Payment was made, the Company will deliver to the trustee an officers' certificate stating that each Restricted Payment made in such fiscal quarter is permitted and setting forth the basis upon which the calculations required by this "Restricted Payments" covenant were computed, together with a copy of any fairness opinion or appraisal required by the indenture. Incurrence of Indebtedness and Issuance of Preferred Stock The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and any Guarantor may incur Indebtedness (including Acquired Debt), the Company may issue Disqualified Stock or any Guarantor may issue preferred stock, if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is to be incurred or such Disqualified Stock or preferred stock is to be issued would have been at least 2.25 to 1.0 if such incurrence is on or prior to October 1, 2005 and 2.50 to 1.0 if such incurrence is after October 1, 2005, determined, in each case, on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or Disqualified Stock or preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (1) the incurrence by the Company and/or any Guarantor of additional Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and the Guarantors thereunder) not to exceed $75.0 million; (2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (3) the incurrence by the Company and the Guarantors of Indebtedness represented by the old notes and the related Guarantees and the new notes and the related Guarantees to be issued pursuant to the registration rights agreement; (4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, 82 construction, installation or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed $5.0 million at any time outstanding; (5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clause (2), (3) or (5) of this paragraph; (6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that: (a) if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the notes, in the case of the Company, or the Guarantee, in the case of a Guarantor; and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); (7) the incurrence by the Company or any of its Subsidiaries of Hedging Obligations; (8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or any Guarantor that was permitted to be incurred by another provision of this covenant; (9) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event will be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (9); (10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers' compensation claims, self-insurance obligations, bankers' acceptances, and performance and surety bonds and completion guarantees in the ordinary course of business; (11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; (12) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness consisting of guarantees, indemnities, holdbacks or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets; provided, however, that such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary; and (13) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (13), not to exceed $20.0 million. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the accumulation of dividends on Disqualified Stock or preferred stock (to the extent not paid) and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock will not be 83 deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Notwithstanding anything to the contrary in this "--Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, in no event will the Company or any of its Restricted Subsidiaries be permitted to refinance the Convertible Senior Subordinated Notes, in whole or in part, with the proceeds of Senior Debt. For purposes of determining compliance with this "--Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, in the event that an item of Indebtedness (including Acquired Debt) meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (13) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company will be permitted to divide and classify (later classify or reclassify in whole or in part in its sole discretion) such item of Indebtedness in any manner that complies with this covenant. Notwithstanding anything to the contrary contained in this "--Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, any increase in the amount of Indebtedness solely by reason of currency fluctuation shall not be considered an incurrence of Indebtedness for purposes of this covenant. For purposes of determining compliance with this covenant, the U.S. dollar-equivalent principal amount of Indebtedness denominated in any currency other than U.S. dollars shall be calculated based on the relevant currency exchange rate in effect as of the date such Indebtedness is incurred. Liens The Company will not and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) securing Indebtedness or trade payables upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the indenture and the notes are secured on an equal and ratable basis (or on a senior basis to, in the case of obligations subordinated in right or payment to the notes) with the obligations so secured until such time as such obligations are no longer secured by a Lien. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (2) make loans or advances to the Company or any of its Restricted Subsidiaries; or (3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of: (1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, restructurings, replacements or refinancings of those agreements, provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, restructurings, replacement or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Issue Date; (2) the indenture, the old notes, the new notes and the related Guarantees; (3) applicable law, rule, regulation or order; 84 (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition or assumed by the Company or any of its Restricted Subsidiaries in connection with an acquisition of all or substantially all the assets of a Person (except to the extent such Indebtedness or Capital Stock was incurred or assumed in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred; (5) customary non-assignment provisions in leases, licenses or other contracts entered into in the ordinary course of business and consistent with past practices: (6) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations permitted under the indenture that impose restrictions of the nature described in clause (3) of the preceding paragraph on the property purchased or leased; (7) any agreement for the sale or other disposition of a Restricted Subsidiary of the Company that restricts distributions by that Restricted Subsidiary pending its sale or other disposition; (8) Permitted Refinancing indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (9) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of the covenant described above under the caption "--Liens" that limit the right of the debtor to dispose of the assets subject to such Liens; (10) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; and (11) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Merger, Consolidation or Sale of Assets Neither the Company nor any of its Restricted Subsidiaries may, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company or a Restricted Subsidiary of the Company is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person; unless: (1) either: (a) the Company or any Restricted Subsidiary of the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company or any Restricted Subsidiary of the Company) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia; (2) the Person formed by or surviving any such consolidation or merger (if other than the Company or any Restricted Subsidiary of the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company or its Restricted Subsidiaries, as applicable, under the notes, the indenture, the registration rights agreement and the Guarantee, if any, pursuant to agreements reasonably satisfactory to the trustee; (3) immediately after such transaction no Default or Event of Default exists; and (4) in the case of the consolidation or merger of the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, 85 assignment, transfer, conveyance or other disposition has been made or, in the case of a consolidation or merger of a Restricted Subsidiary of the Company or the sale, assignment, transfer, conveyance or other disposition of the property or assets of the Restricted Subsidiary, the Company will, in each case, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" or have a Fixed Charge Coverage Ratio that is no less than the Fixed Charge Coverage Ratio of the Company immediately prior to such transaction. In addition, neither the Company nor any of its Restricted Subsidiaries may, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. Notwithstanding the foregoing: (A) the Company or any of its Restricted Subsidiaries may merge with an Affiliate that has no significant assets or liabilities and was incorporated solely for the purpose of reincorporating the Company or such Restricted Subsidiaries in another jurisdiction within the United States; and (B) any Restricted Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties and assets to the Company or to a Subsidiary that is a Guarantor. Transactions with Affiliates The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless: (1) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with a Person who was not an Affiliate; and (2) the Company delivers to the trustee: (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors of the Company set forth in an officers' certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company; and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a written opinion from an independent investment banking, accounting or appraisal firm of nationally recognized standing to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or not materially less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm's-length transaction with a Person who was not an Affiliate. The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph: (1) any employment agreements or arrangements, employee benefit plans or arrangements, officer and director indemnification agreements or arrangements or other similar agreements or arrangements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; 86 (2) transactions between or among the Company and/or its Restricted Subsidiaries; (3) transactions with a Person that is an Affiliate of the Company solely because the Company or any of its Restricted Subsidiaries owns an Equity Interest in, or controls, such Person; (4) payment of reasonable directors' fees and indemnity provided on behalf of officers, directors or employees of the Company or any of its Restricted Subsidiaries; (5) any issuance or sale of Equity Interests (other than Disqualified Stock) to Affiliates of the Company; (6) Permitted Investments and Restricted Payments that are permitted by the provisions of the indenture described above under the caption "-- Restricted Payments": (7) the issuance of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or funding of, employment arrangements, stock options and stock ownership plans or similar employee benefit plans approved by the Board of Directors of the Company in good faith and loans to employees of the Company and its Subsidiaries that are approved by the Board of Directors of the Company in good faith; and (8) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case on ordinary business terms consistent with past practices and otherwise in compliance with the terms of the indenture, which are fair to the Company or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors or senior management of the Company, or are on terms at least as favorable as could reasonably have been obtained at such time from a Person that is not an Affiliate of the Company or any of its Restricted Subsidiaries. Designation of Restricted and Unrestricted Subsidiaries The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default or Event of Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary properly designated will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption "-- Restricted Payments" or under one or more clauses of the definition of Permitted Investments, as determined by the Company. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default. Additional Guarantees If (i) the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary after the Issue Date that Guarantees any Credit Facilities or (ii) any Foreign Subsidiary Guarantees any Credit Facilities, then in each case, such Subsidiary will become a Guarantor and execute a supplemental indenture and deliver an opinion of counsel satisfactory to the trustee within 10 Business Days of the date on which such Subsidiary executed the Guarantee with respect to any such Credit Facilities; provided, however, that the foregoing shall not apply to Subsidiaries that have properly been designated as Unrestricted Subsidiaries in accordance with the indenture for so long as they continue to constitute Unrestricted Subsidiaries. Business Activities The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Subsidiaries taken as a whole. 87 Payments for Consent The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to he paid and is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Termination of Certain Covenants During any period of time that the notes have a rating equal to or greater than BBB- by S&P and Baa3 by Moody's (each such rating, an "Investment Grade Rating") and no Default or Event of Default has occurred and is continuing, the Company and the Subsidiaries will no longer be subject to the provisions of the indenture described under the following captions: (a) "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; (b) "-- Restricted Payments"; (c) "-- Transactions with Affiliates"; (d) "-- Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries"; (e) "-- Designation of Restricted and Unrestricted Subsidiaries": (f) "-- Business Activities"; (g) "-- Payments for Consents"; and (h) "-- Repurchase at the Option of the Holders". (collectively, the "Suspended Covenants"), provided, however, that the provisions of the indenture described under the following captions will not be so terminated: (a) "-- Liens"; (b) "-- Reports"; (c) "-- Merger, Consolidation or Sale of Assets"; provided, however, the Company will no longer be subject to clause (4) of such provision; and (d) "-- Additional Guarantees". In the event that the Company and any of its Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the preceding sentence and that subsequently the notes cease to have an Investment Grade Rating from either S&P or Moody's, as a result of a downgrade, withdrawal of rating or otherwise, then the Company and its Subsidiaries will from such time and thereafter again be subject to the Suspended Covenants. Reports Whether or not required by the Commission, so long as any notes are outstanding, the Company will furnish to the trustee for mailing to the Holders, within the time periods specified in the Commission's rules and regulations: (1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of 88 Operations" and, with respect to the annual information only, a report on the annual financial statements by the Company's certified independent accountants; and (2) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in the "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company. In addition, following the consummation of the exchange offer contemplated by the registration rights agreement (the "Exchange Offer"), whether or not required by the Commission, the Company will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to prospective investors upon request. In addition, the Company and the Guarantors have agreed that they will furnish to the Holders and to prospective investors, upon the request of such Holders, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the notes are not freely transferable under the Securities Act. Events of Default and Remedies Each of the following is an Event of Default: (1) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the notes; (2) default in payment when due of the principal of, or premium, if any, on the notes; (3) failure by the Company or any of its Restricted Subsidiaries to comply with the provisions described under the captions "-- Certain Covenants -- Merger, Consolidation or Sale of Assets," "-- Repurchase at the Option of Holders -- Asset Sales" or "-- Repurchase at the Option of Holders -- Change of Control"; (4) failure by the Company or any of its Restricted Subsidiaries for 60 days after notice to comply with any of the other agreements in the indenture; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default: (a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or (b) results in the acceleration of such Indebtedness prior to its Stated Maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; (6) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0 million (exclusive of amounts covered by insurance), which judgments are not paid, discharged or stayed for a period of 60 days; 89 (7) except as permitted by the indenture, any Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its Obligations under its Guarantee; and (8) certain events of bankruptcy or insolvency described in the indenture with respect to the Company or any of its Significant Subsidiaries. In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any Significant Subsidiary, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the Holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately. However, a default under clause (4) or (5) above will not constitute an Event of Default until the trustee or the Holders of 25% in aggregate principal amount of the outstanding notes notify the Company of the default and the Company does not cure such default within the time specified after receipt of such notice. Holders may not enforce the indenture or the notes except as provided in the indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from Holders notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except with respect to a Default or Event of Default relating to the payment of principal, premium, interest or Liquidated Damages, if any, on the notes. The Holders of a majority in aggregate principal amount of the notes then outstanding by notice to the trustee may, on behalf of the Holders of all of the notes, waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default in the payment of principal, premium, interest or Liquidated Damages, if any, on the notes; provided that the Holders of a majority in aggregate principal amount of the then outstanding notes may rescind an acceleration and its consequences, if the rescission would not conflict with any judgment or decree or if all existing Events of Default have been cured or waived. In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the notes pursuant to the optional redemption provisions of the indenture, an equivalent premium will also become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes. If an Event of Default occurs prior to April 1, 2009, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the notes prior to that date, then the premium specified in the indenture with respect to the first year that the notes may be redeemed at the Company's option will also become immediately due and payable to the extent permitted by law upon the acceleration of the notes. The Company is required to deliver to the trustee annually a statement regarding compliance with the indenture. Upon becoming aware of any Default or Event of Default, the Company is required to deliver to the trustee a statement specifying such Default or Event of Default. No Personal Liability of Directors, Officers, Employees and Stockholders No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the notes, the indenture, the Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws. Legal Defeasance and Covenant Defeasance The Company may, at its option and at any time, elect to have all of its Obligations discharged with respect to the outstanding notes and all Obligations of the Guarantors discharged with respect to their Guarantees ("Legal Defeasance") except for: 90 (1) the rights of Holders of outstanding notes to receive payments in respect of the principal of, or interest or premium and Liquidated Damages, if any, on such notes when such payments are due from the trust referred to below; (2) the Company's obligations with respect to the notes concerning registration of notes, replacing mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the trustee, and the Company's and the Guarantors' Obligations in connection therewith; and (4) the Legal Defeasance provisions of the indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to certain covenants (including its obligations to make Change of Control Offers and Asset Sale Offers) that are described in the indenture ("Covenant Defeasance") and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "--Events of Default and Remedies" will no longer constitute an Event of Default with respect to the notes. If the Company exercises its Legal Defeasance option or its Covenant Defeasance option, each Guarantor will be released from all of its Obligations with respect to the Subsidiary Guarantees. In order to exercise either Legal Defeasance or Covenant Defeasance: (1) the Company must irrevocably deposit with the trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank or firm of independent public accountants, to pay the principal of, premium, interest and Liquidated Damages, if any, on the outstanding notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the notes are being defeased to maturity or to a particular redemption date; (2) in the case of Legal Defeasance, the Company has delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that: (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or (b) since the date of the indenture, there has been a change in the applicable federal income tax law; in either case to the effect that, and based thereon such opinion of counsel will confirm that, the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of Covenant Defeasance, the Company has delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); 91 (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of or constitute a default under any material agreement or instrument (other than the indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (6) the Company must deliver to the trustee an opinion of counsel to the effect that, assuming, among other things, no intervening bankruptcy of the Company between the date of deposit and the 91st day following the deposit, and assuming that no Holder is an "insider" of the Company under applicable bankruptcy law, after the 91st day following the deposit, the cash or securities deposited in trust will not be subject to avoidance and repayment under Sections 547 and 550 of the United States Bankruptcy Code; (7) the Company must deliver to the trustee an officers' certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (8) the Company must deliver to the trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent relating to Legal Defeasance or Covenant Defeasance have been complied with. However, the opinion of counsel required by clause (2) above will not be required if all notes not theretofore delivered to the trustee for cancellation have become due and payable, will become due and payable on their maturity date within one year or are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the Company's name, and at the Company's expense. Amendment, Supplement and Waiver Except as provided in the next two succeeding paragraphs, the indenture or the notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing default or compliance with any provision of the indenture or the notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any notes held by a non-consenting Holder): (1) reduce the principal amount of notes whose Holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any note or alter the provisions with respect to the redemption of the notes (other than provisions relating to the covenants described above under the caption "--Repurchase at the Option of Holders"); (3) reduce the rate of or change the time for payment of interest on any note; (4) waive a Default or Event of Default in the payment of principal of, or interest or premium, or Liquidated Damages, if any, on the notes (except a rescission of acceleration of the notes by the Holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration); (5) make any note payable in currency other than that stated in the notes; (6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, premium, interest or Liquidated Damages, if any, on the notes; 92 (7) waive a redemption payment with respect to any note (other than a payment required by one of the covenants described above under the caption "--Repurchase at the Option of Holders"), (8) release any Guarantor from any of its Obligations under its Guarantee or the indenture, except in accordance with the terms of the indenture; or (9) make any change in the preceding amendment and waiver provisions. Notwithstanding the preceding, without the consent of any Holder, the Company, the Guarantors and the trustee may amend or supplement the indenture or the notes: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated notes in addition to or in place of certificated notes; (3) to provide for the assumption of the Company's obligations to Holders in the case of a merger or consolidation or sale of all or substantially all of the Company's assets; (4) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the indenture of any such Holder; (5) to comply with requirements of the Commission in order to effect or maintain the qualification of the indenture under the Trust Indenture Act; (6) to comply with the rules of any applicable securities depository; (7) to comply with the covenant relating to mergers, consolidations and sales of assets; (8) to add Guarantees with respect to the notes or to secure the notes; (9) to add to the covenants of the Company or any Guarantor for the benefit of the Holders or surrender any right or power conferred upon the Company or any Guarantor; or (10) to evidence and provide for the acceptance and appointment under the indenture of a successor trustee pursuant to the requirements thereof. The consent of the Holders is not necessary under the indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment under the indenture becomes effective, the Company is required to mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment. Satisfaction and Discharge The indenture will be discharged and will cease to be of further effect as to all notes issued thereunder, when: (1) either: (a) all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to the Company, have been delivered to the trustee for cancellation; or (b) all notes that have not been delivered to the trustee for cancellation have become due and payable or will become due and payable within one year by reason of the mailing of a notice of redemption or otherwise and the Company or any Guarantor has 93 irrevocably deposited or caused to be deposited with the trustee as funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the trustee for cancellation for principal, premium and Liquidated Damages, if any, and accrued interest to the date of maturity or redemption; (2) no Default or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the guaranteeing of any Lien securing such borrowing; (3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under the indenture; and (4) the Company has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be. In addition, the Company must deliver an officers' certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Concerning the Trustee If the trustee becomes a creditor of the Company or any Guarantor, the indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default occurs and is continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any Holder, unless such Holder has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense. Additional Information Anyone who receives this prospectus may obtain a copy of the indenture and registration rights agreement without charge by writing to MemberWorks Incorporated, 680 Washington Boulevard, Stamford, Connecticut 06901, Attention: Investor Relations. Book-Entry, Delivery and Form The old notes were offered and sold to qualified institutional buyers in reliance on Rule 144A. Old notes may also be offered and sold in offshore transactions in reliance on Regulation S. Notes will be issued in fully registered form without interest coupons. Except as set forth below, the notes will be issued in registered, global form in minimum denominations of $1,000 and integral multiples of $1,000 in excess of $1,000. The notes will be issued at the closing of this offering only against payment in immediately available funds. The old notes issued in accordance with Rule 144A initially were represented by one or more notes in registered, global form without interest coupons (collectively, the "Rule 144A Global Notes") and old notes issued in accordance with Regulation S initially were represented by one or more Notes in registered, global form without interest coupons (collectively, the "Regulation S Global Notes"). The new notes will also be issued in the form of 94 one or more global notes (collectively, and, together with the Rule 144A Global Notes and the Regulation S Global Notes, the "Global Notes"). The Global Notes will be deposited upon issuance with the trustee as custodian for The Depository Trust Company ("DTC"), in New York, New York, and registered in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below. In addition, beneficial interests in the Rule 144A Global Note may be exchanged for beneficial interests in the Regulation S Global Note and vice versa only in accordance with the Indenture and the applicable rules and system procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear System ("Euroclear") and Clearstream Banking, ("Clearstream")), which may change from time to time. Except as set forth below, the Global Notes may be transferred, in whole but not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Notes in certificated form except in the limited circumstances described below. See "--Exchange of Global Notes for Certificated Notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of Notes in certificated form. Transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream), which may change from time to time. Depository Procedures The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss these matters. DTC has advised us that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in the accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers of the old notes), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants. DTC has also advised us that, pursuant to procedures established by it: (1) upon deposit of the Global Notes, DTC will credit the accounts of Participants with portions of the principal amount of the Global Notes; and (2) ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global Notes). Investors in the Rule 144A Global Notes who are Participants in DTC's system may hold their interests therein directly through DTC. Investors in the Rule 144A Global Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream) which are Participants in such system. Investors in the Regulation S Global Notes must initially hold their interests therein through Euroclear or Clearstream, if they are participants in such systems, or indirectly through organizations that are participants in such systems. Euroclear and Clearstream will hold interests in the Regulation S Global Notes on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositories, which are Euroclear Bank S.A./N.V., as operator of Euroclear, and Citibank, N.A., as operator of Clearstream. All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject 95 to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. Except as described below, owners of an interest in the Global Notes will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or "Holders" thereof under the indenture for any purpose. Payments in respect of the principal of, and interest and premium and Liquidated Damages, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the indenture. Under the terms of the indenture, the Company and the trustee will treat the Persons in whose names the notes, including the Global Notes, are registered as the owners of the notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Company, the trustee nor any agent of the Company or the trustee has or will have any responsibility or liability for: (1) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Notes; or (2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the trustee or the Company. Neither the Company nor the trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the notes, and the Company and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes. Subject to the transfer restrictions with respect to the Rule 144A Global Notes and the Regulation S Global Notes, transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds. Transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures. Subject to compliance with the transfer restrictions applicable to the notes described herein, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream. DTC has advised us that it will take any action permitted to be taken by a Holder only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of 96 such portion of the aggregate principal amount of the notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Notes for legended notes in certificated form, and to distribute such notes to its Participants. Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. None of the Company, the trustee or any of their respective agents will have any responsibility for the performance by DTC. Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Exchange of Global Notes for Certificated Notes A Global Note is exchangeable for definitive notes in registered certificated form ("Certificated Notes") if: (1) DTC (a) notifies us that it is unwilling or unable to continue as depositary for the Global Notes and the Company fails to appoint a successor depositary or (b) has ceased to be a clearing agency registered under the Exchange Act; (2) the Company, at its option, notifies the trustee in writing that it elects to cause the issuance of the Certificated Notes; or (3) there has occurred and is continuing a Default or Event of Default with respect to the notes. In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the trustee by or on behalf of DTC in accordance with the indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures) and will bear the applicable restrictive legend referred to in "Notice to Investors," unless that legend is not required by applicable law. Exchange of Certificated Notes for Global Notes Certificated Notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the trustee a written certificate (in the form provided in the indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such notes. See "Notice to Investors." Same Day Settlement and Payment The Company will make payments in respect of the notes represented by the Global Notes (including principal, premium, if any, interest and Liquidated Damages, if any) by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. The Company will make all payments of principal, interest and premium and Liquidated Damages, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such Holder's registered address. The Notes represented by the Global Notes are expected to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds. Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised us that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC's settlement date. 97 Certain Definitions Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Applicable Premium" means, with respect to any note on any Redemption Date, the greater of: (1) 1.0% of the principal amount of the note; and (2) the excess of: (a) the present value at such Redemption Date of (i) the redemption price of the note at April 1, 2009 (such redemption price being set forth in the table appearing above under the caption "-- Optional Redemption") plus (ii) all required interest payments due on the note through April 1, 2009 (excluding accrued but unpaid interest) computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b) the principal amount of the note. "Asset Sale" means: (1) the sale, lease, conveyance or other disposition of any assets or rights; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the caption "-- Repurchase at the Option of Holders -- Change of Control" and/or the provisions described above under the caption "-- Certain Covenants -- Merger, Consolidation or Sale of Assets" and not by the provisions of the caption "-- Repurchase at the Option of Holders -- Asset Sales"; and (2) the issuance of Equity Interests in any of the Company's Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries. Notwithstanding the preceding, the following items will not be deemed to be Asset Sales: (1) any single transaction or series of related transactions that involves assets having a fair market value of less than $3.0 million; (2) a sale, lease, transfer conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries, 98 (3) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (4) the sale, lease, transfer conveyance or other disposition of products, services, equipment, inventory, accounts receivable or other assets in the ordinary course of business or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; (5) the sale or other disposition of cash or Cash Equivalents; (6) the license of patents, trademarks, copyrights and know-how to third Persons in the ordinary course of business; (7) the creation of Liens; and (8) a Restricted Payment that does not violate, or Permitted Investment that is permitted by, the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned" have correlative meanings. "Board of Directors" means: (1) with respect to a corporation, the board of directors of the corporation; (2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and (3) with respect to any other Person, the board or committee of such Person serving a similar function. "Business Day" means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. 99 "Cash Equivalents" means: (1) United States dollars and any other currency that is convertible into United States dollars without legal restrictions and which is utilized by the Company or any of its Restricted Subsidiaries in the ordinary course of its business; (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition; (3) certificates of deposit and eurodollar time deposits with maturities of 270 days or less from the date of acquisition, bankers' acceptances with maturities not exceeding 270 days and overnight bank deposits, in each case, with any lender party to the Credit Agreement or with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson BankWatch Rating of "B" or better; (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; (5) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and in each case maturing within 270 days after the date of acquisition; and (6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition. "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act); (2) the approval by the holders of Voting Stock of the Company of a plan relating to the liquidation or dissolution of the Company or the adoption of a plan relating to the liquidation or dissolution of the Company by its Board of Directors; (3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as that term is used in Section 13(d)(3) of the Exchange Act), becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, measured by voting power rather than number of shares; (4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or (5) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance). Notwithstanding the foregoing, a Change of Control shall not be deemed to occur as a result of any merger primarily for the purpose of changing the Company's jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of common stock of the surviving entity. 100 "Commission" means the U.S. Securities Exchange Commission. "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus: (1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with (a) an Asset Sale or (b) the disposition of any securities by, or the extinguishment of any Indebtedness of, such Person or any of its Restricted Subsidiaries, to the extent such losses were deducted in computing such Consolidated Net Income; plus (2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (3) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus (4) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; plus (5) unrealized non-cash losses resulting from foreign currency balance sheet adjustments required by GAAP to the extent such losses were deducted in computing such Consolidated Net Income; minus (6) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person; (2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (3) the cumulative effect of a change in accounting principles will be excluded; (4) any impairment loss of such Person or its Restricted Subsidiaries relating to goodwill or other non-amortizing intangible asset will be excluded; and 101 (5) the Net Income or loss of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who: (1) was a member of such Board of Directors on the date of the indenture; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. "Convertible Senior Subordinated Notes" means the 5.50% Convertible Senior Subordinated Notes of the Company due October 1, 2010. "Credit Agreement" means that certain Amended and Restated Credit Agreement, dated as of March 25, 2004, by and among the Company, certain Subsidiaries of the Company, La Salle Bank National Association, as Agent, certain financial institutions as lenders and other agents and arrangers party thereto, providing for up to $45.0 million of revolving credit borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of Debt Issuances), in whole or in part, from time to time. "Credit Facilities" means, one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities, in each case with banks, investment banks, insurance companies, mutual funds and/or other institutional lenders providing for revolving credit loans, term loans, receivables or inventory financing (including through the sale of receivables or inventory to such lenders or to special purpose entities formed to borrow from such lenders against such receivables or inventory) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of Debt Issuances) in whole or in part from time to time. "Debt Issuances" means, with respect to the Company or any Guarantor, one or more issuances after the Issue Date of Indebtedness evidenced by notes, debentures, bonds or other similar securities or instruments. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." "Domestic Subsidiary" means any Restricted Subsidiary of the Company that was formed under the laws of the United States or any state of the United States or the District of Columbia. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of Equity Interests (other than Disqualified Stock) made for cash on a primary basis by the Company after the Issue Date. "Exchange Notes" or "new notes" mean the notes issued in the Exchange Offer. 102 "Existing Indebtedness" means Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the Issue Date, until such amounts are repaid. "Fixed Charge Coverage Ratio" means with respect to any specified Person for any four-quarter reference period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the applicable period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of such period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, subsequent to the commencement of the applicable four-quarter reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period, including any Consolidated Cash Flow and any pro forma expense and cost reductions that have occurred or are reasonably expected to occur, in the reasonable judgment of the chief financial officer of the specified Person (regardless of whether those cost savings or operating improvements could then be reflected in pro forma financial statements in accordance with Regulation S-X promulgated under the Securities Act or any other regulation or policy of the Commission related thereto); (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded; (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date; (4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during the applicable four-quarter reference period; (5) any Person that is not a Restricted Subsidiary on such Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during the applicable four-quarter reference period; and (6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire applicable four-quarter reference period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or 103 bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) if such dividends are not deductible for income tax purposes based on the law in effect at the time of payment, a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Foreign Subsidiary" means Subsidiaries of the Company that are not Domestic Subsidiaries. "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Guarantors" means each Subsidiary that executes a Guarantee in accordance with the provisions of the indenture and their respective successors and assigns. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person incurred in the ordinary course of business and not for speculative purposes under: (1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements entered into with one or more financial institutions and designed to protect the Person or entity entering into the agreement against fluctuations in interest rates with respect to Indebtedness incurred; (2) foreign exchange contracts and currency protection agreements entered into with one of more financial institutions that are designed to protect the Person or entity entering into the agreement against fluctuations in currency exchanges rates with respect to Indebtedness incurred; (3) any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities used by such Person at the time; and (4) other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency exchange rates. "Holder" means a holder of notes. 104 "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of banker's acceptances; (4) representing Capital Lease Obligations; (5) representing the balance deferred and unpaid of the purchase price of any property due more than six months after such property is acquired; or (6) representing Hedging Obligations; if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness; and (3) with respect to Hedging Obligations, the amount required to be recorded as a liability in accordance with GAAP. In addition, for the purpose of avoiding duplication in calculating the outstanding principal amount of Indebtedness for purposes of the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock", Indebtedness arising solely by reason of the existence of a Lien to secure other Indebtedness permitted to be incurred under the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" will not be considered incremental Indebtedness. Indebtedness will not include the obligations of any Person (A) resulting from the endorsement of negotiable instruments for collection in the ordinary course of business, (B) under stand-by letters of credit to the extent collateralized by cash or Cash Equivalents and (C) resulting from representations, warranties, covenants and indemnities given by such Person that are reasonably customary for sellers or transferors in an accounts receivable securitization transaction. "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition in an amount equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "Certain Covenants -- Restricted Payments." The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an 105 Investment in a third Person will be deemed to be an Investment made by the Company or such Restricted Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person on the date of any such acquisition in an amount determined as provided in the final paragraph of the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." "Issue Date" means the first date on which the notes are initially issued. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Liquidated Damages" means amounts payable under the Registration Rights Agreement. "Moody's" means Moody's Investor Services, Inc. or any successor rating agency. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain (or loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, recording fees, title transfer fees, appraiser fees, costs of preparation of assets for sale and any relocation expenses incurred as a result of the Asset Sale, and taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale, all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries or joint ventures as a result of the Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Recourse Debt" means Indebtedness: (1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) is the lender; (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the notes) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock (other than the stock of an Unrestricted Subsidiary pledged by the Company or any of its Restricted Subsidiaries) or assets of the Company or any of its Restricted Subsidiaries. "Obligations" means any principal, premium and Liquidated Damages, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement 106 obligations, damages, guarantees and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereto. "Permitted Business" means (i) the lines of business conducted by the Company and its Restricted Subsidiaries on the Issue Date, (ii) any business in the field of consumer services and (iii) any business incidental or reasonably related to the foregoing clauses (i) and (ii) or which is a reasonable extension thereof as determined in good faith by the Company's Board of Directors and set forth in an officers' certificate delivered to the trustee. "Permitted Investments" means: (1) any Investment in the Company or in a Restricted Subsidiary of the Company; (2) any Investment in Cash Equivalents; (3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary of the Company; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "-- Repurchase at the Option of Holders -- Asset Sales"; (5) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company or made with the proceeds of a substantially concurrent sale of such Equity Interests (other than Disqualified Stock); (6) any Investments received in compromise or resolution of obligations of (A) trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or (B) litigation, arbitration or other similar disputes; (7) Hedging Obligations permitted to be incurred under the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock"; (8) repurchases of the notes; (9) loans and advances made in the ordinary course of business, to officers, directors and employees in an aggregate amount not to exceed $1.0 million outstanding at any one time; (10) Investments of any Person (other than Indebtedness of such Person) in existence at the time such Person becomes a Subsidiary of the Company; provided such Investment was not made in connection with or anticipation of such Person becoming a Subsidiary of the Company; (11) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business and advances, loans or extensions of credit to suppliers in the ordinary course of business; and (12) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (12) since the Issue Date that remain outstanding at the time, not to exceed $5.0 million; provided, however, that if any Investment pursuant to this clause (12) is made in any Person that subsequent to the date of such Investment becomes a Restricted Subsidiary of the Company, then such Investment shall thereafter be 107 deemed to have been made pursuant to clause (1) above, and the amount of such Investment shall be reset to zero for purposes of this clause (12). "Permitted Liens" means: (1) Liens of the Company and the Guarantors securing Indebtedness under Credit Facilities that was permitted by the terms of the indenture, whether incurred under clause (1) of the second paragraph of the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" or under the first paragraph of the covenant described under "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock"; (2) Liens in favor of the Company or the Guarantors; (3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or any Restricted Subsidiary; (4) Liens on property existing at the time of acquisition of the property by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" covering only the assets acquired with or financed by such Indebtedness; (7) Liens existing on the Issue Date; (8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; (9) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (10) Liens imposed by law, such as carriers', warehousemen's, landlord's and mechanics' Liens, in each case, incurred in the ordinary course of business; (11) survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (12) Liens created for the benefit of (or to secure) the notes (or Guarantees of the notes); (13) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the indenture; provided, however, that: (A) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and 108 (B) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Referencing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement; (14) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; and (15) Liens incurred in the ordinary course of business of the Company or any Subsidiary of the Company with respect to obligations that do not exceed $5.0 million at any one time outstanding. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the notes on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary of the Company that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "S&P" means Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., or any successor rating agency. "Senior Debt" means, Indebtedness of the Company and its Restricted Subsidiaries, at the time any determination is to be made, in an amount equal to the sum of: (1) all Indebtedness of the Company and its Restricted Subsidiaries outstanding under Credit Facilities and Hedging Obligations related thereto at such time, and (2) all other outstanding Indebtedness of the Company or any of its Restricted Subsidiaries, unless the instrument under which such Indebtedness is incurred expressly provides that such Indebtedness is subordinated to the notes and the Guarantees. 109 Notwithstanding anything to the contrary in the preceding sentence, Senior Debt will not include: (1) any liability for federal, state, local or other taxes owed or owing by the Company or any of its Restricted Subsidiaries; (2) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates that is by its term subordinate to the notes; (3) any trade payables; or (4) any obligations with respect to any Capital Stock of the Company or any of its Restricted Subsidiaries. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article l, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). "Treasury Rate" means, as of any Redemption Date, the yield to maturity as of such Redemption Date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the Redemption Date to October 1, 2009; provided, however, that if the period from the Redemption Date to October 1, 2009 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used. "Unrestricted Subsidiary" means any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors of the Company, but only to the extent that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and 110 (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," the Company will be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. "Wholly-Owned Restricted Subsidiary" means a direct or indirect Restricted Subsidiary of the Company all of the Capital Stock of which, other than directors' qualifying shares, is owned by the Company or another Wholly-Owned Restricted Subsidiary. 111 Certain U.S. Federal Income Tax Considerations Overview The following is a general discussion of material U.S. federal income tax consequences to a holder with respect to the purchase, ownership and disposition of the Notes. This summary, is generally limited to holders who will hold the Notes as "capital assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code') and who acquire the Notes in this offering at the initial offering price. This summary does not purport to deal with all aspects of the U.S. federal income tax consequences that might be relevant to holders in light of their particular investment circumstances or status nor does it deal with the U.S. federal income tax consequences to investors subject to special treatment under the U.S. federal income tax laws, such as dealers in securities or foreign currency, tax-exempt entities, banks, thrifts, insurance companies, persons that hold the Notes as part of a "straddle," a "hedge" against currency risk, a "conversion transaction" or other integrated transaction, certain financial institutions, insurance companies and U.S. Holders (as defined herein) that have a "functional currency" other than the U.S. dollar, all within the meaning of the Code. In addition, this discussion does not describe any tax consequences arising out of the tax laws of any state, local or foreign jurisdiction. The U.S. federal income tax considerations set forth below are based upon the Code, existing and proposed Treasury regulations thereunder, and current administrative rulings and court decisions, all of which are subject to change or different interpretations. Prospective investors should particularly note that any such change could have retroactive application so as to result in U.S. federal income tax consequences different from those discussed below. Based on currently applicable authorities, we will treat the Notes as indebtedness for U.S. federal income tax purposes, and the remainder of this discussion assumes that the Notes will constitute indebtedness for U.S. tax purposes. We have not sought and will not seek any rulings from the Internal Revenue Service (the "IRS") with respect to the matters discussed below. There can be no assurance that the IRS will not take a different position concerning the tax consequences of the purchase, ownership or disposition of the Notes or that any such position would not be sustained. The following discussion constitutes the material U.S. federal income tax consequences generally applicable to holders who acquire the Notes in this offering at the initial offering price. Investors considering the purchase of the Notes should consult their own tax advisors with respect to the application of the U.S. federal income tax laws to their particular situations, as well as any tax consequences arising under the U.S. federal estate or gift tax rules or under the laws of any state, local or foreign taxing jurisdiction or under any applicable tax treaty. Taxation of U.S. Holders The following discussion is limited to the U.S. federal income tax consequences relevant to U.S. Holders. As used herein, "U.S. Holders" are beneficial owners of the Notes, that are, for U.S. federal income tax purposes: o individuals who are citizens or residents of the United States: o corporations or other entities taxable as corporations created or organized in, or under the laws of, the United States, any state thereof or the District of Columbia; o estates, the income of which is subject to U.S. federal income taxation regardless of its source; or o trusts if (i) (A) a court within the United States is able to exercise primary supervision over the administration of the trust and (B) one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) a valid election to be treated as a U.S. person is in effect with respect to such trust. If a partnership (or other entity taxable as a partnership for U.S. federal income tax purposes) holds Notes, the tax treatment of a partner in the partnership (or other entity) will generally depend upon the status of the partner and the activities of the partnership or other entity. If you are a partner of a partnership (or other entity taxable as a 112 partnership) holding the Notes, you should consult your tax advisor regarding the tax consequences of the purchase, ownership and disposition of the Notes. Certain U.S. federal income tax consequences relevant to a non-U.S. Holder are discussed separately below. Taxation of Interest U.S. Holders generally will be required to recognize as ordinary income any interest paid or accrued on the Notes, in accordance with their regular method of accounting for U.S. federal income tax purposes. In certain circumstances (see "Description of the New Notes -- Repurchase at the Option of Holders"), we may be obligated to pay amounts in excess of stated interest or principal on the Notes. According to Treasury Regulations, the possibility that any such payments in excess of stated interest or principal will be made will not affect the amount of interest income that a U.S. Holder currently recognizes if there is only a remote chance as of the date the Notes were issued that such payments will be made. We intend to take the position that the likelihood of payment of these amounts is remote; therefore, we do not intend to treat these potential payments as part of the yield to maturity of the Notes. Under this approach, if we ultimately make any additional payments, U.S. Holders should recognize such amounts as ordinary income in accordance with their regular method of accounting for U.S. federal income tax purposes. Our determination that these contingencies are remote is binding on a U.S. Holder unless such holder discloses its contrary position in the manner required by applicable Treasury Regulations. Our determination is not, however, binding on the IRS, and if the IRS were to challenge this determination, a U.S. Holder might be required to accrue income on its Notes in excess of stated interest, and to treat as ordinary income rather than capital gain any income realized on the taxable disposition of a Note before the resolution of the contingencies. U.S. Holders should consult their own tax advisors about the treatment of additional payments that might be made in respect of the Notes. Market Discount If a U.S. Holder purchases a Note for an amount that is less than its stated redemption price at maturity the amount of the difference will be treated as "market discount" unless such difference is a specified de minimis amount. Market discount is considered to be de minimis if it is less than 1/4 of 1% of the Note's stated redemption price at maturity multiplied by the number of complete years to maturity after the Note was acquired. Under the market discount rules of the Code, a U.S Holder will be required to treat any partial principal payment on, or any gain realized upon the sale, redemption or other taxable disposition of, a Note as ordinary income to the extent of the market discount which has not previously been included in income and is treated as having accrued on such Note at the time of such payment or disposition. In addition, if a U.S. Holder acquired a Note with market discount such U.S. Holder may be required to defer the deduction of all or a portion of the interest paid or accrued on any indebtedness incurred or maintained to purchase or carry such Note until the maturity of the note or its earlier disposition in a taxable transaction. Market discount is considered to accrue ratably during the period from the date of acquisition to the maturity date of a Note, unless a U.S. Holder elects to include market discount in income on a current basis. A U.S. Holder may elect to include market discount in income (generally as ordinary income) currently as it accrues, in which case the rules described above regarding the deferral of interest deductions will not apply. Such election will also apply to all debt obligations held or subsequently acquired by the U.S. Holder on or after the first day of the taxable year to which the election applies. The election may not be revoked without the consent of the IRS. U.S. Holders should consult their own tax advisors before making this election. Acquisition Premium In general, if a U.S. Holder purchases a Note for an amount in excess of the stated principal amount such U.S. Holder will be treated as having purchased such Note with acquisition premium in the amount of such excess. A U.S. Holder generally may elect to amortize the acquisition premium (with a corresponding decrease in adjusted tax basis) over the remaining term of the Note on a constant yield method as an offset to interest income when includible in income under such U.S. Holder's regular method of accounting for U.S. federal income tax purposes. If such U.S. Holder does not elect to amortize acquisition premium, that premium will decrease the gain or increase the loss it would otherwise recognize upon a sale or other disposition of the Note. An election to amortize premium on a constant yield method will also apply to all debt obligations held or subsequently acquired by the U.S. Holder on or after the first day of the taxable year to which the election applies. The election may not be revoked without the consent of the IRS. U.S. Holders should consult their own tax advisors before making this election. 113 The rules governing market discount and amortizable premium are complex, and U.S. Holders should consult their own tax advisors concerning the application of these rules. Exchange Offer The exchange of the Notes for the new notes in the exchange offer will not constitute a taxable exchange. See "Description of the New Notes." As a result, (1) a U.S. Holder will not recognize taxable gain or loss as a result of exchanging such holder's Notes for new notes; (2) the holding period of the new notes will include the holding period of the Notes exchanged therefor; and (3) the adjusted tax basis of the new notes received will be the same as the adjusted tax basis of the Notes exchanged therefor immediately before such exchange. Disposition of the Notes Upon the disposition of a Note by sale, exchange, redemption or other taxable disposition (other than an exchange for new notes pursuant to the exchange offer or other tax-free transaction), a U.S. Holder will generally recognize gain or loss equal to the difference between (1) the amount realized on the disposition of the Note (other than amounts attributable to accrued interest on the Note, which will be treated as ordinary interest income for U.S. federal income tax purposes if not previously included in gross income) and (2) the U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax basis in a Note generally will equal the cost of the Note to such U.S. Holder less any prior principal payments. Gain or loss from the taxable disposition of a Note generally will be capital gain or loss and will be long-term capital gain or loss if the Note was held by the U.S. Holder for more than one year at the time of the disposition. For non-corporate U.S. holders, certain preferential tax rates may apply to gain recognized as long-term capital gain. The deductibility of capital losses is subject to certain limitations under the Code. Information Reporting and Backup Withholding Where required, information will be reported to both U.S. Holders of Notes and the IRS regarding the amount of interest and principal paid on the Notes in each calendar year as well as the corresponding amount of tax withheld, if any exists. This obligation, however, does not apply with respect to payments to certain U.S. Holders, including corporations and tax-exempt organizations, provided that such U.S. Holders establish entitlement to an exemption. Under the backup withholding provisions of the Code and the applicable Treasury regulations, a holder of Notes may be subject to backup withholding (currently at a 28% rate) with respect to interest and principal paid on the Notes and/or the proceeds from dispositions of the Notes. Certain U.S. holders (including, among others, corporations and tax-exempt organizations) are generally not subject to backup withholding. U.S. Holders will be subject to this backup withholding tax if such holder is not otherwise exempt and such holder: (1) fails to furnish its taxpayer identification number, or TIN (which, for an individual, is ordinarily his or her social security number); (2) furnishes an incorrect TIN; (3) is notified by the IRS that it has failed to properly report payments of interest or dividends; or (4) fails to certify, under penalties of perjury, that it has furnished a correct TIN and that the IRS has not notified the U.S. holder that it is subject to backup withholding. Any amounts withheld under the backup withholding rules from a payment to a U.S. holder will be allowed as a credit against such holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. Taxation of Non-U.S. Holders The following discussion is limited to the U.S. federal income and estate tax consequences of the acquisition, ownership and disposition of the Notes by an initial investor of the Notes that is neither a U.S. Holder as defined above nor a partnership. The rules governing the U.S. federal income taxation of a non-U.S. Holder of Notes are complex and no attempt will be made herein to provide more than a summary of such rules. Special rules may apply to certain non-U.S. Holders such as "controlled foreign corporations," "passive foreign investment companies" and "foreign personal holding companies." Non-U.S. Holders should consult with their own tax advisors to determine the effect of federal, state, local and foreign income tax laws, as well as treaties, with regard to an investment in the Notes, including any reporting requirements. 114 Taxation of Interest Generally, interest income earned on a Note by a non-U.S. Holder will qualify for the "portfolio interest" exception, and therefore will not be subject to U.S. federal income tax or withholding tax, if o the interest income is not effectively connected with the conduct of a U.S. trade or business of the non-U.S. Holder (i.e., not "U.S. trade or business income"): o the non-U.S. Holder does not, directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of our stock entitled to vote; o the non-U.S. Holder is not, for U.S. federal income tax purposes, a controlled foreign corporation that is related to us through stock ownership; o the non-U.S. Holder is not a bank which acquired the Note in consideration for an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business; and o either (A) the non-U.S. Holder certifies, under penalty of perjury, to us or our agent that it is not a U.S. person and such non-U.S. Holder provides its name, address and certain other information on a properly executed Form W-8 BEN (or an applicable substitute form), or (B) a securities clearing organization bank or other financial institution that holds customers' securities in the ordinary course of its trade or business holds the Note on behalf of the beneficial owner and provides a statement to us or our agent signed under penalty of perjury in which the organization, bank or financial institution certifies that the form or an applicable substitute has been received by it from the non-U.S. Holder or from another financial institution entity on behalf of the non-U.S. Holder and furnishes us or our agent with a copy thereof. If a non-U.S. Holder cannot satisfy the requirements for the portfolio interest exception as described above, the gross amount of payments of interest to such non-U.S. Holder that are not effectively connected with the conduct of a U.S. trade or business of the non-U.S. Holder will be subject to U.S. federal withholding tax at the rate of 30%, unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S. trade or business income will not be subject to U.S. federal withholding tax but will be taxed on a net income basis at regular U.S. federal income tax rates, and if the non-U.S. Holder is a foreign corporation, such U.S. trade or business income may be subject to the branch profits tax equal to 30%, or a lower rate provided by an applicable income tax treaty. In order to claim the benefit provided by an applicable income tax treaty or to claim exemption from withholding because the income is U.S. trade or business income, a non-U.S. Holder must provide either: o a properly executed Form W-8 BEN (or an applicable substitute form) claiming an exemption from or reduction in withholding under the benefit of an applicable income tax treaty; or o a properly executed Form W-8 ECI (or an applicable substitute form) stating that interest paid on the Note is not subject to withholding tax because it is effectively connected with the conduct of a U.S. trade or business of the non-U.S. Holder. Disposition of the Notes Generally, a non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax on any gain realized on the sale, exchange, redemption or other taxable disposition (other than an exchange for new notes pursuant to the exchange offer or other tax free transaction) of a Note unless: o the gain is effectively connected with the conduct of a U.S. trade or business of the non-U.S. Holder (and, if an income tax treaty applies, the gain is attributable to a U.S. permanent establishment (for a fixed base) in the United States); or o the non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year in which the disposition of the Note is made and certain other requirements are met, or is subject to tax pursuant to the provisions of U.S. federal income tax law applicable to certain former citizens and residents of the United States. 115 A non-U.S. holder described in the first bullet point above will be required to pay U.S. federal income tax on the net gain derived from the sale, except as otherwise required by an applicable income tax treaty, and if such holder is a foreign corporation, it may also be required to pay a branch profits tax at a 30% rate or a lower rate if so specified by an applicable income tax treaty. A non-U.S. holder described in the second bullet point above will be subject to a 30% U.S. federal income tax on the gain derived from the sale, which may be offset by U.S. source capital losses, even though the non-U.S. holder is not considered a resident of the United States. The exchange of the Notes for the new notes in the exchange offer will not constitute a taxable exchange. Information Reporting and Backup Withholding Where required, information will be reported annually to each non-U.S. Holder as well as the IRS regarding any interest that is either subject to withholding or exempt from U.S. federal withholding tax pursuant to an applicable income tax treaty or to the portfolio interest exception. Copies of these information returns may also be made available to the tax authorities of the country in which the non-U.S. Holder resides under the provisions of a specific treaty or agreement. Under the backup withholding provisions of the Code and the applicable Treasury Regulations, a holder of Notes may be subject to backup withholding (currently at a 28% rate) with respect to interest and principal paid on the Notes and/or the proceeds from dispositions of the Notes. However, the Treasury regulations provide that payments of principal and interest to a non-U.S. Holder will not be subject to backup withholding and information reporting if the non-U.S. Holder certifies its non-U.S. status under penalty of perjury or satisfies the requirements of an otherwise established exemption, provided that neither us or our paying agent has actual knowledge that such holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied. The payment of the proceeds from the disposition of Notes to or through the U.S. office of any broker, U.S. or foreign, will be subject to information reporting and possible backup withholding unless the non-U.S. Holder certifies its non-U.S. status under penalty of perjury or satisfies the requirements of an otherwise established exemption, provided that the broker does not have actual knowledge that such holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied. The payment of the proceeds from the disposition of a Note to or through a non-U.S. office of a non-U.S. broker that does not have certain enumerated relationships with the United States will not be subject to information reporting or backup withholding. When a non-U.S. Holder receives a payment of proceeds from the disposition of Notes either to or through a non-U.S. office of a broker that is either a U.S. person or a person who has certain enumerated relationships with the United States, the Treasury regulations require information reporting (but generally not backup withholding) on the payment, unless the broker has documentary evidence in its files that the non-U.S. Holder is not a U.S. person and the broker has no knowledge to the contrary. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder will be allowed as a credit against such holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. Non-U.S. Holders should consult their own tax advisors regarding the filing of a U.S. federal income tax return for claiming a refund of such backup withholding. U.S. Federal Estate Tax The U.S. federal estate tax will not apply to Notes owned by an individual who is not a citizen or resident of the United States at the time of his death provided that (1) the individual does not, directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of our stock entitled to vote and (2) interest on the Note would not have been, if received at the time death, effectively connected with the conduct of a U.S. trade or business of such holder. Investors considering the purchase of the Notes should consult their own tax advisors with respect to the application of the U.S. federal income tax laws to their particular situations, as well as any tax consequences arising under the U.S. federal estate or gift tax rules or under the laws of any state, local or foreign taxing jurisdiction or under any applicable tax treaty. 116 Plan of Distribution Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes where such old notes were acquired as a result of market-making activities or other trading activities. We have agreed that for a period of one year after the expiration of the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resales. In addition, we have agreed that we would not for a period of 90 days from April 13, 2004, the date of the offering memorandum distributed in connection with the sale of the old notes, directly or indirectly offer, sell, grant any options to purchase or otherwise dispose of any debt securities other than in connection with this exchange offer. We will not receive any proceeds from any sale of new notes by broker-dealers. New notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such new notes. Any broker-dealer that resells new notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such new notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of new notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. We have been advised by the initial purchasers of the old notes, that following completion of the exchange offer they intend to make a market in the new notes to be issued in the exchange offer. However, they are under no obligation to do so and any market activities with respect to the new notes may be discontinued at any time. Legal Matters Certain matters with respect to the validity of the new notes will be passed upon for us by Shearman & Sterling LLP, New York, New York. Experts The financial statements of MemberWorks Incorporated as of June 30, 2003 and 2002, and for each of the three years in the period ended June 30, 2003, included in this prospectus, have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The financial statements of Lavalife Inc. of September 30, 2003 and 2002, and for each of the two years in the period ended September 30, 2003, incorporated by reference in this prospectus, have been audited by Ernst & Young LLP, independent accountants, as stated in their report appearing herein. Where You Can Find More Information We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the internet at the SEC's website at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549, and obtain copies of our filings at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. 117 Incorporation by Reference We are incorporating by reference into this prospectus the information we have filed with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus but is automatically updated and superseded by information in this prospectus, including our financial statements for the year ended June 30, 2003. In addition, information in documents that we file later with the SEC will automatically update and supersede information in this prospectus. We incorporate by reference the documents listed below into this prospectus, and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act (excluding any information furnished pursuant to Item 9 or Item 12 on any current report on Form 8-K), until our offering is complete. The documents we incorporate by reference are: o Our Annual Report on Form 10-K for the year ended June 30, 2003 filed with the SEC on September 15, 2003. o Our Quarterly Reports on Form 10-Q for the periods ended September 30, 2003 and December 31, 2003 filed with the SEC on November 13, 2003 and February 9, 2004, respectively. o Our Current Reports on Form 8-K file with the SEC on September 22, 2003, September 25, 2003, September 30, 2003, October 24, 2003, March 4, 2004, March 26, 2004 (Items 5 and 7), March 26 (Items 7 and 9), April 5, 2004 and April 8, 2004. o Our Proxy Statement on Form 14A filed with the SEC on October 3, 2003. You may request a copy of these filings at no cost, by writing or telephoning us at the following address: MemberWorks Incorporated 680 Washington Boulevard Stamford, Connecticut 06901 Attention: Investor Relations Telephone: (203) 324-7635 118 Index to Consolidated Financial Statements Page ---- Consolidated Financial Statements of MemberWorks Incorporated Audited Consolidated Financial Statements for the Years Ended June 30, 2003, 2002 and 2001 Report of Independent Auditors............................................F-2 Consolidated Financial Statements: Consolidated Balance Sheets-- June 30, 2003 and June 30, 2002..........F-3 Consolidated Statements of Operations -- For the Fiscal Years Ended June 30, 2003, June 30, 2002 and June 30, 2001..........F-4 Consolidated Statements of Shareholders' Deficit -- For the Fiscal Years Ended June 30, 2003, June 30, 2002 and June 30, 2001..........F-5 Consolidated Statements of Cash Flows -- For the Fiscal Years Ended June 30, 2003, June 30, 2002 and June 30, 2001.....................F-6 Notes to Consolidated Financial Statements............................F-7 Unaudited Condensed Consolidated Financial Statements for the Six Months Ended December 31, 2003 Condensed Consolidated Balance Sheets as of December 31, 2003 and June 30, 2003.......................................................F-31 Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2003 and 2002.........................F-32 Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2003 and 2002....................................F-33 Notes to Unaudited Condensed Consolidated Financial Statements.........F-34 F-1 MEMBERWORKS INCORPORATED REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Shareholders of MemberWorks Incorporated In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of shareholders' deficit, and of cash flows present fairly, in all material respects, the financial position of MemberWorks Incorporated and its subsidiaries at June 30, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2003 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the accompanying financial statement schedule included on page F-31 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 4 to the consolidated financial statements, the Company changed its method of accounting for membership fee revenue in fiscal 2001 and goodwill and other intangible assets in fiscal 2002. /s/ PricewaterhouseCoopers LLP New York, New York July 28, 2003, except for Note 21, as to which the date is March 31, 2004 F-2 MEMBERWORKS INCORPORATED CONSOLIDATED BALANCE SHEETS
June 30, 2003 2002 (In thousands, except per share amounts) Assets Current assets: Cash and cash equivalents......................................................... $ 72,260 $ 45,502 Restricted cash................................................................... 2,732 5,683 Marketable securities............................................................. -- 912 Accounts receivable (net of allowance for doubtful accounts of $1,743 and $914, at June 30, 2003 and 2002, respectively)........................................ 8,713 9,831 Prepaid membership materials...................................................... 2,196 2,061 Prepaid expenses.................................................................. 7,571 4,325 Membership solicitation and other deferred costs.................................. 77,883 129,085 ----------- ----------- Total current assets........................................................ 171,355 197,399 Fixed assets, net.................................................................... 24,969 31,420 Goodwill............................................................................. 42,039 42,039 Intangible assets, net............................................................... 6,656 8,049 Other assets......................................................................... 3,486 1,910 ----------- ----------- Total assets................................................................ $ 248,505 $ 280,817 =========== =========== Liabilities and Shareholders' Deficit Current liabilities: Current maturities of long term obligations....................................... $ 244 $ 1,070 Accounts payable.................................................................. 32,644 32,769 Accrued liabilities............................................................... 59,105 57,709 Deferred membership fees.......................................................... 167,643 206,272 Deferred income taxes............................................................. 879 -- ----------- ----------- Total current liabilities................................................... 260,515 297,820 Deferred income taxes................................................................ 5,145 -- Long-term liabilities................................................................ 3,128 3,627 ----------- ----------- Total liabilities........................................................... 268,788 301,447 ----------- ----------- Commitments and contingencies (Note 11).............................................. -- -- Shareholders' deficit:............................................................... Preferred stock, $0.01 par value-- 1,000 shares authorized; no shares issued...... -- -- Common stock, $0.01 par value-- 40,000 shares authorized; 17,847 shares issued (17,493 shares at June 30, 2002)........................... 178 175 Capital in excess of par value.................................................... 122,425 109,254 Accumulated deficit............................................................... (17,829) (42,185) Accumulated other comprehensive loss.............................................. (469) (373) Treasury stock, 6,126 shares at cost (4,139 shares at June 30, 2002).............. (124,588) (87,501) ----------- ----------- Total shareholders' deficit................................................. (20,283) (20,630) ----------- ----------- Total liabilities and shareholders' deficit................................. $ 248,505 $ 280,817 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. F-3 MEMBERWORKS INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS
For the year ended June 30, 2003 2002 2001 (In thousands, except per share amounts) Revenues................................................................... $ 456,881 $ 427,602 $ 475,726 Expenses: Marketing............................................................... 280,673 248,974 305,032 Operating............................................................... 78,444 78,694 90,368 General and administrative.............................................. 74,085 79,211 99,732 Restructuring charges (Note 12)......................................... -- 6,893 -- Non-recurring charge (Note 11).......................................... -- -- 3,000 Amortization of intangibles............................................. 1,393 1,941 10,918 ----------- ------------- ----------- Operating income (loss).................................................... 22,286 11,889 (33,324) Settlement of investment related litigation (Note 7)....................... 19,148 -- -- (Loss) gain on sale of subsidiary (Note 6)................................. (959) 65,608 -- Net (loss) gain on investment (Note 6)..................................... (206) (33,628) (2,172) Other income (expense), net................................................ 326 (401) (450) ----------- ------------- ----------- Income (loss) before equity in affiliate and minority interest............. 40,595 43,468 (35,946) Equity in income of affiliate.............................................. -- -- 83 Minority interest (Note 15)................................................ -- 450 9,106 ----------- ------------- ----------- Income (loss) before income taxes.......................................... 40,595 43,918 (26,757) Provision for income taxes................................................. 16,239 -- -- ----------- ------------- ----------- Income (loss) before cumulative effect of accounting change................ 24,356 43,918 (26,757) Cumulative effect of accounting change (Note 4)............................ -- (5,907) (25,730) ----------- ------------- ----------- Net income (loss).......................................................... $ 24,356 $ 38,011 $ (52,487) =========== ============= =========== Basic earnings (loss) per share: Income (loss) before cumulative effect of accounting change............. $ 1.93 $ 3.03 $ (1.75) Cumulative effect of accounting change.................................. -- (0.41) (1.69) ----------- ------------- ----------- Basic earnings (loss) per share......................................... $ 1.93 $ 2.63 $ (3.44) =========== ============= =========== Diluted earnings (loss) per share: Income (loss) before cumulative effect of accounting change............. $ 1.84 $ 2.95 $ (1.75) Cumulative effect of accounting change.................................. -- (0.40) (1.69) ----------- ------------- ----------- Diluted earnings (loss) per share....................................... $ 1.84 $ 2.55 $ (3.44) =========== ============= =========== Pro forma assuming accounting changes are retroactively applied: Net income (loss)....................................................... $ 24,356 $ 43,918 $ (18,978) Basic earnings (loss) per share......................................... 1.93 3.03 (1.24) Diluted earnings (loss) per share....................................... 1.84 2.95 (1.24) Weighted average common shares used in earnings (loss) per share calculations: Basic................................................................... 12,596 14,477 15,248 =========== ============= =========== Diluted................................................................. 13,233 14,909 15,248 =========== ============= ===========
The accompanying notes are an integral part of these consolidated financial statements F-4 MEMBERWORKS INCORPORATED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT Accumulated Common Stock Capital in Other ----------------- Excess of Deferred Accumulated Comprehensive Treasury Shares Amount Par Value Compensation Deficit Loss Stock Total ------ ------ ---------- ------------ ----------- ------------- ---------- ----------- (In thousands) Balance-- June 30, 2000.......... 16,507 $165 $ 91,398 $(44) $(27,709) $(145) $(44,644) $ 19,021 Issuance of common stock......... 376 4 3,234 3,238 Issuance of common stock for an acquisition............... 425 4 12,880 12,884 Issuance of treasury stock to fund 401K Plan.................... (28) 154 126 Acquisition of treasury stock.... (8,917) (8,917) Deferred compensation............ 351 44 395 Comprehensive loss: Net loss..................... (52,487) Currency translation adjustment (225) Total comprehensive loss..... (52,712) ------------------------------------------------------------------------------------------- Balance - June 30, 2001.......... 17,308 173 107,835 -- (80,196) (370) (53,407) (25,965) Issuance of common stock......... 185 2 1,462 1,464 Issuance of treasury stock to fund 401K Plan.................... (51) 207 156 Expense associated with the issuance of stock options to a non-employee................. 8 8 Acquisition of treasury stock.... (34,301) (34,301) Comprehensive income: Net income....................... 38,011 Currency translation adjustment.. (3) Total comprehensive income....... 38,008 ------------------------------------------------------------------------------------------- Balance - June 30, 2002.......... 17,493 175 109,254 -- (42,185) (373) (87,501) (20,630) Issuance of common stock options. 354 3 4,047 4,050 Tax Benefit from employee stock options...................... 9,100 9,100 Issuance of treasury stock to fund 401K Plan.................... (21) 127 106 Expense associated with the issuance of stock options to a non-employee................. 45 45 Acquisition of treasury stock.... (37,214) (37,214) Comprehensive income: Net income....................... 24,356 Currency translation adjustment.. (96) Total comprehensive income....... 24,260 ------------------------------------------------------------------------------------------- Balance - June 30, 2003.......... 17,847 $ 178 $122,425 $-- $(17,829) (469) $ (124,588) $(20,283) ========== ======== ========= ============ =========== ============= ========== ==========
The accompanying notes are an integral part of these consolidated financial statements F-5 MEMBERWORKS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended June 30, ---------------------------------------- 2003 2002 2001 ------------ ----------- ------------ (In thousands) Operating activities....................................................... $ 24,356 $ 38,011 $ (52,487) Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Change in deferred membership fees.................................... (39,003) (17,116) 9,266 Change in membership solicitation and other deferred costs............ 51,411 15,038 17,177 Depreciation and amortization......................................... 12,120 13,252 20,498 Deferred income taxes................................................. 14,182 -- -- Tax benefit from employee stock plans................................. 942 -- -- Gain on settlement of investment relating litigation.................. (19,148) -- -- Loss (gain) on sale of subsidiary..................................... 959 (65,608) -- Net loss on investment................................................ 206 33,628 2,172 Equity in income of affiliate......................................... -- -- (83) Non-cash restructuring charges........................................ -- 1,585 -- Minority interest..................................................... -- (450) (9,106) Cumulative effect of accounting change................................ -- 5,907 25,730 Other................................................................. 2,485 2,605 2,863 Change in assets and liabilities: Restricted cash......................................................... 2,951 (4,692) (991) Accounts receivable..................................................... 758 8,830 (2,299) Prepaid membership materials............................................ (135) 315 202 Prepaid expenses (3,246) (2,217) (2,938) Other assets............................................................ (1,331) (251) 773 Related party payables.................................................. -- 12 176 Accounts payable........................................................ (255) (10,752) (827) Accrued liabilities..................................................... 1,281 (1,083) 1,896 ------------ ----------- ------------ Net cash provided by operating activities................................. 48,533 17,014 12,022 ------------ ----------- ------------ Investing activities....................................................... Acquisition of fixed assets............................................. (5,463) (5,761) (15,133) Settlement of investment related litigation............................. 19,148 -- -- Proceeds from sale of subsidiary, net of cash sold...................... -- 45,997 -- Other investing activities.............................................. (1,250) -- 4,144 Business combinations, net of cash acquired............................. -- -- (7,185) ------------ ----------- ------------ Net cash provided by (used in) investing activities........................ 12,435 40,236 (18,174) ------------ ----------- ------------ Financing activities ...................................................... Net proceeds from issuance of stock..................................... 4,050 1,515 8,059 Net repayments of credit facility....................................... -- -- (526) Treasury of stock purchases............................................. (37,214) (34,301) (8,917) Payments of long-term obligations....................................... (1,051) (718) (755) ------------ ----------- ------------ Net cash used in financing activities ..................................... (34,215) (33,504) (2,139) ------------ ----------- ------------ Effect of exchange rate changes on cash and cash equivalents............... 5 11 (133) ------------ ----------- ------------ Net increase (decrease) in cash and cash equivalents....................... 26,758 23,757 (8,424) Cash and cash equivalents at beginning of year............................. 45,502 21,745 30,169 ------------ ----------- ------------ Cash and cash equivalents at end of year................................... $ 72,260 $ 45,502 $ 21,745 ============ =========== ============
The accompanying notes are an integral part of these consolidated financial statements. F-6 Note 1 -- Nature of Business MemberWorks Incorporated ("MemberWorks" or the "Company"), a Delaware Corporation organized in 1996 and did business as Card Member Publishing Corporation from 1989 to 1996, designs and manages membership programs that offer services and discounts on everyday needs in healthcare, personal finance, insurance, travel, entertainment, fashion, personal security and more. As of June 30, 2003, 6.3 million retail members are enrolled in MemberWorks programs, gaining convenient access to thousands of service providers and vendors. MemberWorks is the trusted marketing partner of leading consumer-driven organizations and offers them effective tools to enhance their market presence, strengthen customer affinity and generate additional revenue. Note 2 -- Summary of Significant Accounting Policies Basis of presentation -- consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Use of estimates The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management of the Company to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant judgments and estimates include: membership cancellation rates, deferred marketing costs, valuation of intangible assets, estimation of remaining useful lives of intangible assets and valuation of deferred tax assets. Reclassifications Certain prior year amounts have been reclassified to conform to the current years presentation. Foreign currency translation Assets and liabilities of foreign subsidiaries are translated at the exchange rates in effect as of the balance sheet dates. Equity accounts are translated at historical exchange rates and revenues, expenses and cash flows are translated at the average exchange rates for the periods presented. Translation gains and losses are included as a component of comprehensive income in the consolidated statements of shareholders' deficit. Transaction gains and losses, if any, are included in the consolidated statements of operations. Fair value of financial instruments and concentration of credit risk All current assets and liabilities are carried at cost, which approximates fair value due to the short-term maturity of those instruments. The recorded amounts of the Company's long-term liabilities also approximate fair value. Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of accounts receivable from financial and other cardholder-based institutions (clients of the Company) whose cardholders constitute the Company's membership base. These entities include major banks, financial institutions, retailers and major oil companies located primarily in the United States. Fixed assets Fixed assets, capitalized software costs and capital leases are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the related assets. Useful lives are generally 3 years for computer software and equipment, 5 years or F-7 the remaining life of the lease for leasehold improvements and 5 to 10 years for furniture and fixtures. Maintenance and repair expenditures are charged to operations as incurred. Revenue recognition Membership fees are billed through clients of the Company primarily through credit cards. During an initial annual membership term or renewal term, a member may cancel his or her membership in the program generally for a pro rata refund of the membership fee based on the remaining portion of the membership period. Revenue from members who are charged on a monthly payment program is recognized as the membership fees are earned. In accordance with Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"), deferred membership fees are recorded, net of estimated cancellations, and are amortized as revenues from membership fees upon the expiration of membership refund privileges. An allowance for membership cancellations is established based on management's estimates and is updated regularly. In determining the estimate of allowance for membership cancellations, management analyzes historical cancellation experience, current economic trends and changes in customer demand for the Company's products. Actual membership cancellations are charged against the allowance for membership cancellations on a current basis. If actual cancellations differ from the estimate, the results of operations would be impacted. Accrued liabilities set forth in the accompanying consolidated balance sheets as of June 30, 2003 and 2002 include an allowance for membership cancellations of $20,934,000 and $23,753,000, respectively. Membership programs sponsored by the Company's two largest clients in 2003 accounted for 21% and 16% of revenue, respectively. For the fiscal years ended June 30, 2002 and 2001, membership programs sponsored by the Company's largest client accounted for 16% and 13% of revenue, respectively. Marketing Expenses The Company's marketing expenses are comprised of telemarketing, direct mail, refundable royalty payments, non- refundable royalty payments and advertising costs. Telemarketing and direct mail are direct response advertising costs which are accounted for in accordance with American Institute of Certified Public Accountants Statement of Position 93-7, "Reporting on Advertising Costs" ("SOP 93-7"). Under SOP 93-7, direct response advertising costs are deferred and charged to operations over the membership period as revenues from membership fees are recognized. Refundable royalty payments are also deferred and charged to operations over the membership period in order to match the marketing costs with the associated revenues from membership fees. Advertising costs and non-refundable royalty payments, which include fee per pitch, fee per sale and fee per impression marketing arrangements, are expensed when incurred. Total membership solicitation costs incurred to obtain a new member are generally less than the estimated total membership fees. However, if total membership solicitation costs were to exceed total estimated membership margins, an adjustment would be made to the membership solicitation and other deferred costs balance to the extent of any impairment. Earnings per share Basic and diluted earnings per share amounts are determined in accordance with the provisions of Financial Accounting Standards Board Statement ("SFAS") No. 128, "Earnings Per Share" ("SFAS 128"). Basic earnings per share is computed using the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is computed using the weighted average number of common shares outstanding and the dilutive effect of potential common shares outstanding, determined using the treasury stock method. Cash and cash equivalents The Company considers highly liquid investment instruments with terms of three months or less at the time of acquisition to be cash equivalents. F-8 Restricted cash The Company excludes from cash and cash equivalents restricted cash which is held in an escrow account for the payment of commissions to a client and the related refunds to customers. In fiscal 2002, the Company held cash in an escrow account pursuant to the iPlace, Inc. merger agreement (see Note 6). Marketable securities Marketable securities are classified as available-for-sale. Unrealized gains and losses are excluded from earnings and are reported as a separate component of other comprehensive income in shareholders' equity. Losses incurred that are deemed to be other than temporary are charged to earnings. Realized gains and losses are included in income and are determined based on the specific identification method. As of June 30, 2003, the Company did not have any marketable securities. As of June 30, 2002, the Company had marketable securities of $912,000. Income taxes The Company accounts for income taxes under the provisions of SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"). Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation of goodwill and other intangibles MemberWorks reviews the carrying value of its goodwill and other intangible assets, and assesses the remaining estimated useful lives of its intangible assets, in accordance with SFAS 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). The Company reviews the carrying value of its goodwill and other intangible assets for impairment by comparing such amounts to their fair values. MemberWorks is required to perform this comparison at least annually or more frequently if circumstances indicate possible impairment. When determining fair value, the Company utilizes various assumptions, including projections of future cash flows. A change in these underlying assumptions would cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts. In such an event, MemberWorks would then be required to record a corresponding charge which would negatively impact earnings. Goodwill at July 1, 2002 and 2001 was tested for impairment during the quarters ended September 30, 2002 and 2001, respectively. The Company concluded that none of its goodwill was impaired as of July 1, 2002. As of July 1, 2001, the Company determined that there was an impairment of goodwill of $5,907,000 at one of its reporting units (see Note 4) due to the change in methodology of calculating impairment under SFAS 142 concurrent with downward trends in the operations of the reporting unit. This amount was recorded as a cumulative effect of accounting change in the statement of operations in fiscal 2002. Intangible assets principally include member and customer relationships that arose in connection with business acquisitions. Acquired intangibles, except member relationships, are recorded at cost and are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 20 years. The value of member relationships is amortized using an accelerated method based on estimated future cash flows. Impairment of long-lived assets The Company accounts for the impairment and disposition of long-lived assets in accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." The Company reviews its intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. As of June 30, 2003, no impairment has been indicated. Treasury stock Treasury stock is accounted for under the cost method. F-9 Stock-based compensation The Company accounts for stock option grants in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and its related interpretations. As of June 30, 2003, the Company has five stock-based compensation plans which are described below. In accordance with APB 25, the Company applies the intrinsic value method in accounting for employee stock options. Accordingly, the Company generally does not recognize compensation expense with respect to stock-based awards to employees. Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and SFAS No. 148, "Accounting for Stock-Based Compensation Transition and Disclosure" ("SFAS 148"), the Company's pro forma net income and earnings per share would have been as follows:
Year Ended June 30, --------------------------------------- 2003 2002 2001 ----------- ----------- ------------ ($ in thousands, except per share data) Net income (loss) reported:............................................. $24,356 $ 38,011 $(52,487) Add: Stock-based employee compensation expense determined under the intrinsic value based method for all awards, net of related tax effects........................................................... -- 8 395 Deduct: Stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects.... (6,055) (11,406) (11,310) ----------- ----------- ------------ Pro forma net income.................................................. $18,301 $ 26,613 $(63,402) =========== =========== ============ Earnings (loss) per share: As reported Basic............................................................... $ 1.93 $2.63 $ (3.44) Diluted............................................................. 1.84 2.55 (3.44) Pro forma Basic............................................................... $ 1.45 $ 1.84 $ (4.16) Diluted............................................................. 1.38 1.79 (4.16)
Under the stock options plans and the agreement with an executive officer, the fair value of each option grant calculated under the provisions of SFAS 123 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions for the years ended June 30:
2003 2002 2001 ----------- ----------- ------------ Dividend yield.......................................................... 0% 0% 0% Expected volatility..................................................... 69% 50% 50% Risk free interest rate................................................. 3.5% 4.8% 5.9% Expected lives.......................................................... 5 years 5 years 5 years
The weighted average fair value per share of options granted at market value were $7.95, $9.55 and $14.03 for the years ended June 30, 2003, 2002 and 2001, respectively. For pro forma purposes, the estimated fair value of the Company's stock-based awards to employees is amortized over the options' vesting period of four years and the Employee Stock Purchase Plan's look-back period of six-months. For purposes of calculating the pro forma SFAS 123 compensation expense under the iPlace Inc. stock option plan, the fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions for the year ended June 30, 2002: dividend yield of 0%; volatility of 50%; risk free interest rate of 4.6%; and expected life of 5.0 years. The weighted average fair value of options granted at market value during fiscal 2002 was $1.34. The following weighted average assumptions were F-10 used for the year ended June 30, 2001: dividend yield of 0%; volatility of 50%; risk free interest rate of 4.9%; and expected life of 5.0 years. The weighted average fair value of options granted at market value during fiscal 2001 was $2.07. New accounting pronouncements In June 2002, the Financial Accounting Standards Board ("FASB") issued Statement No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"), which is effective for exit or disposal activities that are initiated after December 31, 2002. SFAS 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs in a Restructuring)." The adoption of SFAS 146 did not have a material impact on the Company's financial statements. In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires a guarantor to include disclosure of certain obligations, and if applicable, at the inception of the guarantee, recognize a liability for the fair value of other certain obligations undertaken in issuing a guarantee. The recognition requirement is effective for guarantees issued or modified after December 31, 2002. The adoption of FIN 45 did not have a material impact on the Company's financial statements. In December 2002, the FASB issued SFAS 148. This Statement amends SFAS 123 to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of that Statement to require prominent disclosure about the effects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation. Finally, this Statement amends APB Opinion No. 28, "Interim Financial Reporting," to require disclosure about those effects in interim financial information. The transition provisions of this statement are effective for financial statements with fiscal years ending after December 15, 2002. The disclosure provisions of this statement are effective for financial reports containing condensed financial statements for interim periods beginning after December 15, 2002. The Company will continue to account for its stock based compensation according to the provisions of APB Opinion No. 25. In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 clarifies the application of Accounting Research Bulletin No. 51 and applies immediately to any variable interest entities created after January 31, 2003 and to variable interest entities in which an interest is obtained after that date. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. While it will continue to evaluate the requirements of FIN 46, MemberWorks does not believe that the adoption of FIN 46 will have a material impact on the Company's financial statements. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150"). This statement requires that certain financial instruments that were accounted for as equity under previous guidance be classified as liabilities in statements of financial position. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. MemberWorks does not believe that the adoption of SFAS 150 will have a material impact on Company's financial statements. Note 3 -- Stock-Based Compensation Stock Compensation Plans During fiscal 1997, the Board of Directors approved the Company's 1996 Stock Option Plan (the "1996 Stock Option Plan"), which became effective upon the closing of the Company's initial public offering. Under the 1996 Stock Option Plan, the Board can determine the date on which options can vest and become exercisable as well as the term of the options granted. During fiscal 1999, the Board of Directors and shareholders approved an increase F-11 in the number of shares of Common Stock reserved for issuance under the 1996 Stock Option Plan from 1,800,000 to 3,600,000. During fiscal 2002, the Company added an additional 2,000,000 options, which may be granted using treasury stock. During fiscal 1996, the Board of Directors and shareholders of the Company approved the adoption of the 1995 Executive Officers' Stock Option Plan and the 1995 Non-Employee Directors' Stock Option Plan under which the Board is authorized to grant 360,000 and 180,000 options, respectively, to acquire shares of Common Stock at a price per share equal to or greater than fair market value at the date of grant. Under the Executive Officers' Stock Option Plan, the Board can determine the date on which options vest and become exercisable. Options become exercisable over a four-year period under the Non-Employee Directors' Stock Option Plan. Under the stock option plans described above, options generally become exercisable over a four to five year period and expire at the earlier of termination of employment or between five to ten years from the date of grant. The Company had an agreement with an executive officer, whereby the Company was required to grant options to purchase up to 144,000 shares of Common Stock to the executive for achievement of certain performance goals. These options have a stated exercise price of $2.78 per share and vest ratably over a four-year period from the date of grant. The Company recognized compensation expense related to those options of $44,000 for the year ended June 30, 2001. At June 30, 2003, 5,508,000 shares of common stock were reserved for issuance under the stock option plans, of which 900,000 shares were available for future grant. Information with respect to options to purchase shares issued under these plans is as follows:
2003 2002 2001 --------------------- ---------------------- ----------------------- Average Average Average Exercise Exercise Exercise (Shares in thousands) Shares Price Shares Price Shares Price --------- -------- --------- --------- ---------- --------- Outstanding at beginning of year 4,341 $20.82 3,815 $21.45 2,980 $17.14 Granted at market value........ 850 13.42 1,128 19.36 1,766 27.61 Exercised...................... (338) 11.30 (127) 21.29 (366) 7.78 Forfeited...................... (321) 24.53 (475) 25.31 (565) 26.32 --------- --------- ---------- Outstanding at end of year..... 4,532 $19.88 4,341 $20.82 3,815 $21.45 ========= ========= ==========
Options Outstanding Options Exercisable --------------------------------------- ------------------------ Average Shares Remaining Average Shares Average Outstanding Life Exercise Outstanding Exercise (Shares in thousands) at 6/30/03 (Years) Price at 6/30/03 Price ------------ --------- -------- ------------- --------- $2.78 to $13.00................ 447 3.6 $ 5.95 392 $ 5.67 $13.05 to $14.26............... 773 9.1 13.10 -- -- $15.00 to $19.38............... 754 5.9 16.76 599 16.42 $20.31 to $20.35............... 988 8.0 20.34 294 20.34 $20.81 to $29.00............... 671 6.5 26.81 534 26.53 $29.56 to $29.88............... 899 6.9 29.59 486 26.60 ------------ ------------- 4,532 7.0 $19.88 2,305 $20.21 ============ =============
Options exercisable as of June 30, 2002 and 2001 were 1,876,000 and 1,345,000, respectively. iPlace Stock Option Plan In April 2001, the Board of Directors of iPlace approved a five-for-one stock split of iPlace's outstanding stock and options. The stock option split did not impact the value of outstanding options and all option share information has been adjusted to reflect the five-for-one stock split. F-12 The iPlace options were issued at the estimated fair value of the underlying common stock and generally vested 25% per year beginning one year from the date of grant. During 2002, 470,000 options were granted at an average exercise price of $2.74 and 205,000 options were forfeited at an average exercise price of $2.40. In August 2001, MemberWorks sold iPlace (see Note 6). Therefore, there were no stock options outstanding under this plan as of June 30, 2003 or 2002. During 2001, 2,941,000 options were granted at an average exercise price of $4.20 and 482,000 options were forfeited at an average exercise price of $2.80. At June 30, 2001, options to purchase approximately 5,585,000 shares of iPlace stock remained outstanding at an average exercise price of $3.18 with 1,548,000 of those options exercisable at an average exercise price of $2.54. Employee Stock Purchase Plan During fiscal 1997, the Company adopted the 1996 Employee Stock Purchase Plan which provides for the issuance of up to 360,000 shares of common stock. The plan permits eligible employees to purchase Common Stock through payroll deductions, which may not exceed 10% of an employee's compensation, at a price equal to the lower of (a) 85% of the closing price of the Common Stock on the day the purchase period commences or (b) 85% of the closing price of the Common Stock on the day the purchase period terminates. During fiscal 2003, 2002, and 2001, 16,000, 18,000 and 20,000 shares were purchased under the plan, respectively. Warrants During fiscal 2001, warrants to acquire 3,000 shares of Common Stock were exercised at $0.0014 per share. In addition, during fiscal 2001, warrants to acquire 4,000 shares of Common Stock at $0.0014 expired. Warrants were issued to outside investors prior to fiscal 1997. As of June 30, 2003, 2002 and 2001, no warrants are outstanding to purchase Common Stock. Note 4 -- Cumulative Effect of Accounting Change Adoption of SFAS 142 The Company adopted SFAS 142 effective July 1, 2001. With the adoption of SFAS 142, the Company reassessed the useful lives and residual values of all acquired intangible assets to make any necessary valuation or amortization period adjustments. Based on that assessment, only goodwill was determined to have an indefinite useful life and no adjustments were made to the amortization period or residual values of other intangible assets. The Company determined that at July 1, 2001, there was an impairment of goodwill of $5,907,000 at one of its reporting units due to the change in methodology of calculating impairment under SFAS 142 concurrent with recent downward trends in the operations of the reporting unit. This amount was recorded as a cumulative effect of accounting change in the statement of operations in the fiscal quarter ended September 30, 2001. F-13 The following pro forma net income and earnings per share have been prepared assuming SFAS 142 was adopted as of July 1, 2000. Pro forma balances have been adjusted to exclude goodwill amortization expense which is no longer recorded under the provisions of SFAS 142 (in thousands, except per share data). 2003 2002 2001 ----------- ---------- ------------ Net income (loss) before cumulative effect of accounting change: Reported income (loss) before cumulative effect of accounting change $ 24,356 $ 43,918 $ (26,757) Indefinite lived intangible asset amortization..................... -- -- 7,779 ----------- ---------- ----------- Adjusted net income (loss) before cumulative effect of accounting change............................................................. $ 24,356 $ 43,918 $ (18,978) =========== ========== =========== Basic earnings (loss) before cumulative effect of accounting change per share: Reported earnings (loss) before cumulative effect of accounting change per share................................................. $ 1.93 $ 3.03 $ (1.75) Indefinite lived intangible asset amortization per share........... -- -- 0.51 ----------- ---------- ----------- Adjusted earnings (loss) before cumulative effect of accounting change per share................................................. $ 1.93 $ 3.03 $ (1.24) =========== ========== =========== Diluted earnings (loss) before cumulative effect of accounting change per share: Reported earnings (loss) before cumulative effect of accounting change per share........................................................ $ 1.84 $ 2.95 $ (1.75) Indefinite lived intangible asset amortization per share........... -- -- 0.51 ----------- ---------- ----------- Adjusted earnings (loss) before cumulative effect of accounting change per share................................................. $ 1.84 $ 2.95 $ (1.24) =========== ========== =========== Net income (loss): Reported income (loss)............................................. $ 24,356 $ 38,011 $ (52,487) Indefinite lived intangible asset amortization..................... -- -- 7,779 ----------- ---------- ----------- Adjusted net income (loss)......................................... $ 24,356 $ 38,011 $ (44,708) ----------- ---------- ----------- Basic earnings (loss) per share: Reported earnings (loss) per share................................. $ 1.93 $ 2.63 $ (3.44) Indefinite lived intangible asset amortization per share........... -- -- 0.51 ----------- ---------- ----------- Adjusted earnings (loss) per share................................. $ 1.93 $ 2.63 $ (2.93) =========== ========== =========== Diluted earnings (loss) per share: Reported earnings (loss) per share................................. $ 1.84 $ 2.55 $ (3.44) Indefinite lived intangible asset amortization per share........... -- -- 0.51 ----------- ---------- ----------- Adjusted earnings (loss) per share................................. $ 1.84 $ 2.55 $ (2.93) =========== ========== ===========
Adoption of SAB 101 The Company adopted SAB 101 as of July 1, 2000. SAB 101 establishes the Security and Exchange Commission's (the "Staff") preference that membership fees should not be recognized in earnings prior to the expiration of refund privileges. Effective July 1, 2000, the Company changed its method of accounting for membership fee revenue to comply with the Staff's preferred method as outlined in SAB 101. Membership fees, and the related direct costs associated with acquiring the underlying memberships, are no longer recognized on a prorata basis over the corresponding membership period, but instead are recognized in earnings upon the expiration of membership refund privileges. The cumulative effect of this change in accounting principle as of July 1, 2000 of $25,730,000 was recorded in the fiscal quarter ended September 30, 2000. The membership fees, net of estimated refunds and associated direct costs, which were deferred as part of the cumulative effect adjustment at July 1, 2000 were recognized in earnings during fiscal year 2001 as the underlying refund privileges expired. During the fiscal year ended June 30, 2001, the Company recognized $68,195,000 of revenue which was included as a component of the cumulative effect of accounting change booked July 1, 2000. The effect of the adoption of SAB 101 on reported revenue, loss before the cumulative effect of accounting change and loss per share before the cumulative effect of accounting change for the fiscal year ended June 30, 2001, is an increase of $13,470,000, $3,758,000 and $0.25, respectively. F-14 Note 5 -- Business Combinations In October 2000, the Company increased its ownership in Discount Development Services, L.L.C. and its subsidiary, Uni-Care, Inc., (together "DDS") from 19% to 100%. The Company paid $8,150,000 in cash and 425,232 shares of MemberWorks Common Stock with an approximate fair market value of $13,641,000 as of the date the Company entered into the purchase agreement. The acquisition was accounted for as a purchase, with the purchase price allocated to the assets acquired and liabilities assumed based upon their respective estimated fair value at the date of acquisition. DDS is in the business of marketing and administering healthcare network membership programs that provide its members access to various healthcare networks including hearing, vision, prescription and chiropractic. The results of DDS's operations are included in the consolidated financial statements from the date of acquisition. Due to the immateriality of the acquisition, pro forma results were not required to be presented. Note 6 -- (Loss) Gain on Sale of Subsidiary/Loss on Investment During fiscal 2002, the Company sold its investment in and advances to iPlace, Inc. in exchange for $50,111,000 in cash, including $3,703,000 held in escrow, and 1,601,000 shares of Homestore.com, Inc. common stock, including 451,000 shares held in escrow. The Company reported a gain of $65,608,000 on the sale. Subsequent to the date of sale, the investment in Homestore.com, Inc. declined in value and management determined that the decline was other than temporary. As a result, the Company wrote down its investment in Homestore.com, Inc. to its fair value and recognized a loss of $33,628,000 during fiscal 2002. As of June 30, 2002, the Company's investment in Homestore.com, Inc. was valued at $912,000. During fiscal 2002, 84,000 shares were released from the escrow. During fiscal 2003, the Company settled with Homestore.com, Inc. all pending issues related to amounts held in escrow in connection with the sale. The Company returned cash and stock to Homestore.com, Inc., which resulted in a net loss of $959,000. During fiscal 2003, the Company sold all of its Homestore.com, Inc. common stock and recognized a loss of $206,000 in connection with this sale (see Note 7). During fiscal 2001, MemberWorks' investment in 24/7 Media, Inc., ("24/7") declined in value and management determined that the decline was other than temporary. As a result, MemberWorks wrote down its investment in 24/7 by $1,790,000. In addition, during fiscal 2001, MemberWorks sold its remaining shares of 24/7 stock. Proceeds from the sales were $4,144,000 and related realized losses were $382,000. The financial impact of the transactions on fiscal 2001 is a net loss of $2,172,000. Note 7 -- Settlement of Investment Related Litigation During fiscal 2003, MemberWorks, along with certain of the other former shareholders of iPlace, Inc., settled their lawsuit against Homestore.com, Inc. The total settlement amount in favor of the plaintiffs was $23,000,000 of which MemberWorks received $19,148,000 (see Note 6). Note 8 -- Goodwill and Other Intangible Assets The gross carrying value and accumulated amortization of goodwill and other intangibles are as follows (in thousands): F-15
As of June 30, 2003 As of June 30, 2002 ------------------------------- ------------------------------- Gross Carrying Accumulated Gross Carrying Accumulated Amount Amortization Amount Amortization -------------- ------------- ------------- -------------- Finite lived intangible assets: Membership and client relationships...... $ 13,195 $ (6,730) $ 13,195 $ (5,466) Other.................................... 950 (759) 950 (630) -------------- ------------- ------------- -------------- Total amortized intangible assets...... $ 14,145 $ (7,489) $ 14,145 $ (6,096) ============= ============= ============= ============== Indefinite lived intangible assets: Goodwill................................. $ 42,039 $ 42,039 ============= =============
The future intangible amortization expense for the next five fiscal years is estimated to be as follows (in thousands): Fiscal Year: 2004..................................................... 1,045 2005..................................................... 840 2006..................................................... 695 2007..................................................... 554 2008..................................................... 485 Goodwill was tested for impairment during the quarter ended September 30, 2002 as required by SFAS 142. The Company concluded that none of its goodwill was impaired. Fair value was estimated using discounted cash flow methodologies. Goodwill was tested at July 1, 2001, for impairment during the quarter ended September 30, 2001, in connection with the adoption of SFAS 142 (see Note 4). In addition, the Company reassessed the estimated useful lives of its indefinite lived intangible assets and determined that the lives were appropriate. The Company will continue to test the goodwill of each of its reporting units annually or more frequently if impairment indicators exist. Note 9 -- Fixed Assets Fixed assets, net are comprised of the following at June 30, (in thousands): 2003 2002 ----------- ------------ Computer software and equipment.............................. $ 44,535 $ 44,935 Furniture and fixtures....................................... 8,161 8,103 Leasehold improvements....................................... 6,356 6,895 ----------- ------------ 59,052 59,933 Accumulated depreciation and amortization.................... (34,083) (28,513) ----------- ------------ $ 24,969 $ 31,420 =========== ============
Depreciation and amortization expense was $10,818,000, $11,311,000 and $10,545,000 for the years ended June 30, 2003, 2002 and 2001, respectively. Note 10 -- Long-Term Liabilities Long-term liabilities are summarized as follows at June 30, (in thousands): 2003 2002 ----------- ------------ Notes payable................................................ $ -- $ 760 Lease incentives............................................. 1,466 1,519 Other long-term obligations.................................. 1,898 2,355 ----------- ------------ F-16 3,364 4,634 Less: current maturities..................................... 236 1,015 ----------- ------------ Long-term liabilities........................................ $ 3,128 $ 3,619 =========== ============
The Company has a bank credit facility that allows borrowings up to $28,000,000. Borrowings under the facility accrue interest at the higher of the base commercial lending rate for the bank or the Federal Funds Rate plus 0.5% per annum. A commitment fee is charged based on the total facility at the rate of 0.50% per annum on the average daily unused portion of the facility. This bank credit facility matures on March 29, 2004. As of June 30, 2003, availability under the bank credit facility was reduced by an outstanding letter of credit of $5,495,000. There were no borrowings outstanding under this bank credit facility as of June 30, 2003 or 2002. The bank credit facility has certain financial covenants, including a maximum debt coverage ratio, a minimum fixed charge ratio, potential restrictions on additional borrowings and potential restrictions on additional stock repurchases. For the periods ended June 30, 2003 and 2002, the Company was in compliance with all financial and restrictive loan covenants. The credit facility is secured by all of the Company's assets, including the stock of its subsidiaries. As of June 30, 2002, the Company's subsidiary, DDS, had $760,000 outstanding under a note payable that had an interest rate of 5.0% per annum which was paid in full in fiscal 2003. As of June 30, 2003 and 2002, MemberWorks Canada had $1,466,000 and $1,519,000, respectively, outstanding for lease incentives related to certain operating leases. These lease incentives are amortized as a reduction to rent expense over the terms of the leases. Other long-term obligations are comprised of the long-term portion of the restructuring reserve (see note 12) and two consulting agreements entered into by DDS which expire during fiscal 2005. Other income (expense) as shown in the statements of operations for the fiscal years ended June 30, 2003, 2002 and 2001, includes interest expense of $238,000, $435,000 and $1,263,000, respectively. Other income (expense) as shown in the statements of operations for the fiscal years ended June 30, 2003, 2002 and 2001, includes interest income of $808,000, $768,000 and $900,000, respectively. Note 11 -- Commitments and Contingencies The Company operates in leased facilities. Management expects that leases currently in effect will be renewed or replaced by other leases of a similar nature and term. Rent expense under operating leases was $7,671,000, $6,508,000 and $7,552,000 for the fiscal years ended June 30, 2003, 2002 and 2001, respectively. The Company entered into certain capital leases for certain equipment. Lease amortization for the years ended June 30, 2003, 2002 and 2001 was $55,000, $62,000 and $47,000, respectively, and is included in depreciation and amortization expense. Future minimum lease payments under capital leases, including the present value of net minimum lease payments, as of June 30, 2003 are $8,000, which will be paid in fiscal 2004. Interest rates on these capital leases ranged from 9.9% to 31.6%. The future minimum lease payments under operating leases as of June 30, 2003 are as follows (in thousands): Operating Fiscal Year Leases ----------- ----------- 2004.................................................... $ 6,620 2005.................................................... 6,160 2006.................................................... 4,977 2007.................................................... 2,516 2008.................................................... 2,393 Thereafter.............................................. 4,496 ----------- Total minimum lease payments............................ $ 27,162 =========== F-17 In fiscal 2003, the Company entered into an advertising agreement with one of its clients to promote products and services to prospective new members. Pursuant to the agreement, as of June 30, 2003, the Company has a purchase commitment of $1,000,000, that is payable in fiscal 2004. In fiscal 2001, the Company entered into a voluntary agreement with the State of California and Ventura and Orange Counties to implement certain marketing practices in the State of California. Pursuant to the agreement, the Company paid costs of investigation and civil penalties of $2,000,000, which were split between the state and the counties. The Company also established a reserve of $1,000,000 to cover specific costs related to the agreement. As a result of the agreement, the Company recorded a non-recurring charge of $3,000,000 during fiscal 2001. As of June 30, 2003, this obligation was $0. Legal proceedings Except as set forth below, in management's opinion, there are no significant legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their properties are subject. The Company is involved in other lawsuits and claims generally incidental to its business including, but not limited to, various suits, including previously disclosed suits in the 2002 Annual Report filed on Form 10-K, brought against the Company by individual consumers seeking monetary and/or injunctive relief relating to the marketing of the Company's programs. In addition, from time to time, and in the regular course of its business, the Company receives inquiries from various federal and/or state regulatory authorities. Management does not believe that there will be any material effects on the results of operations as a result of its outstanding litigation proceedings. In March 2001, an action was instituted by plaintiff Teresa McClain against Coverdell & Company ("Coverdell"), a wholly-owned subsidiary of the Company, Monumental Life Insurance Company and other defendants in the United States District Court for the Eastern District of Michigan, Southern Division. The suit, which seeks unspecified monetary damages, alleges that Coverdell and the other defendants violated the Michigan Consumer Protection Act and other applicable Michigan laws in connection with the marketing of Monumental Life Insurance Company insurance products. The complaint includes a claim that the suit should be certified as a class action and the plaintiff has filed a motion for class certification to which all of the defendants have filed opposing papers regarding the same. The Court has announced that it will deny the motion for national class certification, but it has indicated that it would consider certifying a class of Michigan residents. A hearing has not yet been held on class certification, and no order has been issued. The Company believes that the claims made against Coverdell are unfounded and Coverdell and the Company will vigorously defend their interests against this suit. On January 24, 2003, the Company filed a motion with the Superior Court for the Judicial District of Hartford, Connecticut to vacate and oppose the confirmation of an arbitration award issued in December 2002. The arbitration, filed against the Company by MedValUSA Health Programs, Inc. ("MedVal") in September 2000, involved claims of breach of contract, breach of the duty of good faith and fair dealing, and violation of the Connecticut Unfair Trade Practices Act ("CUTPA"). Even though the arbitrators found that MemberWorks was not liable to MedVal for any compensatory damages, they awarded $5,495,000 in punitive damages and costs against MemberWorks solely under CUTPA. MemberWorks believes that this arbitration award is unjustified and not based on any existing legal precedent. Specifically, the Company is challenging the award on a number of grounds, including that it violates a well defined public policy against excessive punitive damage awards, raises constitutional issues and disregards certain legal requirements for a valid award under CUTPA. The hearing on the Company's motion was held on February 10, 2003. On June 22, 2003, the Superior Court denied the Company's motion to vacate the award, and the Company filed an appeal of that decision. No briefing schedule has yet been set in the appeal. While the Company intends to take action to prevent the enforcement of the award by, among other things, vigorously pursuing an appeal, there can be no assurance that MemberWorks will be successful in its efforts. The Company has made no provision in its financial statements for this contingency because it believes that a loss is not probable. If the Company were ultimately unsuccessful on this or other available appeals, and a final non-appealable court order confirming the arbitration award is rendered, the payment of the award could have a material adverse effect on the Company's results of operations and liquidity in the period in which the final order is entered. F-18 Note 12 -- Restructuring Charges During fiscal 2002, the Company announced the implementation of several cost saving initiatives due to a slowdown in consumer response rates and increased economic uncertainty in both the U.S. and abroad. This restructuring program included a workforce reduction, the closing of the Company's United Kingdom operations and the downsizing of the operational infrastructure throughout the Company. As a result of the restructuring program, the Company recorded restructuring charges of $6,893,000 during the quarter ended December 31, 2001. The following is a rollforward of the major components of the restructuring reserve (in thousands):
Workforce Lease Asset Reduction Obligations Disposals Total ----------- ----------- ---------- ---------- Additions to the reserve..................... $ 2,214 $ 3,094 $ 1,585 $ 6,893 Charges to the reserve....................... 1,823 548 1,585 3,956 ----------- ----------- ---------- ---------- Reserve balance at June 30, 2002............. 391 2,546 -- 2,937 Additions to the reserve..................... -- -- -- -- Charges to the reserve....................... 300 836 -- 1,136 ----------- ----------- ---------- ---------- Reserve balance at June 30, 2003............. $ 91 $ 1,710 $ -- $ 1,801 =========== =========== ========== ==========
Workforce Reduction As part of the restructuring plan, the Company reduced its workforce by approximately 190 regular employees, consisting of membership service representatives and other professional personnel. All 190 employees have been terminated. Lease Obligations and Asset Disposals In connection with the closing of the United Kingdom offices and the downsizing of the Company's infrastructure, the Company recorded $73,000 for lease terminations, $3,021,000 for non-cancelable lease obligations and $1,585,000 for asset disposals. The reserve for lease obligations has been reduced by anticipated sublease income. Note 13 -- Income Taxes The provision for income taxes is as follows as of June 30, (in thousands): 2003 2002 2001 ------------- ----------- ------------- Current Federal........................................ $ 1,635 $ -- $ -- State.......................................... 422 -- -- Foreign........................................ -- -- -- ------------- ----------- ------------- Total............................................ $ 2,057 $ -- $ -- ============= =========== ============= Deferred Federal........................................ $ 11,642 $ -- $ -- State.......................................... 2,540 -- -- Foreign........................................ -- -- -- ------------- ----------- ------------- Total............................................ $ 14,182 $ -- $ -- ============= =========== =============
There was no current or deferred provision for income taxes for the years ended June 30, 2002 or 2001 due to the utilization of the Company's net operating loss carry forwards against which the Company had carried a full valuation allowance. Deferred tax assets and liabilities result from differences in the basis of assets and liabilities for tax and financial statement purposes. F-19 The tax effects of the basis differences and net operating loss carry forwards and the valuation allowance established in accordance with SFAS 109 are summarized below as of June 30, 2003 and 2002 (in thousands): 2003 2002 ------------- ------------ Deferred Tax Assets: Benefit of federal and state net operating loss carry forwards.. $ 16,163 $ 28,859 Deferred membership fees........................................ 2,965 18,944 Allowance for membership cancellations.......................... 8,361 9,453 Sale of Homestore.com, Inc. marketable securities............... -- 335 Other deferred tax assets ...................................... 1,997 4,751 ------------- ------------ Gross deferred tax assets....................................... 29,486 62,342 Less: Valuation allowance....................................... -- (6,581) ------------- ------------ Deferred tax assets after valuation allowance................... 29,486 55,761 ------------- ------------ Deferred Tax Liabilities: Membership solicitation and other deferred costs................ (30,266) (54,175) Goodwill and other intangibles.................................. (3,204) (992) Depreciation.................................................... (2,040) (594) ------------- ------------ Gross deferred tax liabilities.................................. (35,510) (55,761) ------------- ------------ Net deferred tax liability........................................ $ (6,024) $ -- ============= ============
As of June 30, 2003, the Company had federal net operating loss carry forwards of $41,443,000 expiring at various dates from December 31, 2017 to June 30, 2021. The Company's ability to use these losses to offset future taxable income would be subject to limitations under the Internal Revenue Code if certain changes in the Company's ownership occur. The Company also has state net operating loss carry forwards available to reduce future state taxable income which expire beginning June 30, 2003 through June 30, 2022. Tax benefits resulting from the exercise of nonqualified stock options and the disqualifying dispositions of shares issued under the Company's stock-based compensation plans reduced taxes payable by approximately $942,000 in 2003. Such benefits were credited to additional paid-in capital. There has been no tax benefit recognized into income in fiscal 2003 for the reversal of the valuation allowance of $8,157,000 that was attributable to prior period disqualifying dispositions. These amounts have been credited to additional paid-in capital. The amount credited to additional paid-in capital exceeds the June 30, 2002 valuation allowance due to the Company's revaluation of certain deferred tax assets. Income tax expense as a percentage of pre-tax income was 40% for fiscal 2003. The effective tax rate was higher than the U.S. statutory rate primarily due to state taxes and other non-deductible items. During fiscal 2002, MemberWorks was not required to record a provision for income taxes due to the ability to utilize net operating loss carryforwards against which the Company had carried a full valuation allowance. MemberWorks was not required to record a provision for income taxes for the year ended June 30, 2001 due to tax losses incurred and the provision of a full valuation allowance against those losses. The valuation allowance recognized in prior periods has been fully reversed in fiscal 2003 based upon the Company's belief that it is more likely than not that it will realize its deferred tax assets. Note 14 -- Related Party Obligations As of June 30, 2001, the Company's majority-owned subsidiary, iPlace, Inc. had a note payable to the president of iPlace, Inc. for $1,973,000. The note bore interest at the Citibank, N.A. publicly announced interest rate plus 1% per annum and was due on demand. Other income, net for fiscal 2003, 2002 and 2001 included related party interest expense of $0, $12,000 and $176,000, respectively. Note 15 -- Minority Interest Prior to the sale of iPlace, Inc. in August 2001, the Company was the majority shareholder of iPlace, Inc. with an approximate 58% ownership share. Minority interest in the statement of operations for the year ended June F-20 30, 2002 and 2001 represents approximately 42% of iPlace's losses incurred through the date of the sale of iPlace, Inc. in August 2001. Note 16 -- Shareholders' Equity The Company has a stock repurchase program. During fiscal 2003, the Board of Directors authorized the Company to repurchase up to an additional 2,500,000 shares of the Company's Common Stock. As of June 30, 2003, approximately 979,000 shares were remaining for repurchase under the stock repurchase program. During fiscal 2003, the Company repurchased 1,993,000 shares for $37,214,000, an average price of $18.67 per share, compared to the repurchase of 2,227,000 shares for $34,301,000, an average price of $15.40 per share, in fiscal 2002 and 340,000 shares for $8,917,000, an average price of $26.23 per share, in fiscal 2001. In July 2003, the Board of Directors authorized an additional 1,000,000 shares to be purchased under the stock repurchase program. Pursuant to the share repurchase program, the Company is authorized to repurchase approximately 1,979,000 additional shares as market conditions permit. Note 17 -- Employee Benefit Plan All employees over the age of 18 may participate in the Company's 401(k) profit sharing plan. Employees may contribute up to 20% of their compensation subject to certain limitations. Effective July 1, 2000, MemberWorks began making quarterly matching contributions in Common Stock based on qualified employee contributions. Treasury stock, calculated under the cost method, was used to match qualified employee contributions. Effective January 1, 2003, MemberWorks began making matching contributions in cash. Matching contributions were $153,000, $156,000 and $126,000 for fiscal 2003, 2002 and 2001, respectively. Note 18 -- Statement of Cash Flows Supplemental disclosure of cash flow information (in thousands):
Year ended June 30, --------------------------------------- 2003 2002 2001 ---------- ---------- ----------- Cash paid during the period for interest...................... $ 241 $ 377 $ 1,246 Cash paid during the period for income taxes.................. 411 43 595
Note 19 -- Earnings (Loss) Per Share Basic and diluted earnings (loss) per share amounts are determined in accordance with the provisions SFAS 128. The following table sets forth the reconciliation of the numerators and denominators in the computation of basic and diluted earnings (loss) per share (in thousands, except per share data):
2003 2002 2001 ---------- ---------- ----------- Numerator for basic and diluted earnings (loss) per share: Net income (loss) before cumulative effect of accounting change $ 24,356 $ 43,918 $ (26,757) Cumulative effect of accounting change.......................... -- (5,907) (25,730) ---------- ---------- ----------- Net income (loss)............................................... $ 24,356 $ 38,011 $ (52,487) ========== ========== =========== Denominator for basic earnings (loss) per share: Weighted average number of common shares outstanding- basic 12,596 14,477 15,248 Effect of dilutive securities: Options......................................................... 637 432 -- ---------- ---------- --------- Weighted average number of common shares outstanding--diluted... 13,233 14,909 15,248 ========== ========== =========== Basic earnings (loss) per share................................. $ 1.93 $ 2.63 $ (3.44) ========== ========== =========== Diluted earnings (loss) per share............................... $ 1.84 $ 2.55 $ (3.44) ========== ========== ===========
F-21 The diluted earnings (loss) per common share calculation excludes the effect of potentially dilutive shares when their effect is antidilutive. Excluded from the diluted share calculation above for the year ended June 30, 2003, 2002 and 2001 are incremental weighted average stock option shares of approximately 2,838,000, 3,383,000 and 2,870,000, respectively. Note 20 - Quarterly Financial Data (Unaudited) (In thousands, except per share amounts):
Year ended June 30, 2003 ---------------------------------------------------- First Second Third Fourth Quarter (a) Quarter Quarter Quarter ----------- ------------ ------------ ------------ Revenues...................................... $ 105,004 $ 114,045 $ 118,647 $ 119,185 Operating income.............................. 2,125 5,858 5,516 8,787 Income before cumulative effect of accounting change...................................... 12,136 3,647 3,332 5,241 Net income.................................... 12,136 3,647 3,332 5,241 Diluted earnings before cumulative effect of accounting change per share................. 0.89 0.27 0.25 0.41 Diluted earnings per share.................... 0.89 0.27 0.25 0.41
Year ended June 30, 2002 ---------------------------------------------------- First Second Third Fourth Quarter (b) Quarter (c) Quarter Quarter (d) ----------- ------------ ------------- ------------ Revenues...................................... $ 118,964 $ 102,684 $ 100,800 $ 105,154 Operating (loss) income....................... (2,578) (171) 10,816 3,822 Income (loss) before cumulative effect of accounting change........................... 40,351 (9,160) 10,495 2,232 Net income (loss)............................. 34,444 (9,160) 10,495 2,232 Diluted earnings (loss) before cumulative effect of accounting change per share....... 2.51 (0.62) 0.72 0.16 Diluted earnings (loss) per share............. 2.14 (0.62) 0.72 0.16
- ----------------- (a) Results of operations for this period include a $19,148,000 gain related to the settlement of investment related litigation (see Note 7), a $959,000 loss related to the sale of iPlace, Inc. (see Note 6) and a $206,000 loss on investment (see Note 6). (b) Results of operations for this period include a $65,608,000 gain related to the sale of iPlace, Inc. (see Note 6), a $22,296,000 loss on investment (see Note 6) and a $5,907,000 cumulative effect of accounting change (see Note 4). (c) Results of operations for this period include a $9,043,000 loss on investment (see Note 6) and a $6,893,000 restructuring charge (see Note 12). (d) Results of operations for this period include a $2,289,000 loss on investment (see Note 6). Note 21 -- Guarantor and Nonguarantor Financial Statements MemberWorks has entered into an agreement to sell an aggregate of $150.0 million of Senior Notes in private placements pursuant to Rule 144A. The Senior Notes will be unsecured obligations and will rank pari passu in right of payment to all of the Company's existing and future senior unsecured indebtedness and senior in right of payment to all of the Company's existing and future subordinated indebtedness that expressly provides for its subordination to the Notes. The Senior Notes will be fully and unconditionally guaranteed by all of the Company's existing and future domestic subsidiaries and certain of the Company's existing and future foreign subsidiaries. The following consolidating financial information presents the consolidating balance sheets as of June 30, 2003 and 2002 and the related statements of income and cash flows for each of the three years in the period ended F-22 June 30, 2003. The information includes elimination entries necessary to consolidate MemberWorks ("Parent") with the guarantor and nonguarantor subsidiaries. Investment in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor and nonguarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. F-23 CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2003 --------------------------------------------------------------------- Nonguarantor Consolidated Parent Guarantor Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Assets Current assets: Cash and cash equivalents.............. $ 51,895 $ 18,716 $ 1,649 $ -- $ 72,260 Restricted cash........................ -- 2,732 -- -- 2,732 Accounts receivable.................... 2,811 3,907 1,995 -- 8,713 Intercompany receivable................ 686 298 -- (984) -- Prepaid membership materials........... 1,762 170 264 -- 2,196 Prepaid expenses and other current assets 6,032 1,031 508 -- 7,571 Membership solicitation and other deferred costs....................... 73,856 1,853 2,174 -- 77,883 ------------ ------------ ------------- ------------ ------------ Total current assets................. 137,042 28,707 6,590 (984) 171,355 Fixed assets, net......................... 22,193 535 2,241 -- 24,969 Goodwill.................................. -- 35,320 6,719 -- 42,039 Intangible assets, net.................... -- 6,656 -- -- 6,656 Other assets.............................. 3,426 60 -- -- 3,486 Investment in subsidiaries................ 56,419 -- -- (56,419) -- ------------ ------------ ------------- ------------ ------------ Total assets......................... $ 219,080 $ 71,278 $ 15,550 $ (57,403) $ 248,505 ============ ============ ============= ============= ============ Liabilities and Shareholders' Deficit Current liabilities: Current maturities of long-term obligations.......................... $ -- $ 244 $ -- $ -- $ 244 Accounts payable....................... 17,678 13,018 1,948 -- 32,644 Accrued liabilities.................... 53,692 3,333 2,080 -- 59,105 Intercompany payable................... -- 804 180 (984) -- Deferred membership fees............... 163,276 1,007 3,360 -- 167,643 Deferred income taxes.................. 662 (1,701) 1,918 -- 879 ------------ ------------ ------------- ------------ ------------ Total current liabilities............ 235,308 16,705 9,486 (984) 260,515 Deferred income taxes..................... 2,456 3,260 (571) -- 5,145 Other long-term liabilities............... 1,599 63 1,466 -- 3,128 ------------ ------------ ------------- ------------ ------------ Total liabilities.................... 239,363 20,028 10,381 (984) 268,788 Shareholders' deficit: Preferred stock........................ -- -- -- -- -- Common stock........................... 178 6 3 (9) 178 Capital in excess of par value......... 122,425 52,296 9,564 (61,860) 122,425 Accumulated deficit.................... (17,829) (1,052) (3,929) 4,981 (17,829) Accumulated other comprehensive loss... (469) -- (469) 469 (469) Treasury stock......................... (124,588) -- -- -- (124,588) ------------ ------------ ------------- ------------ ------------ Total shareholders' deficit.......... (20,283) 51,250 5,169 (56,419) (20,283) ------------ ------------ ------------- ------------ ------------ Total liabilities and shareholders' deficit............................ $ 219,080 $ 71,278 $ 15,550 $ (57,403) $ 248,505 ============ ============ ============= ============= ============
F-24 CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2003 --------------------------------------------------------------------- Nonguarantor Consolidated Parent Guarantor Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Assets Current assets: Cash and cash equivalents.............. $ 34,476 $ 8,463 $ 2,563 $ -- $ 45,502 Restricted cash........................ -- 5,683 -- -- 5,683 Marketable securities.................. 912 -- -- -- 912 Accounts receivable.................... 3,675 4,127 2,029 -- 9,831 Intercompany receivable................ 3,538 1,144 -- (4,682) -- Prepaid membership materials........... 1,676 180 205 -- 2,061 Prepaid expenses and other current assets 3,233 720 372 -- 4,325 Membership solicitation and other deferred costs....................... 124,531 2,157 2,397 -- 129,085 ------------ ------------ ------------- ------------ ------------ Total current assets................. 172,041 22,474 7,566 (4,682) 197,399 Fixed assets, net......................... 27,979 704 2,737 -- 31,420 Goodwill.................................. -- 35,320 6,719 -- 42,039 Intangible assets, net.................... -- 8,049 -- -- 8,049 Other assets.............................. 1,794 116 -- -- 1,910 Investment in subsidiaries................ 52,067 -- -- (52,067) -- ------------ ------------ ------------- ------------ ------------ Total assets......................... $ 253,881 $ 66,663 $ 17,022 $ (56,749) $ 280,817 ============ ============ ============= ============= ============ Liabilities and Shareholders' Deficit Current liabilities: Current maturities of long-term obligations.......................... $ -- $ 1,070 $ -- $ -- $ 1,070 Accounts payable....................... 20,005 10,936 1,828 -- 32,769 Accrued liabilities.................... 51,706 3,664 2,339 -- 57,709 Intercompany payable................... -- 286 4,396 (4,682) -- Deferred membership fees............... 200,981 1,748 3,543 -- 206,272 Deferred income taxes.................. -- -- -- -- -- ------------ ------------ ------------- ------------ ------------ Total current liabilities............ 272,692 17,704 12,106 (4,682) 297,820 Deferred income taxes..................... -- -- -- -- -- Other long-term liabilities............... 1,819 289 1,519 -- 3,627 ------------ ------------ ------------- ------------ ------------ Total liabilities.................... 274,511 17,993 13,625 (4,682) 301,447 Shareholders' deficit: Preferred stock........................ -- -- -- -- -- Common stock........................... 175 6 155 (161) 175 Capital in excess of par value......... 109,254 52,296 9,564 (61,860) 109,254 Accumulated deficit.................... (42,185) (3,632) (5,949) 9,581 (42,185) Accumulated other comprehensive loss... (373) -- (373) 373 (373) Treasury stock......................... (87,501) -- -- -- (87,501) ------------ ------------ ------------- ------------ ------------ Total shareholders' deficit.......... (20,630) 48,670 3,397 (52,067) (20,630) ------------ ------------ ------------- ------------ ------------ Total liabilities and shareholders' deficit............................ $ 253,881 $ 66,663 $ 17,022 $ (56,749) $ 280,817 ============ ============ ============= ============= ============
F-25 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
As of June 30, 2003 --------------------------------------------------------------------- Nonguarantor Consolidated Parent Guarantor Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Revenues.................................. $ 393,958 $ 50,787 $ 12,972 $ (836) $ 456,881 Expenses: Marketing.............................. 253,389 23,198 4,086 -- 280,673 Operating.............................. 64,539 11,639 3,102 (836) 78,444 General and administrative............. 60,553 10,381 3,151 -- 74,085 Amortization of intangibles............ -- 1,393 -- -- 1,393 ------------ ------------ ------------- ------------ ------------ Operating income.......................... 15,477 4,176 2,633 -- 22,286 Settlement of investment related litigation............................. 19,148 -- -- -- 19,148 Loss on sale of subsidiary................ (959) -- -- -- (959) Loss on investment........................ (206) -- -- -- (206) Equity in income of subsidiary............ 4,600 -- -- (4,600) -- Other income (expense), net............... (532) 124 734 -- 326 ------------ ------------ ------------- ------------ ------------ Income before income taxes................ 37,528 4,300 3,367 (4,600) 40,595 Provision for income taxes................ 13,172 1,720 1,347 -- 16,239 ------------ ------------ ------------- ------------ ------------ Net income................................ $ 24,356 $ 2,580 $ 2,020 $ (4,600) $ 24,356 ============ ============ ============= ============= ============
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
As of June 30, 2003 --------------------------------------------------------------------- Nonguarantor Consolidated Parent Guarantor Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Revenues.................................. $ 358,283 $ 55,380 $ 14,576 $ (637) $ 427,602 Expenses: Marketing.............................. 220,224 22,867 5,883 -- 248,974 Operating.............................. 59,286 13,650 6,395 (637) 78,694 General and administrative............. 60,815 13,600 4,796 -- 79,211 Restructuring charge................... 4,720 -- 2,173 -- 6,893 Amortization of intangibles............ -- 1,941 -- -- 1,941 ------------ ------------ ------------- ------------ ------------ Operating income.......................... 13,238 3,322 (4,671) -- 11,889 Gain on sale of subsidiary................ 69,379 (3,771) -- -- 65,608 Loss on investment........................ (33,628) -- -- -- (33,628) Equity in income of subsidiary............ 3,769 -- -- (3,769) -- Other income (expense), net............... (14,747) (136) 14,482 -- (401) ------------ ------------ ------------- ------------ ------------ Income before minority interest........... 38,011 (585) 9,811 (3,769) 43,468 Minority interest......................... -- 450 -- -- 450 ------------ ------------ ------------- ------------ ------------ Income before income taxes................ 38,011 (135) 9,811 (3,769) 43,918 Provision for income taxes................ -- -- -- -- -- ------------ ------------ ------------- ------------ ------------ Income before cumulative effect of accounting change...................... 38,011 (135) 9,811 (3,769) 43,918 Cumulative effect of accounting change.... -- (5,907) -- -- (5,907) ------------ ------------ ------------- ------------ ------------ Net income................................ $ 38,011 $ (6,042) $ 9,811 $ (3,769) $ 38,011 ============ ============ ============= ============= ============
F-26 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended June 30, 2001 ---------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Revenues.................................. $ 382,597 $ 83,102 $ 11,299 $ (1,272) $ 475,726 Expenses: Marketing.............................. 261,915 38,507 4,610 -- 305,032 Operating.............................. 61,745 22,406 7,489 (1,272) 90,368 General and administrative............. 61,577 29,334 8,821 -- 99,732 Non-recurring charge................... 3,000 -- -- -- 3,000 Amortization of intangibles............ 84 10,288 546 -- 10,918 ------------ ------------ ------------- ------------ ------------ Operating income.......................... (5,724) (17,433) (10,167) -- (33,324) Loss on investment........................ (2,172) -- -- -- (2,172) Equity in income of subsidiary............ (19,891) -- -- 19,891 -- Other income (expense), net............... 947 (1,443) 46 -- (450) ------------ ------------ ------------- ------------ ------------ Income before equity in affiliate and minority interest...................... (26,840) (18,876) (10,121) 19,891 (35,946) Equity in income of affiliate............. 83 -- -- -- 83 Minority interest......................... -- 9,106 -- -- 9,106 ------------ ------------ ------------- ------------ ------------ Income before income taxes................ (26,757) (9,770) (10,121) 19,891 (26,757) Provision for income taxes................ -- -- -- -- -- ------------ ------------ ------------- ------------ ------------ Income before cumulative effect of accounting change...................... (26,757) (9,770) (10,121) 19,891 (26,757) Cumulative effect of accounting change.... (25,730) -- -- -- (25,730) ------------ ------------ ------------- ------------ ------------ Net income................................ $ (52,487) $ (9,770) $ (10,121) $ 19,891 $ (52,487) ============ ============ ============= ============= ============
F-27 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30, 2001 ---------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Operating activities Net income............................. $ 24,356 $ 2,580 $ 2,020 $ (4,600) $ 24,356 Adjustments to reconcile net income to net cash provided by operating activities: Change in deferred membership fees... (37,705) (741) (557) -- (39,003) Change in membership solicitation and other deferred costs............... 50,675 304 432 -- 51,411 Depreciation and amortization........ 9,390 1,750 980 -- 12,120 Deferred income taxes................ 11,276 1,559 1,347 -- 14,182 Tax benefit from employee stock plans 942 -- -- -- 942 Gain on settlement of investment related litigation................. (19,148) -- -- -- (19,148) Loss on sale of subsidiary........... 959 -- -- -- 959 Net loss on investment............... 206 -- -- -- 206 Other................................ 2,635 -- (150) -- 2,485 Change in assets and liabilities: Restricted cash...................... -- 2,951 -- -- 2,951 Accounts receivable.................. 504 220 34 -- 758 Intercompany receivable & payable.... 2,852 1,364 (4,216) -- -- Prepaid membership materials......... (86) 10 (59) -- (135) Prepaid expenses..................... (2,799) (311) (136) -- (3,246) Other assets......................... (1,387) 56 -- -- (1,331) Accounts payable..................... (2,457) 2,082 120 -- (255) Accrued liabilities.................. 2,003 (332) (390) -- 1,281 ------------ ------------ ------------- ------------ ------------ Net cash provided by (used in) operating activities............................. 42,216 11,492 (575) (4,600) 48,533 ------------ ------------ ------------- ------------ ------------ Investing activities Acquisition of fixed assets............ (4,931) (188) (344) -- (5,463) Investment in subsidiaries............. (4,600) -- -- 4,600 -- Settlement of investment related litigation........................... 19,148 -- -- -- 19,148 Other investing activities............. (1,250) -- -- -- (1,250) ------------ ------------ ------------- ------------ ------------ Net cash provided by (used in) investing activities............................. 8,367 (188) (344) 4,600 12,435 ------------ ------------ ------------- ------------ ------------ Financing activities Net proceeds from exercise of stock options.............................. 4,050 -- -- -- 4,050 Treasury stock purchases............... (37,214) -- -- -- (37,214) Payments of long-term obligations...... -- (1,051) -- -- (1,051) ------------ ------------ ------------- ------------ ------------ Net cash used in financing activities..... (33,164) (1,051) -- -- (34,215) ------------ ------------ ------------- ------------ ------------ Effect of exchange rate changes on cash and cash equivalents....................... -- -- 5 -- 5 ------------ ------------ ------------- ------------ ------------ Net increase (decrease) in cash and cash equivalents............................ 17,419 10,253 (914) -- 26,758 Cash and cash equivalents at beginning of year................................... 34,476 8,463 2,563 -- 45,502 ------------ ------------ ------------- ------------ ------------ Cash and cash equivalents at end of year.. $ 51,895 $ 18,716 $ 1,649 $ -- $ 72,260 ============ ============ ============= ============= ============
F-28 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30, 2001 ---------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Operating activities Net income (loss)......................... $ 38,011 $ (6,042) $ 9,811 $ (3,769) $ 38,011 Adjustments to reconcile net income (loss)to net cash provided by operating activities: Change in deferred membership fees..... (18,701) 1,721 (136) -- (17,116) Change in membership solicitation and other deferred costs................. 16,485 (2,641) 1,194 -- 15,038 Depreciation and amortization.......... 9,452 2,544 1,256 -- 13,252 (Gain) loss on sale of subsidiary...... (69,378) 3,770 -- -- (65,608) Net loss on investment................. 33,628 -- -- -- 33,628 Non-cash restructuring charges......... -- -- 1,585 -- 1,585 Minority interest...................... -- (450) -- -- (450) Cumulative effect of accounting change. -- 5,907 -- -- 5,907 Other.................................. 2,435 54 116 -- 2,605 Change in assets and liabilities: Restricted cash........................ -- (4,692) -- -- (4,692) Accounts receivable.................... 2,837 4,573 1,420 -- 8,830 Intercompany receivable & payable...... 24,764 (13,280) (11,484) -- -- Prepaid membership materials........... 560 11 (256) -- 315 Prepaid expenses....................... (1,832) (613) 228 -- (2,217) Other assets........................... (337) 86 -- -- (251) Related party payables................. -- 12 -- -- 12 Accounts payable....................... (10,783) 2,524 (2,493) -- (10,752) Accrued liabilities.................... (199) (807) (77) -- (1,083) ------------ ------------ ------------- ------------ ------------ Net cash provided by (used in) operating activities............................. 26,942 (7,323) 1,164 (3,769) 17,014 ------------ ------------ ------------- ------------ ------------ Investing activities Acquisition of fixed assets............ (5,074) (262) (425) -- (5,761) Investment in subsidiaries............. (3,769) -- -- 3,769 -- Proceeds from sale of subsidiary, net of cash sold............................ 35,582 10,415 -- -- 45,997 Other investing activities............. 1,499 (1,499) -- -- -- ------------ ------------ ------------- ------------ ------------ Net cash (used in) provided by investing activities............................. 28,238 8,654 (425) 3,769 40,236 ------------ ------------ ------------- ------------ ------------ Financing activities Net proceeds from exercise of stock options.............................. 1,461 54 -- -- 1,515 Treasury stock purchases............... (34,301) -- -- -- (34,301) Payments of long-term obligations...... -- (718) -- -- (718) ------------ ------------ ------------- ------------ ------------ Net cash (used in) financing activities... (32,840) (664) -- -- (33,504) ------------ ------------ ------------- ------------ ------------ Effect of exchange rate changes on cash and cash equivalents....................... -- -- 11 -- 11 ------------ ------------ ------------- ------------ ------------ Net increase in cash and cash equivalents. 22,340 667 750 -- 23,757 Cash and cash equivalents at beginning of year................................... 12,136 7,796 1,813 -- 21,745 ------------ ------------ ------------- ------------ ------------ Cash and cash equivalents at end of year.. $ 34,476 $ 8,463 $ 2,563 $ -- $ 45,502 ============ ============ ============= ============= ============
F-29 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30, 2001 ---------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Operating activities Net income............................. $ (52,487) $ (9,770) $ (10,121) $ 19,891 $ (52,487) Adjustments to reconcile net income to net cash provided by operating activities: Change in deferred membership fees... (4,259) 10,576 2,949 -- 9,266 Change in membership solicitation and other deferred costs............... 25,142 (5,640) (2,325) -- 17,177 Depreciation and amortization........ 7,639 11,356 1,503 -- 20,498 Net loss on investment............... 2,172 -- -- -- 2,172 Equity in income of affiliate........ (83) -- -- -- (83) Minority interest.................... -- (9,106) -- -- (9,106) Cumulative effect of accounting change 25,730 -- -- -- 25,730 Other................................ 1,662 867 334 -- 2,863 Change in assets and liabilities: Restricted cash...................... -- (991) -- -- (991) Accounts receivable.................. (75) (2,086) (138) -- (2,299) Intercompany receivable & payable.... (6,570) (3,440) 10,010 -- -- Prepaid membership materials......... 613 26 (437) -- 202 Prepaid expenses and other current assets............................. (535) (1,675) (728) -- (2,938) Other assets......................... 23 134 616 -- 773 Related party payables............... -- 176 -- -- 176 Accounts payable..................... (6,031) 4,218 986 -- (827) Accrued liabilities.................. (3,000) 3,629 1,267 -- 1,896 ------------ ------------ ------------- ------------ ------------ Net cash provided by operating activities. (10,059) (1,726) 3,916 19,891 12,022 ------------ ------------ ------------- ------------ ------------ Investing activities Acquisition of fixed assets............ (11,823) (1,215) (2,095) -- (15,133) Investment in subsidiaries............. 19,891 -- -- (19,891) -- Other investing activities............. 4,944 (800) -- -- 4,144 Business combinations, net of cash acquired (8,349) 1,164 -- -- (7,185) ------------ ------------ ------------- ------------ ------------ Net cash (used in) provided by investing activities............................. 4,663 (851) (2,095) (19,891) (18,174) ------------ ------------ ------------- ------------ ------------ Financing activities Net proceeds from exercise of stock options.............................. 3,239 4,820 -- -- 8,059 Net repayments of credit facility...... -- -- (526) -- (526) Treasury stock purchases............... (8,917) -- -- -- (8,917) Payments of long-term obligations...... (7) (748) -- -- (755) ------------ ------------ ------------- ------------ ------------ Net cash provided by (used in) financing activities............................. (5,685) 4,072 (526) -- (2,139) ------------ ------------ ------------- ------------ ------------ Effect of exchange rate changes on cash and cash equivalents....................... -- -- (133) -- (133) ------------ ------------ ------------- ------------ ------------ Net increase in cash and cash equivalents. (11,081) 1,495 1,162 -- (8,424) Cash and cash equivalents at beginning of period................................. 23,217 6,301 651 -- 30,169 ------------ ------------ ------------- ------------ ------------ Cash and cash equivalents at end of period $ 12,136 $ 7,796 $ 1,813 $ -- $ 21,745 ============ ============ ============= ============= ============
F-30 MemberWorks Incorporated Schedule II -- Valuation and Qualifying Accounts
Charged Balance at to Costs Charged to Other Beginning of and Accounts -- Deductions -- Balance at Description Period Expense Describe Describe End of Period - ---------------------------- ------------- --------- ----------------- -------------- -------------- Year Ended June 30, 2003 Allowance for membership cancellations............ $23,753,000 $-- $281,250,000(A) $284,069,000(B) $20,934,000 Valuation allowance for deferred tax assets...... 6,581,000 -- (6,581,000)(D) -- -- Year Ended June 30, 2002 Allowance for membership cancellations............ $30,004,000 $-- $277,412,000(A) $283,663,000(B) $23,753,000 Valuation allowance for deferred tax assets...... 22,690,000 -- (16,109,000)(D) -- 6,581,000 Year Ended June 30, 2001 Allowance for membership cancellations............ $33,477,000 $-- $362,623,000(A) $366,096,000(B) $30,004,000 Valuation allowance for deferred tax assets...... 10,175,000 -- 12,515,000(C) -- 22,690,000
- --------------- (A) Charged to balance sheet account "Deferred membership fees." (B) Charges for refunds upon membership cancellations. In addition, the allowance was reduced by $2,082,000 in connection with the sale of iPlace in fiscal 2002. (C) Increase in the valuation allowance for deferred tax assets is due to an increase in deferred tax assets that management does not believe will be more likely than not realizable. (D) Decrease in the valuation allowance is due to current utilization of deferred tax assets as well as management's belief that the Company will more likely than not realize its deferred tax assets in the future. F-31 MEMBERWORKS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
December 31, June 30, 2003 2003 --------------- ------------- (Unaudited) Assets Current assets: Cash and cash equivalents................................................ $ 119,995 $ 72,260 Restricted cash.......................................................... 3,169 2,732 Accounts receivable (net of allowance for doubtful accounts of $1,744 and 11,477 8,713 $1,743, at December 31, 2003 and June 2003, respectively).............. Prepaid membership materials............................................. 3,742 2,196 Prepaid expenses and other current assets................................ 6,932 7,571 Membership solicitation and other deferred costs......................... 62,618 77,883 --------------- ------------- Total current assets................................................... 207,933 171,355 Fixed assets, net........................................................... 22,855 24,969 Goodwill (Note 4)........................................................... 42,039 42,039 Intangible assets, net (Note 4)............................................. 6,277 6,656 Other assets................................................................ 6,102 3,486 --------------- ------------- Total assets........................................................... $ 285,206 $ 248,505 =============== ============= Liabilities and Shareholders' Deficit Current liabilities: Current maturities of long-term obligations.............................. $ 28 $ 244 Accounts payable......................................................... 29,365 32,644 Accrued liabilities...................................................... 64,982 59,105 Deferred membership fees................................................. 150,062 167,643 Deferred income taxes.................................................... 6,171 879 --------------- ------------- Total current liabilities.............................................. 250,608 260,515 Deferred income taxes....................................................... 5,157 5,145 Other long-term liabilities................................................. 2,993 3,128 Convertible debt (Note 6)................................................... 90,000 -- --------------- ------------- Total liabilities...................................................... 348,758 268,788 --------------- ------------- Commitments and contingencies (Note 11)..................................... -- -- Shareholders' deficit: Preferred stock, $0.01 par value-- 1,000 shares authorized; no shares issued -- -- Common stock, $0.01 par value-- 40,000 shares authorized; 18,998 shares 190 178 issued (17,847 shares at June 30, 2003)................................ Capital in excess of par value........................................... 146,646 122,425 Accumulated deficit...................................................... (6,269) (17,829) Accumulated other comprehensive loss..................................... (453) (469) Treasury stock, 8,604 shares at cost (6,126 shares at June 30, 2003)..... (203,666) (124,588) --------------- ------------- Total shareholders' deficit............................................ (63,552) (20,283) --------------- ------------- Total liabilities and shareholders' deficit............................ $ 285,206 $ 248,505 =============== =============
The accompanying notes are an integral part of these consolidated financial statements. F-32 MEMBERWORKS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended December 31, December 31, ----------------------- ---------------------- 2003 2002 2003 2002 ---------- --------- ---------- ---------- (In thousands, except per share data) Revenues............................................... $123,164 $114,045 $236,988 $219,049 Expenses: Marketing........................................... 66,745 69,899 133,401 135,448 Operating........................................... 23,042 19,178 44,505 37,252 General and administrative.......................... 19,195 18,764 37,962 37,627 Amortization of intangible assets................... 271 346 589 739 ---------- --------- ---------- ---------- Operating income....................................... 13,911 5,858 20,531 7,983 Settlement of investment related litigation............ -- -- -- 19,148 Loss on sale of subsidiary............................. -- -- -- (959) Net loss on investment................................. -- -- -- (206) Interest expense....................................... (1,456) (25) (1,570) (57) Other income, net...................................... 320 246 305 397 ---------- --------- ---------- ---------- Income before income taxes............................. 12,775 6,079 19,266 26,306 Provision for income taxes............................. 5,110 2,432 7,706 10,523 ---------- --------- ---------- ---------- Net income............................................. $7,665 $3,647 $11,560 $15,783 ========== ========= ========== ========== Basic earnings per share............................ $0.71 $0.29 $1.03 $1.22 ========== ========= ========== ========== Diluted earnings per share.......................... $0.60 $0.27 $0.91 $1.17 ========== ========= ========== ========== Weighted average common shares used in earnings per share calculations: Basic............................................... 10,756 12,735 11,192 12,949 ========== ========= ========== ========== Diluted............................................. 14,074 13,396 13,541 13,530 ========== ========= ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-33 MEMBERWORKS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended December 31, ------------------------------- 2003 2002 -------------- ------------- (In thousands) Operating activities Net income............................................................... $ 11,560 $ 15,783 Adjustments to reconcile net income to net cash provided by operating activities: Change in deferred membership fees..................................... (17,733) (9,909) Change in membership solicitation and other deferred costs............. 15,368 20,775 Depreciation and amortization.......................................... 5,242 6,169 Deferred income taxes.................................................. 5,304 9,744 Tax benefit from employee stock plans.................................. 1,553 297 Gain on settlement of investment related litigation.................... -- (19,148) Loss on sale of subsidiary............................................. -- 959 Net loss on investment................................................. -- 206 Other.................................................................. 720 382 Change in assets and liabilities: Restricted cash........................................................ (437) 2,841 Accounts receivable.................................................... (2,764) (1,529) Prepaid membership materials........................................... (1,996) (1,169) Prepaid expenses and other current assets.............................. 1,243 334 Other assets........................................................... (140) (424) Accounts payable....................................................... (3,351) 1,044 Accrued liabilities.................................................... 5,872 6,522 -------------- ------------- Net cash provided by operating activities................................... 20,441 32,877 -------------- ------------- Investing activities Acquisition of fixed assets ............................................. (2,538) (2,762) Settlement of investment related litigation.............................. -- 19,148 Purchase price adjustments from sale of subsidiary....................... -- (750) -------------- ------------- Net cash (used in) provided by investing activities......................... (2,538) 15,636 -------------- ------------- Financing activities Net proceeds from exercise of stock options.............................. 22,551 1,851 Treasury stock purchases................................................. (79,078) (14,957) Net proceeds from issuance of convertible debt........................... 86,568 -- Payments of long-term obligations........................................ (250) (927) -------------- ------------- Net cash provided by (used in) financing activities......................... 29,791 (14,033) -------------- ------------- Effect of exchange rate changes on cash and cash equivalents................ 41 (32) -------------- ------------- Net increase in cash and cash equivalents................................... 47,735 34,448 Cash and cash equivalents at beginning of period............................ 72,260 45,502 -------------- ------------- Cash and cash equivalents at end of period.................................. $ 119,995 $ 79,950 ============== =============
The accompanying notes are an integral part of these consolidated financial statements. F-34 MEMBERWORKS INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 -- Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, such statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The preparation of these consolidated financial statements in conformity with generally accepted accounting principles requires management of MemberWorks Incorporated ("the Company" or "MemberWorks") to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three and six months ended December 31, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2004. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K with respect to the fiscal year ended June 30, 2003. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Note 2 -- Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. Note 3 -- Stock-Based Compensation In accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), the Company applies the intrinsic value method in accounting for employee stock options. Accordingly, the Company generally does not recognize compensation expense with respect to stock-based awards to employees. If compensation cost for the Company's stock-based compensation plans had been determined based on the fair value (estimated using the Black-Scholes option-pricing model) at the grant dates for awards under those plans consistent with the method of Financial Accounting Standards Board Statement ("SFAS") No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and SFAS No. 148, "Accounting for Stock-Based Compensation Transition and Disclosure" ("SFAS 148"), the Company's pro forma net income and earnings per share would have been as follows: F-35
Three Months Six Months Ended Ended December 31, December 31, ---------------------- -------------------- 2003 2002 2003 2002 --------- ---------- --------- -------- Net income reported.................................. $ 7,665 $ 3,647 $ 11,560 $ 15,783 Add: Stock-based employee compensation expense determined under the intrinsic value based method for all awards, net of related tax effects........ -- -- -- -- Deduct: Stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects................ 1,262 1,486 2,527 3,071 --------- ---------- --------- -------- Pro forma net income................................. $ 6,403 $ 2,161 $ 9,033 $ 12,712 ========= ========== ========= ======== Earnings per share: As reported: Basic........................................... $ 0.71 $ 0.29 $ 1.03 $ 1.22 Diluted......................................... $ 0.60 $ 0.27 $ 0.91 $ 1.17 Pro forma: Basic........................................... $ 0.60 $ 0.17 $ 0.81 $ 0.98 Diluted......................................... $ 0.51 $ 0.16 $ 0.72 $ 0.94
NOTE 4 -- Goodwill and Other Intangible Assets The gross carrying value and accumulated amortization of goodwill and other intangibles are as follows (in thousands):
As of December 31, 2003 As of June 30, 2003 -------------------------------- ------------------------------- Gross Carrying Accumulated Gross Carrying Accumulated Amount Amortization Amount Amortization --------------- -------------- ---------------- - ------------ Amortized intangible assets: Membership and Client Relationships.............. $ 13,405 $ (7,269) $ 13,195 $ (6,730) Other........................ 950 (809) 950 (759) --------------- -------------- ---------------- ------------- Total amortized intangible assets................... $ 14,355 $ (8,078) $ 14,145 $ (7,489) --------------- -------------- ---------------- ------------- Intangible assets, net..... $ 6,277 $ 6,656 =============== ================ Unamortized intangible assets: Goodwill..................... $ 42,039 $ 42,039 =============== ================
Acquired intangibles, except member relationships, are recorded at cost and are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 20 years. The value of member relationships is amortized using an accelerated method based on estimated future cash flows. The future intangible amortization expense for the next five years is estimated to be as follows (in thousands): Fiscal Year: 2004........................................................ 1,090 2005........................................................ 900 2006........................................................ 755 2007........................................................ 599 2008........................................................ 485 As a result of increased integration of operations and management at three of its five reporting units during fiscal 2003, the Company aggregated these three reporting units into a single reporting unit for fiscal 2004 impairment testing purposes, resulting in a total of three reporting units in the current year. Goodwill was tested for impairment during the quarter ended September 30, 2003 as required by SFAS 142. The Company concluded that F-36 none of its goodwill was impaired. Fair value was estimated using discounted cash flow methodologies. In addition, the Company reassessed the estimated useful lives of its definite-lived intangible assets and determined that the lives were appropriate. The Company will test the goodwill of each of its reporting units annually or more frequently if impairment indicators exist. NOTE 5 -- Allowance for Membership Cancellations Accrued liabilities set forth in the accompanying condensed consolidated balance sheets as of December 31, 2003 and June 30, 2003 include an allowance for membership cancellations of $21,320,000 and $20,934,000, respectively. Recording an allowance for membership cancellations has the effect of reducing the amount of deferred membership fees recorded. NOTE 6 -- Convertible Debt On September 30, 2003, the Company issued $90,000,000 aggregate principal amount of 5.5% convertible senior subordinated notes ("Notes") due September 2010 in a private offering pursuant to rule 144A of the Securities Act of 1933, as amended. The Notes bear interest at the rate of 5.5% per year, which will be payable in cash semi-annually in arrears on April 1 and October 1 of each year, with the first payment due on April 1, 2004. Holders of the Notes may convert their Notes into shares of MemberWorks common stock at any time prior to maturity at an initial conversion price of approximately $40.37 per share, which is equivalent to an initial conversion rate of approximately 24.7739 shares per $1,000 principal amount of the Notes. In accordance with Accounting Principles Board Opinion No. 14, "Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants," these Notes have been classified as a liability. On December 3, 2003, Memberworks filed on Form S-3 a shelf registration statement with the Securities and Exchange Commission covering the resale of the Notes and the common stock issuable upon their conversion, which has not yet been declared effective. Debt issuance costs associated with this issuance were $3,432,000 for the six months ended December 31, 2003. Debt issuance costs are capitalized and amortized as interest expense over the term of the Notes using the effective interest method. NOTE 7 -- Restructuring Charges During fiscal 2002, the Company announced the implementation of several cost saving initiatives due to a slowdown in consumer response rates and increased economic uncertainty in both the U.S. and abroad. This restructuring program included a workforce reduction, the closing of the Company's United Kingdom operations and the downsizing of the operational infrastructure throughout the Company. As a result of the restructuring program, the Company recorded restructuring charges of $6,893,000 during the quarter ended December 31, 2001. The following is a rollforward of the major components of the restructuring reserve (in thousands) which is recorded in accrued liabilities and other long-term liabilities:
Workforce Lease Reduction Obligations Total --------- ----------- --------- Restructuring reserve balance at June 30, 2002...... $ 391 $ 2,546 $ 2,937 Additions to the reserve............................ -- -- -- Charges to the reserve.............................. 300 836 1,136 --------- ----------- --------- Restructuring reserve balance at June 30, 2003...... 91 1,710 1,801 Additions to the reserve............................ -- -- -- Charges to the reserve.............................. 54 41 95 --------- ----------- --------- Restructuring reserve balance at December 31, 2003.. $ 37 $ 1,669 $ 1,706 ========= =========== =========
F-37 NOTE 8 -- Income Tax Expense Income tax expense as a percentage of pre-tax income was 40% for the three and six months ended December 31, 2003 and 2002. The effective tax rate was higher than the U.S. statutory rate for the three and six months ended December 31, 2003 and 2002 primarily due to state taxes and other non-deductible items. Tax benefits resulting from the exercise of nonqualified stock options and the disqualifying dispositions of shares issued under the Company's stock based compensation plans reduced taxes payable by $38,000 and $271,000 during the quarter ended December 31, 2003 and 2002, respectively. Tax benefits resulting from the exercise of nonqualified stock options and the disqualifying dispositions of shares issued under the Company's stock based compensation plans reduced taxes payable by $1,553,000 and $297,000 during the six months ended December 31, 2003 and 2002, respectively. Such benefits are credited to capital in excess of par value. NOTE 9 -- Earnings Per Share Basic and diluted earnings per share amounts are determined in accordance with the provisions of SFAS No. 128, "Earnings Per Share." The following table sets forth the reconciliation of the numerators and denominators in the computation of basic and diluted earnings per share (in thousands, except per share data):
Three Months Ended Six Months Ended December 31, December 31, --------------------- ---------------------- 2003 2002 2003 2002 ---------- ---------- ----------- ---------- Numerator: Income available to common shareholders used in basic earnings per share................................. $ 7,665 $ 3,647 $ 11,560 $ 15,783 Add back: Interest expense on convertible securities. 743 -- 751 -- ---------- ---------- ----------- ---------- Income available to common shareholders after assumed conversion of convertible debt for diluted earnings per share.......................................... $ 8,408 $ 3,647 $ 12,311 $ 15,783 ========== ========== =========== ========== Denominator: Weighted average number of common shares outstanding-- basic.............................................. 10,756 12,735 11,192 12,949 Effect of dilutive securities: Convertible securities................................ 2,230 -- 1,127 -- Options............................................... 1,088 661 1,222 581 ---------- ---------- ----------- ---------- Weighted average number of common shares outstanding-- diluted............................................ 14,074 13,396 13,541 13,530 ========== ========== =========== ========== Basic earnings per share.............................. $ 0.71 $ 0.29 $ 1.03 $ 1.22 ========== ========== =========== ========== Diluted earnings per share............................ $ 0.60 $ 0.27 $ 0.91 $ 1.17 ========== ========== =========== ==========
The diluted earnings per share calculation excludes the effect of potentially dilutive shares when their effect is antidilutive. For the three months ended December 31, 2003 and 2002, the Company had 996,000 and 3,041,000 shares, respectively, of potentially dilutive stock options outstanding that are not included in the calculation as they are antidilutive. For the six months ended December 31, 2003 and 2002, the Company had 765,000 and 3,112,000 shares, respectively, of potentially dilutive stock options that are not included in the calculations as they are antidilutive. NOTE 10 -- Comprehensive Income The components of comprehensive income are as follows (in thousands):
Three Months Ended Six Months Ended December 31, December 31, --------------------- ---------------------- 2003 2002 2003 2002 ---------- ---------- ----------- ---------- Net income........................................... $ 7,665 $ 3,647 $ 11,560 $ 15,783 Foreign currency translation gain (loss)............. 14 5 16 (80) ---------- ---------- ----------- ---------- Comprehensive income................................. $ 7,679 $ 3,652 $ 11,576 $ 15,703 ========== ========== =========== ==========
F-38 NOTE 11 -- Commitments and Contingencies The Company operates in leased facilities. Management expects that leases currently in effect will be renewed or replaced by other leases of a similar nature and term. As of December 31, 2003, the Company has purchase obligations of $1,407,000 outstanding, of which $250,000 has been recorded in the Condensed Consolidated Balance Sheet. Except as set forth below, in management's opinion, there are no significant legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their properties are subject. The Company is involved in other lawsuits and claims generally incidental to its business including, but not limited to, various suits, including previously disclosed suits, brought against the Company by individual consumers seeking monetary and/or injunctive relief relating to the marketing of he Company's programs. In addition, from time to time, and in the regular course of its business, the Company receives inquiries from various federal and/or state regulatory authorities. In March 2001, an action was instituted by plaintiff Teresa McClain against Coverdell & Company ("Coverdell"), a wholly-owned subsidiary of the Company, Monumental Life Insurance Company and other defendants in the United States District Court for the Eastern District of Michigan, Southern Division. The suit, which seeks unspecified monetary damages, alleges that Coverdell and the other defendants violated the Michigan Consumer Protection Act and other applicable Michigan laws in connection with the marketing of Monumental Life Insurance Company insurance products. The complaint includes a claim that the suit should be certified as a class action and the plaintiff has filed a motion for class certification to which all of the defendants have filed opposing papers regarding the same. The Court certified a class of Michigan residents. The Court of Appeals denied the defendants' petition for leave to appeal the certification order. No discovery scheduling order has been set. The Company believes that the claims made against Coverdell are unfounded and Coverdell and the Company will vigorously defend their interests against this suit. On January 24, 2003, the Company filed a motion with the Superior Court for the Judicial District of Hartford, Connecticut to vacate and oppose the confirmation of an arbitration award issued in December 2002. The arbitration, filed against the Company by MedValUSA Health Programs, Inc. ("MedVal") in September 2000, involved claims of breach of contract, breach of the duty of good faith and fair dealing, and violation of the Connecticut Unfair Trade Practices Act ("CUTPA"). Even though the arbitrators found that MemberWorks was not liable to MedVal for any compensatory damages, they awarded $5,495,000 in punitive damages and costs against MemberWorks solely under CUTPA. MemberWorks believes that this arbitration award is unjustified and not based on any existing legal precedent. Specifically, the Company is challenging the award on a number of grounds, including that it violates a well defined public policy against excessive punitive damage awards, raises constitutional issues and disregards certain legal requirements for a valid award under CUTPA. The hearing on the Company's motion was held on February 10, 2003. On June 22, 2003, the Superior Court denied the Company's motion to vacate the award, and the Company filed an appeal of that decision. While the Company intends to take action to prevent the enforcement of the award by, among other things, vigorously pursuing an appeal, there can be no assurance that MemberWorks will be successful in its efforts. The Company has made no provision in its financial statements for this contingency because it believes that a loss is not probable. If the Company were ultimately unsuccessful in this or other available appeals, and a final non-appealable court order confirming the arbitration award is rendered, the payment of the award could have a material adverse effect on the Company's results of operations in the period in which the final order is entered. On October 21, 2003, the Florida Attorney General's Office filed a civil complaint against the Company based upon concerns that some of its past marketing practices may have violated various consumer laws. The Company believes that any legitimate concerns have previously been fully addressed, including the implementation of industry-leading Best Marketing Practices and voluntary agreements incorporating those practices, such as the nationwide assurance agreement that the Company entered into with the State of Nebraska in 2001. The Company believes that the allegations of the complaint are unfounded and the Company intends to vigorously defend its interests in this matter. The Company further believes that the potential liability represented by the lawsuit and the final resolution of this matter will not be material to the Company. F-39 NOTE 12 -- New Accounting Pronouncements In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"), which was revised in December 2003. FIN 46 clarifies the application of Accounting Research Bulletin No. 51 and provides guidance on the identification of and reporting for variable interest entities. FIN 46 is effective immediately for variable interest entities formed after January 31, 2003 and is effective for periods ending after March 15, 2004 for any variable interest entity formed prior to February 1, 2003. While it will continue to evaluate the requirements of FIN 46, MemberWorks does not believe that the adoption of FIN 46 will have a material impact on the Company's financial statements. In May 2003, the Financial Accounting Standards Board issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity " ("SFAS 150"). This statement requires that certain financial instruments that were accounted for as equity under previous guidance be classified as liabilities in statements of financial position. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS 150 did not have a material impact on the Company's financial statements. NOTE 13 -- Guarantor and Nonguarantor Financial Statements MemberWorks has entered into an agreement to sell an aggregate of $150.0 million of Senior Notes in private placements pursuant to Rule 144A. The Senior Notes will be unsecured obligations and will rank pari passu in right of payment to all of the Company's existing and future senior unsecured indebtedness and senior in right of payment to all of the Company's existing and future subordinated indebtedness that expressly provides for its subordination to the Notes. The Senior Notes will be fully and unconditionally guaranteed by all of the Company's existing and future domestic subsidiaries and certain of the Company's existing and future foreign subsidiaries. The following consolidating financial information presents the consolidating balance sheets as of December 31, 2003 and June 30, 2003, the related statements of income for each of the three and six month periods ended December 31, 2003 and December 31, 2002 and the related statements of cash flows for the six month periods ended December 31, 2003 and 2002. The information includes elimination entries necessary to consolidate MemberWorks ("Parent") with the guarantor and nonguarantor subsidiaries. Investment in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor and nonguarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. F-40 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of December 31, 2003 --------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Assets Current assets: Cash and cash equivalents............. $ 99,518 $ 18,369 $ 2,108 $ -- $ 119,995 Restricted cash....................... -- 3,169 -- -- 3,169 Accounts receivable................... 4,048 3,561 3,868 -- 11,477 Intercompany receivable............... 1,671 384 -- (2,055) -- Prepaid membership materials.......... 2,678 175 889 -- 3,742 Prepaid expenses and other current assets 5,373 1,164 395 -- 6,932 Membership solicitation and other deferred costs...................... 54,303 5,624 2,691 -- 62,618 ------------ ------------ ------------- ------------ ------------ Total current assets................ 167,591 32,446 9,951 (2,055) 207,933 Fixed assets, net........................ 20,096 583 2,176 -- 22,855 Goodwill................................. -- 35,320 6,719 -- 42,039 Intangible assets, net................... -- 6,277 -- -- 6,277 Other assets............................. 6,082 20 -- -- 6,102 Investment in subsidiaries............... 58,067 -- -- (58,067) -- ------------ ------------ ------------- ------------ ------------ Total assets........................ $ 251,836 $ 74,646 $ 18,846 $ (60,122) $ 285,206 ============ ============ ============= ============ ============ Liabilities and Shareholders' Deficit Current liabilities: Current maturities of long-term obligations......................... $ -- $ 28 $ -- $ -- $ 28 Accounts payable...................... 13,339 12,876 3,150 -- 29,365 Accrued liabilities................... 58,321 4,182 2,479 -- 64,982 Intercompany payable.................. -- 1,686 369 (2,055) -- Deferred membership fees.............. 144,702 1,142 4,218 -- 150,062 Deferred income taxes................. 4,900 (877) 2,148 -- 6,171 ------------ ------------ ------------- ------------ ------------ Total current liabilities........... 221,262 19,037 12,364 (2,055) 250,608 Deferred income taxes.................... 2,532 3,152 (527) -- 5,157 Other long-term liabilities.............. 1,594 -- 1,399 -- 2,993 Convertible debt......................... 90,000 -- -- -- 90,000 ------------ ------------ ------------- ------------ ------------ Total liabilities................... 315,388 22,189 13,236 (2,055) 348,758 Shareholders' deficit: Preferred stock....................... -- -- -- -- -- Common stock.......................... 190 6 3 (9) 190 Capital in excess of par value........ 146,646 52,296 9,564 (61,860) 146,646 Accumulated deficit................... (6,269) 155 (3,504) 3,349 (6,269) Accumulated other comprehensive loss (453) -- (453) 453 (453) Treasury stock........................ (203,666) -- -- -- (203,666) ------------ ------------ ------------- ------------ ------------ Total shareholders' deficit (equity) (63,552) 52,457 5,610 (58,067) (63,552) ------------ ------------ ------------- ------------ ------------ Total liabilities and shareholders' deficit........................... $ 251,836 $ 74,646 $ 18,846 $ (60,122) $ 285,206 ============ ============ ============= ============ ============
F-41 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of June 30, 2003 --------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Assets Current assets: Cash and cash equivalents............. $ 51,895 $ 18,716 $ 1,649 $ -- $ 72,260 Restricted cash....................... -- 2,732 -- -- 2,732 Accounts receivable................... 2,811 3,907 1,995 -- 8,713 Intercompany receivable............... 686 298 -- (984) -- Prepaid membership materials.......... 1,762 170 264 -- 2,196 Prepaid expenses and other current assets 6,032 1,031 508 -- 7,571 Membership solicitation and other deferred costs...................... 73,856 1,853 2,174 -- 77,883 ------------ ------------ ------------- ------------ ------------ Total current assets................ 137,042 28,707 6,590 (984) 171,355 Fixed assets, net....................... 22,193 535 2,241 -- 24,969 Goodwill................................ -- 35,320 6,719 -- 42,039 Intangible assets, net.................. -- 6,656 -- -- 6,656 Other assets............................ 3,426 60 -- -- 3,486 Investment in subsidiaries.............. 56,419 -- -- (56,419) -- ------------ ------------ ------------- ------------ ------------ Total assets........................ $ 219,080 $ 71,278 $ 15,550 $ (57,403) $ 248,505 ============ ============ ============= ============ ============ Liabilities and Shareholders' Deficit Current liabilities: Current maturities of long-term obligations......................... $ -- $ 244 $ -- $ -- $ 244 Accounts payable...................... 17,678 13,018 1,948 -- 32,644 Accrued liabilities................... 53,692 3,333 2,080 -- 59,105 Intercompany payable.................. -- 804 180 (984) -- Deferred membership fees.............. 163,276 1,007 3,360 -- 167,643 Deferred income taxes................. 662 (1,701) 1,918 -- 879 ------------ ------------ ------------- ------------ ------------ Total current liabilities........... 235,308 16,705 9,486 (984) 260,515 Deferred income taxes................... 2,456 3,260 (571) -- 5,145 Other long-term liabilities............. 1,599 63 1,466 -- 3,128 ------------ ------------ ------------- ------------ ------------ Total liabilities................... 239,363 20,028 10,381 (984) 268,788 Shareholders' deficit: Preferred stock....................... -- -- -- -- -- Common stock.......................... 178 6 3 (9) 178 Capital in excess of par value........ 122,425 52,296 9,564 (61,860) 122,425 Accumulated deficit................... (17,829) (1,052) (3,929) 4,981 (17,829) Accumulated other comprehensive loss................................ (469) -- (469) 469 (469) Treasury stock........................ (124,588) -- -- -- (124,588) ------------ ------------ ------------- ------------ ------------ Total shareholders' deficit......... (20,283) 51,250 5,169 (56,419) (20,283) ------------ ------------ ------------- ------------ ------------ Total liabilities and shareholders' deficit........................... $ 219,080 $ 71,278 $ 15,550 $ (57,403) $ 248,505 ============ ============ ============= ============ ============
F-42 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended December 31, 2003 --------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Revenues................................. $ 103,006 $ 15,128 $ 5,451 $ (421) $ 123,164 Expenses: Marketing............................. 58,013 7,532 1,200 -- 66,745 Operating............................. 17,762 3,156 2,545 (421) 23,042 General and administrative............ 15,631 2,583 981 -- 19,195 Amortization of intangible assets..... -- 271 -- -- 271 ------------ ------------ ------------- ------------ ------------ Operating income......................... 11,600 1,586 725 -- 13,911 Interest expense......................... (1,456) -- -- -- (1,456) Equity in income of subsidiaries......... 1,423 -- -- (1,423) -- Other income, net........................ 260 61 (1) -- 320 ------------ ------------ ------------- ------------ ------------ Income before income taxes............... 11,827 1,647 724 (1,423) 12,775 Provision for income taxes............... 4,162 659 289 -- 5,110 ------------ ------------ ------------- ------------ ------------ Net income............................... $ 7,665 $ 988 $ 435 $ (1,423) $ 7,665 ============ ============ ============= ============ ============
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended December 31, 2002 --------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Revenues................................. $ 98,509 $ 12,409 $ 3,313 $ (186) $ 114,045 Expenses: Marketing............................. 63,262 5,578 1,059 -- 69,899 Operating............................. 15,654 2,877 833 (186) 19,178 General and administrative............ 15,451 2,526 787 -- 18,764 Amortization of intangible assets..... -- 346 -- -- 346 ------------ ------------ ------------- ------------ ------------ Operating income......................... 4,142 1,082 634 -- 5,858 Interest expense......................... (23) (2) -- -- (25) Equity in income of subsidiaries......... 1,066 -- -- (1,066) -- Other income, net........................ 183 35 28 -- 246 ------------ ------------ ------------- ------------ ------------ Income before income taxes............... 5,368 1,115 662 (1,066) 6,079 Provision for income taxes............... 1,721 446 265 -- 2,432 ------------ ------------ ------------- ------------ ------------ Net income............................... $ 3,647 $ 669 $ 397 $ (1,066) $ 3,647 ============ ============ ============= ============ ============
F-43 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended December 31, 2003 --------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Revenues................................. $ 201,176 $ 27,998 $ 8,598 $ (784) $ 236,988 Expenses: Marketing............................. 117,124 14,039 2,238 -- 133,401 Operating............................. 35,144 6,358 3,787 (784) 44,505 General and administrative............ 31,016 5,089 1,857 -- 37,962 Amortization of intangible assets..... -- 589 -- -- 589 ------------ ------------ ------------- ------------ ------------ Operating income......................... 17,892 1,923 716 -- 20,531 Interest expense......................... (1,570) -- -- -- (1,570) Equity in income of subsidiaries......... 1,632 -- -- (1,632) -- Other income, net........................ 224 89 (8) -- 305 ------------ ------------ ------------- ------------ ------------ Income before income taxes............... 18,178 2,012 708 (1,632) 19,266 Provision for income taxes............... 6,618 805 283 -- 7,706 ------------ ------------ ------------- ------------ ------------ Net income............................... $ 11,560 $ 1,207 $ 425 $ (1,632) $ 11,560 ============ ============ ============= ============ =============
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended December 31, 2002 --------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Revenues................................. $ 188,381 $ 24,767 $ 6,370 $ (469) $ 219,049 Expenses: Marketing............................. 122,029 11,182 2,237 -- 135,448 Operating............................. 30,350 5,863 1,508 (469) 37,252 General and administrative............ 30,799 5,266 1,562 -- 37,627 Amortization of intangible assets..... -- 739 -- -- 739 ------------ ------------ ------------- ------------ ------------ Operating income......................... 5,203 1,717 1,063 -- 7,983 Settlement of investment related litigation 19,148 -- -- -- 19,148 Loss on sale of subsidiary............... (959) -- -- -- (959) Net loss on investment................... (206) -- -- -- (206) Interest expense......................... (46) (11) -- -- (57) Equity in income of subsidiaries......... 1,716 -- -- (1,716) -- Other income, net........................ 307 67 23 -- 397 ------------ ------------ ------------- ------------ ------------ Income before income taxes............... 25,163 1,773 1,086 (1,716) 26,306 Provision for income taxes............... 9,380 709 434 -- 10,523 ------------ ------------ ------------- ------------ ------------ Net income............................... $ 15,783 $ 1,064 $ 652 $ (1,716) $ 15,783 ============ ============ ============= ============ =============
F-44 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended December 31, 2003 --------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Operating activities Net income............................ $ 11,560 $ 1,207 $ 425 $ (1,632) $ 11,560 Adjustments to reconcile net income to net cash provided by operating activities: Change in deferred membership fees.. (18,574) 135 706 -- (17,733) Change in membership solicitation and other deferred costs.............. 19,553 (3,771) (414) -- 15,368 Depreciation and amortization....... 4,151 741 350 -- 5,242 Deferred income taxes............... 4,314 716 274 -- 5,304 Tax benefit from employee stock plans 1,553 -- -- -- 1,553 Other............................... 602 118 -- -- 720 Change in assets and liabilities: Restricted cash..................... -- (437) -- -- (437) Accounts receivable................. (1,237) 346 (1,873) -- (2,764) Intercompany receivable & payable... (985) 796 189 -- -- Prepaid membership materials........ (1,366) (5) (625) -- (1,996) Prepaid expenses and other current assets 1,223 (93) 113 -- 1,243 Other assets........................ 212 (352) -- -- (140) Accounts payable.................... (4,339) (214) 1,202 -- (3,351) Accrued liabilities................. 4,629 917 326 -- 5,872 ------------ ------------ ------------- ------------ ------------ Net cash provided by operating activities 21,296 104 673 (1,632) 20,441 ------------ ------------ ------------- ------------ ------------ Investing activities Acquisition of fixed assets........... (2,082) (201) (255) -- (2,538) Investment in subsidiaries............ (1,632) -- -- 1,632 -- ------------ ------------ ------------- ------------ ------------ Net cash used in by investing activities. (3,714) (201) (255) 1,632 (2,538) ------------ ------------ ------------- ------------ ------------ Net proceeds from exercise of stock options............................. 22,551 -- -- -- 22,551 Treasury stock purchases.............. (79,078) -- -- -- (79,078) Net proceeds from issuance of convertible debt.................... 86,568 -- -- -- 86,568 Payments of long-term obligations..... -- (250) -- -- (250) ------------ ------------ ------------- ------------ ------------ Net cash provided by (used in) financing activities............................ 30,041 (250) -- -- 29,791 ------------ ------------ ------------- ------------ ------------ Effect of exchange rate changes on cash and cash equivalents...................... -- -- 41 -- 41 ------------ ------------ ------------- ------------ ------------ Net increase (decrease) in cash and cash equivalents........................... 47,623 (347) 459 -- 47,735 Cash and cash equivalents at beginning of period................................ 51,895 18,716 1,649 -- 72,260 ------------ ------------ ------------- ------------ ------------ Cash and cash equivalents at end of period $ 99,518 $ 18,369 $ 2,108 $ -- $ 119,995 ============ ============ ============= ============ =============
F-45 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended December 31, 2002 --------------------------------------------------------------------- Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ ------------ (In thousands) Operating activities Net income............................ $ 15,783 $ 1,064 $ 652 $ (1,716) $ 15,783 Adjustments to reconcile net income to net cash provided by operating activities: Change in deferred membership fees.. (8,690) (600) (619) -- (9,909) Change in membership solicitation and other deferred costs.............. 19,657 521 597 -- 20,775 Depreciation and amortization....... 4,743 940 486 -- 6,169 Deferred income taxes............... 8,601 709 434 -- 9,744 Tax benefit from employee stock plans 297 -- -- -- 297 Gain on settlement of investment related litigation................ (19,148) -- -- -- (19,148) Loss on sale of subsidiary.......... 959 -- -- -- 959 Net loss on investment.............. 206 -- -- -- 206 Other............................... 382 -- -- -- 382 Change in assets and liabilities: Restricted cash..................... -- 2,841 -- -- 2,841 Accounts receivable................. 587 (567) (1,549) -- (1,529) Intercompany receivable & payable... 1,098 686 (1,784) -- -- Prepaid membership materials........ (1,151) -- (18) -- (1,169) Prepaid expenses and other current assets 586 (380) 128 -- 334 Other assets........................ (451) 27 -- -- (424) Accounts payable.................... (3,070) 3,371 743 -- 1,044 Accrued liabilities................. 6,359 304 (141) -- 6,522 ------------ ------------ ------------- ------------ ------------ Net cash provided by (used in) operating activities............................ 26,748 8,916 (1,071) (1,716) 32,877 ------------ ------------ ------------- ------------ ------------ Investing activities Acquisition of fixed assets........... (2,677) (62) (23) -- (2,762) Investment in subsidiaries............ (1,716) -- -- 1,716 -- Settlement of investment related litigation.......................... 19,148 -- -- -- 19,148 Purchase price adjustments from sale of subsidiary.......................... (750) -- -- -- (750) ------------ ------------ ------------- ------------ ------------ Net cash (used in) provided by investing activities............................ 14,005 (62) (23) 1,716 15,636 ------------ ------------ ------------- ------------ ------------ Financing activities..................... Net proceeds from exercise of stock options............................. 1,851 -- -- -- 1,851 Treasury stock purchases.............. (14,957) -- -- -- (14,957) Payments of long-term obligations..... -- (927) -- -- (927) ------------ ------------ ------------- ------------ ------------ Net cash used in financing activities.... (13,106) (927) -- -- (14,033) ------------ ------------ ------------- ------------ ------------ Effect of exchange rate changes on cash and cash equivalents...................... -- -- (32) -- (32) ------------ ------------ ------------- ------------ ------------ Net increase (decrease) in cash and cash equivalents........................... 27,647 7,927 (1,126) -- 34,448 Cash and cash equivalents at beginning of period................................ 34,476 8,463 2,563 -- 45,502 ------------ ------------ ------------- ------------ ------------ Cash and cash equivalents at end of period $ 62,123 $ 16,390 $ 1,437 $ -- $ 79,950 ============ ============ ============= ============ =============
F-46 PART II Item 20. Indemnification of Directors and Officers Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership or other enterprise, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by them in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interest of the corporation and, with respect to any criminal action or proceeding, if he or she had no reasonable cause to believe their conduct was unlawful. Section 145 further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor, against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of the action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made against expense in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. Our certificate of incorporation and by-laws provide that we shall, to the maximum extent permitted under Delaware law, indemnify any director or officer of the corporation who is or was made a party to any action or proceeding by reason of the fact that he or she is or was an agent of the corporation, against liability incurred in connection with such action or proceeding. We have entered into agreements with our directors, executive officers and some of our other officers implementing such indemnification. In addition, our certificate of incorporation limits, to the fullest extent permitted by Delaware law, the liability of directors for monetary damages for breach of fiduciary duty. We may also purchase and maintain insurance policies insuring our directors and officers against certain liabilities they may incur in their capacity as directors and officers. Item 21. Exhibits and Financial Statement Schedules (a) Exhibits The exhibits to this registration statement are listed in the Exhibit Index to this registration statement, which Exhibit Index is hereby incorporated by reference. (b) Financial Statement Schedule. Not applicable. Item 22. Undertakings (1) The undersigned registrant hereby undertakes to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or II-1 decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any such action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. (4) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act. (5) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (6) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. MEMBERWORKS INCORPORATED By: /s/ George Thomas ------------------------------ George Thomas Senior Vice President, General Counsel POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President, Chief Executive Officer and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Executive Vice President and Chief Financial James B. Duffy Officer /s/ Alec L. Ellison - --------------------------- Director Alec L. Ellison /s/ Scott N. Flanders - --------------------------- Director Scott N. Flanders /s/ Robert Kamerschen - --------------------------- Director Robert Kamerschen /s/ Michael T. McClorey - --------------------------- Director Michael T. McClorey /s/ Edward M. Stern - --------------------------- Director Edward M. Stern /s/ Marc S. Tesler - --------------------------- Director Marc S. Tesler II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA BALTIMORE LLC By: /s/ George Thomas ------------------------------ George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA COLORADO LLC By: /s/ George Thomas ------------------------------ George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA GEORGIA LLC By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA MICHIGAN LLC By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA NEW JERSEY LLC By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA NEW YORK LLC By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA OHIO LLC By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-10 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC By: /s/ George Thomas ------------------------ George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-11 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. LAVALIFE WASHINGTON D.C., L.L.C. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-12 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE MEDIA GROUP (USA) LTD. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-13 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE MEDIA CONSOLIDATED, INC. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-14 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE (TX) VOICE MEDIA CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ Gary A. Johnson - --------------------------- Vice President, Treasurer and Director Gary A. Johnson /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-15 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE L.A. VOICE MEDIA CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-16 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE MEDIA (IL) CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-17 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE MEDIA MO CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-18 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. BARNES HOLDING CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-19 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE S.J. VOICE MEDIA CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-20 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA (CA) CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-21 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA (MN) CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-22 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Gary A. Johnson - --------------------------- President and Director Gary A. Johnson /s/ James B. Duffy - --------------------------- Vice President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Bruce Croxon - --------------------------- Director Bruce Croxon II-23 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. COVERDELL & COMPANY, INC. By: /s/ George Thomas --------------------------- George Thomas Assistant Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Michael Owens - --------------------------- President and Chief Executive Officer Michael Owens /s/ James B. Duffy - --------------------------- Director James B. Duffy II-24 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. DISCOUNT DEVELOPMENT SERVICES, L.L.C By: /s/ George Thomas --------------------------- George Thomas Assistant Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Vincent DiBenedetto - --------------------------- President Vincent DiBenedetto /s/ James B. Duffy - --------------------------- Vice President and Director James B. Duffy II-25 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. MEMBERWORKS CANADA LLC By: /s/ George Thomas --------------------------- George Thomas Vice President and Treasurer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James B. Duffy - --------------------------- President, Secretary and Manager James B. Duffy /s/ George Thomas - --------------------------- Vice President and Treasurer George Thomas II-26 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. IMPAQ MARKETING CORPORATION By: /s/ George Thomas --------------------------- George Thomas Vice President and Treasurer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James B. Duffy - --------------------------- President, Secretary and Director James B. Duffy /s/ George Thomas - --------------------------- Vice President and Treasurer George Thomas II-27 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. BEST BENEFITS, INC. By: /s/ George Thomas --------------------------- George Thomas Vice President and Treasurer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James B. Duffy - --------------------------- President, Secretary and Director James B. Duffy /s/ George Thomas - --------------------------- Vice President and Treasurer George Thomas II-28 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. UNI-CARE, INC. By: /s/ George Thomas --------------------------- George Thomas Assistant Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Vincent DiBenedetto - --------------------------- President Vincent DiBenedetto /s/ James B. Duffy - --------------------------- Vice President, Secretary and Director James B. Duffy II-29 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. QUOTA-PHONE, INC. By: /s/ George Thomas --------------------------- George Thomas Vice President and Treasurer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James B. Duffy - --------------------------- President, Secretary and Director James B. Duffy /s/ George Thomas - --------------------------- Vice President and Treasurer George Thomas II-30 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. COUNTRYWIDE DENTAL, INC. By: /s/ George Thomas --------------------------- George Thomas Vice President and Treasurer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James B. Duffy - --------------------------- President, Secretary and Director James B. Duffy /s/ George Thomas - --------------------------- Vice President and Treasurer George Thomas II-31 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. MEMBERWORKS CANADA HOLDCO, INC. By: /s/ George Thomas --------------------------- George Thomas Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James B. Duffy - --------------------------- President, Treasurer and Director James B. Duffy /s/ George Thomas - --------------------------- Director George Thomas /s/ Gary A. Johnson - --------------------------- Director Gary A. Johnson II-32 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. LAVALIFE CORP. By: /s/ George Thomas --------------------------- George Thomas Assistant Secretary POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ Bruce Croxon - --------------------------- Chief Executive Officer and Director Bruce Croxon /s/ James B. Duffy - --------------------------- Assistant Treasurer and Director James B. Duffy /s/ Gary A. Johnson - --------------------------- Director Gary A. Johnson /s/ George Thomas - --------------------------- Director George Thomas II-33 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. MYHEALTHYSAVINGS.COM, INC. By: /s/ George Thomas --------------------------- George Thomas Vice President and Treasurer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James B. Duffy - --------------------------- President, Secretary and Director James B. Duffy /s/ George Thomas - --------------------------- Vice President and Treasurer George Thomas II-34 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on May 12, 2004. BILLING SERVICES INTERNATIONAL, INC. By: /s/ George Thomas --------------------------- George Thomas Vice President and Treasurer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 12, 2004. Each individual whose signature appears below constitutes and appoints George Thomas his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto, including post-effective amendments, and to file other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James B. Duffy - --------------------------- President, Secretary and Director James B. Duffy /s/ George Thomas - --------------------------- Vice President and Treasurer George Thomas II-35 EXHIBIT INDEX Exhibit No. Description of Exhibits ----------- ----------------------- 3.1* Restated Certificate of Incorporation of MemberWorks Incorporated (filed as Exhibit 3.3 to the Company's Registration Statement on Form S-1, Registration No. 333-10541, filed on October 18, 1996, and incorporated herein by reference). 3.2* Restated By-laws of MemberWorks Incorporated, as amended (filed as Exhibit 3.4 to the Company's Registration Statement on Form S-1, Registration No. 333-10541, filed on October 18, 1996, and incorporated herein by reference). 3.3 Certificate of Formation of Interactive Voice Media Baltimore L.L.C. 3.4 Limited Liability Company Agreement with Amendments of Interactive Voice Media Baltimore L.L.C. 3.5 Certificate of Formation and Certificate of Merger of Interactive Voice Media Colorado LLC 3.6 Limited Liability Company Agreement with Amendment of Interactive Voice Media Colorado LLC 3.7 Certificate of Formation and Certificate of Merger of Interactive Voice Media Georgia LLC 3.8 Limited Liability Company Agreement with Amendment of Interactive Voice Media Georgia LLC 3.9 Certificate of Formation of Interactive Voice Media Michigan L.L.C 3.10 Limited Liability Company Agreement with Amendments of Interactive Voice Media Michigan L.L.C 3.11 Certificate of Formation and Certificate of Merger of Interactive Voice Media New Jersey LLC 3.12 Limited Liability Company Agreement with Amendment of Interactive Voice Media New Jersey LLC 3.13 Certificate of Formation and Certificate of Merger of Interactive Voice Media New York LLC 3.14 Limited Liability Company Agreement with Amendment of Interactive Voice Media New York LLC 3.15 Certificate of Formation and Certificate of Merger of Interactive Voice Media Ohio LLC 3.16 Limited Liability Company Agreement with Amendment of Interactive Voice Media Ohio LLC 3.17 Certificate of Formation and Certificate of Merger of Interactive Voice Media Pennsylvania LLC 3.18 Limited Liability Company Agreement with Amendment of Interactive Voice Media Pennsylvania LLC II-36 3.19 Certificate of Formation and Certificate of Amendment of Lavalife Washington D.C., L.L.C 3.20 Limited Liability Company Agreement with Amendments of Lavalife Washington D.C., L.L.C. 3.21 Certificate of Incorporation and Certificate of Amendment of Interactive Media Group (USA) Ltd. 3.22 Bylaws of Interactive Media Group (USA) Ltd. 3.23 Certificate of Incorporation of Interactive Media Consolidated, Inc. 3.24 Bylaws of Interactive Media Consolidated, Inc. 3.25 Articles of Incorporation of Interactive (TX) Voice Media Corp. 3.26 Bylaws of Interactive (TX) Voice Media Corp. 3.27 Articles of Incorporation of Interactive L.A. Voice Media Corp. 3.28 Bylaws of Interactive L.A. Voice Media Corp. 3.29 Articles of Incorporation of Interactive Media (IL) Corp. 3.30 Bylaws of Interactive Media (IL) Corp. 3.31 Articles of Incorporation of Interactive Media MO Corp. 3.32 Bylaws of Interactive Media MO Corp. 3.33 Articles of Incorporation and Certificate of Amendment of Interactive Voice Media (CA) Corp. 3.34 Bylaws of Interactive Voice Media (CA) Corp. 3.35 Certificate of Incorporation of Interactive Voice Media (MN) Corp. 3.36 Bylaws of Interactive Voice Media (MN) Corp. 3.37 Certificate of Incorporation and Certificate of Amendment of Barnes Holding Corporation 3.38 Bylaws of Barnes Holding Corporation 3.39 Articles of Incorporation of Interactive Voice Media (Sacramento) Corp. 3.40 Bylaws of Interactive Voice Media (Sacramento) Corp. 3.41 Articles of Incorporation of Interactive S.J. Media Corp. 3.42 Bylaws of Interactive S.J. Media Corp. 3.43 Articles of Incorporation, Amendments and Certificate of Merger of Coverdell & Company, Inc. 3.44 Bylaws of Coverdell & Company, Inc. II-37 3.45 Articles of Organization of Discount Development Services, L.L.C. 3.46 Limited Liability Company Operating Agreement of Discount Development Services, L.L.C. 3.47 Certificate of Formation of MemberWorks Canada LLC 3.48 Limited Liability Company Operating Agreement of MemberWorks Canada LLC 3.49 Certificate of Incorporation of Impaq Marketing Corporation 3.50 Bylaws of Impaq Marketing Corporation 3.51 Certificate of Incorporation of Best Benefits, Inc. 3.52 Bylaws of Best Benefits, Inc. 3.53 Articles of Incorporation of Uni-Care, Inc. 3.54 Bylaws of Uni-Care, Inc. 3.55 Certificate of Incorporation, Amendments and Certificate of Merger of Quota-Phone, Inc. 3.56 Bylaws of Quota-Phone, Inc. 3.57 Certificate of Incorporation and Amendment of Countrywide Dental, Inc. 3.58 Bylaws of Countrywide Dental, Inc. 3.59 Certificate of Incorporation of MemberWorks Canada Holdco, Inc. 3.60 Bylaws of MemberWorks Canada Holdco, Inc. 3.61 Memorandum of Association and Articles of Association of Lavalife Corp. 3.62 Certificate of Incorporation of MyHealthySavings.com, Inc. 3.63 Bylaws of MyHealthySavings.com, Inc. 3.64 Certificate of Incorporation of Billing Services International, Inc. 3.65 Bylaws of Billing Services International, Inc. 4.1 Indenture dated as of April 13, 2004 between MemberWorks Incorporated and each of the Guarantors party thereto and LaSalle Bank National Association, as Trustee relating to the 9 1/4% Senior Notes due 2014, including the form of notes. 4.2 Registration Rights Agreement dated as of April 13, 2004 between MemberWorks Incorporated and each of the Guarantors party thereto and Lehman Brothers Inc., UBS Securities LLC and ABN AMRO Incorporated. 5.1** Opinion of Shearman & Sterling LLP. 12.1 Computation of Ratio of Earnings to Fixed Charges. II-38 21.1 List of subsidiaries. 23.1 Consent of PricewaterhouseCoopers LLP, as independent accountants. 23.2 Consent of Ernst & Young LLP, as independent accountants. 24.1 Power of Attorney (contained on signature page). 25.1 Form T-1 Statement of Eligibility of Trustee under the Trust Indenture Act of 1939 of LaSalle Bank National Association. 99.1 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companied and Other Nominees. 99.2 Form of Letter of Transmittal. 99.3 Form of Letter to Clients. 99.4 Form of Notice of Guaranteed Delivery. 99.5 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. ------------------ * Previously filed. ** To be filed by amendment. II-39 EX-3.3 4 ex3-3_043004.txt CERTIFICATE OF FORMATION (BALTIMORE) CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA BALTIMORE L.L.C. (Under Section 18-201 of the Delaware Limited Liability Company Act) 1. The name of the limited liability company is: Interactive Voice Media Baltimore L.L.C. 2. The address of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of Interactive Voice Media Baltimore L.L.C. this 28th day of May, 1997. /s/ Candace Lynn Bell ------------------------------------ Candace Lynn Bell, Authorized Person EX-3.4 5 ex3-4_043004.txt LLC AGREEMENT WITH AMENDMENTS (BALTIMORE) SECOND AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA BALTIMORE L.L.C. (a Delaware limited liability company) THIS SECOND AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between Interactive Voice Media Baltimore L.L.C. (the "Company"), a Delaware limited liability company, and Interactive Voice Media New York LLC, a Delaware limited liability company and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated May 29, 1997 (the "Original Agreement"); and WHEREAS, the Member and the Company entered into a First Amendment to the Limited Liability Company Agreement dated March 26, 1998 (the "First Amendment") (the Original Agreement, as amended by the First Amendment, is referred to herein as the "Entire Agreement"); and WHEREAS, the Member and the Company desire to amend the Entire Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. --------- Section 5.8 of the Entire Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be -2- taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the. Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management of all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may -3- sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee Or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. -4- (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. ---------------- Except as specifically provided herein, the Entire Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this Second Amendment to the Limited Liability Company Agreement as of the date first above written.
The Company The Sole Member Interactive Voice Media Baltimore L.L.C. Interactive Voice Media New York LLC By: /s/ Bruce Croxon By: /s/ Bruce Croxon --------------------------------- ---------------------------------- Bruce Croxon, Chief Executive Officer Bruce Croxon, Chief Executive Officer
FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA BALTIMORE L.L.C. (a Delaware limited liability company) THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 26th day of March 1998, by and between Interactive Voice Media Baltimore L.L.C. (the "Company"), a Delaware limited liability company, and Interactive Media (New York) Corp., a New York corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated May 29, 1997 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. --------- Section 5.8 of the Original Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Chief Executive Officer, President and Chief Operating Officer, Chief Technology Officer, Chief People Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such rights, powers, -2- duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (c) The President is authorized to be an executive officer of the Company; shall (in the absence of both the Chairman of the Management Committee and the Chief Executive Officer) preside at meetings of the Members and of the Management Committee; and shall have general and active management of the business of the Company; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. The President shall also be known as the Chief Operating Officer of the Company. (d) The Chief Technology Officer is authorized to be an executive officer of the Company. The Chief Technology Officer shall be responsible to the Management Committee, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. (e) The Chief People Officer is authorized to be an executive officer of the Company. The Chief People Officer shall be responsible to the Management Committee, the Chief Executive Officer and President for the management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. (f) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee, the Chief Executive Officer and the President for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. -4- (g) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the President, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (h) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the President or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Management Committee from time to time. -5- 2. Original Agreement. ------------------ Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written.
The Company The Sole Member Interactive Voice Media Baltimore L.L.C. Interactive Voice Media (New York) Corp. By: /s/ Nicholas Paine By: /s/ Nicholas Paine --------------------------------- ---------------------------------- Nicholas Paine, Manager Nicholas Paine, Chief Executive Officer
LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA BALTIMORE L.L.C. a Delaware limited liability company Dated May 29, 1997 TABLE OF CONTENTS 1. DEFINITIONS................................................................1 2. ORGANIZATION OF THE COMPANY.................................................1 2.1 ORGANIZATION...............................................................1 2.2 NAME.......................................................................2 2.3 PRINCIPAL PLACE OF BUSINESS................................................2 2.4 STATUTORY AGENT............................................................2 2.5 TERM.......................................................................2 3. PURPOSES OF THE COMPANY.....................................................2 4. NAMES AND ADDRESSES OF MEMBERS..............................................2 5. MANAGEMENT OF THE COMPANY...................................................3 5.1 MANAGEMENT COMMITTEE.......................................................3 5.2 RESIGNATION................................................................3 5.3 FIDUCIARY RELATIONSHIP.....................................................3 5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3 5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4 5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING......................4 5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4 5.8 OFFICERS...................................................................4 6. RIGHTS AND POWERS OF THE MEMBERS............................................5 6.1 NO COMMITMENTS.............................................................5 6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY-IN-INTEREST OF THE MEMBERS....5 6.3 MEETINGS OF THE MEMBERS....................................................6 6.4 DECISIONS OF THE MEMBERS...................................................6 6.5 PROXIES....................................................................6 6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6 6.7 WAIVER OF NOTICE ..........................................................6 6.8 TAX MATTERS PARTNER........................................................6 7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7 7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7 7.2 LIMITATION OF LIABILITY....................................................7 7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7 8. CAPITAL CONTRIBUTIONS.......................................................7 8.1 GENERALLY..................................................................7 8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8 9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8 9.1 ALLOCATION OF PROFITS AND LOSSES...........................................8 9.2 ACCOUNTING................................................................10 9.3 DISTRIBUTIONS.............................................................11 9.4 GUARANTEED PAYMENTS ......................................................11 10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11 10.1 RIGHT TO TRANSFER........................................................11 10.2 STATUS OF THIRD PARTY TRANSFEREE.........................................12 -ii- 10.3 ABSOLUTE RESTRICTION ON TRANSFERS........................................12 10.4 TIME OF TRANSFER.........................................................12 10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST.........12 10.6 EFFECT OF WITHDRAWAL EVENTS..............................................13 11. TERMINATION, LIQUIDATION AND WINDING UP...................................13 11.1 TERMINATION AND WINDING UP OF THE COMPANY................................13 11.2 METHOD OF DISTRIBUTION UPON WINDING UP...................................14 11.3 ORDERLY LIQUIDATION......................................................14 12. MISCELLANEOUS PROVISIONS..................................................14 12.1 NOTICES..................................................................14 12.2 BOOKS OF ACCOUNTS AND RECORDS............................................14 12.3 GOVERNING LAW............................................................15 12.4 WAIVER OF ACTION FOR PARTITION...........................................15 12.5 AMENDMENTS...............................................................15 12.6 CONSTRUCTION.............................................................15 12.7 WAIVERS..................................................................15 12.8 RIGHTS AND REMEDIES CUMULATIVE...........................................15 12.9 ENTIRE AGREEMENT.........................................................15 12.10 SEVERABILITY............................................................16 12.11 HEIRS, SUCCESSORS AND ASSIGNS...........................................16 12.12 CREDITORS...............................................................16 12.13 COUNTERPARTS............................................................16 12.14 FEDERAL INCOME ME TAX ELECTIONS.........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA BALTIMORE L.L.C. (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 29th day of May, 1997, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media Baltimore L.L.C. (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. ----------- Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein by reference. 2. Organization of the Company. --------------------------- 2.1 Certificate of Formation. ------------------------ On May 29, 1997, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Bell as authorized person of the Company, and the assignment by Ms. Bell to the Members of all her right, title and interest, if any, as authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, and to indemnify and hold -2- harmless Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement. --------- This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. 2.3 Admission of Members. -------------------- This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4. Name. ---- The name of the Company is Interactive Voice Media Baltimore L.L.C. 2.5 Principal Place of Business. --------------------------- The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. --------------- The name and address of the registered agent for service of process in Delaware shall be Prentice-Hall Corporation System, Inc., 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. ---- The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement. 3. Purposes of the Company ----------------------- The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. ------------------------------ The names and addresses of the Members are as set forth on Schedule A attached to this Agreement and incorporated herein by reference. -3- 5. Management of the Company. ------------------------- 5.1 Management Committee. -------------------- Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of four (4) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: Nicholas Paine Bruce Croxon Paul Woolner John Bradlow Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority-in-Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. ----------- Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. ---------------------- At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. ------------------------------------ Any Manager may call a meeting of the Management Committee upon forty-eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. -4- 5.5 Decisions of the Management Committee. ------------------------------------- Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. ----------------------------------------------------- Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written action without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7 Authority of Management Committee. --------------------------------- The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. -------- 5.8.1 The Company shall have a President, Vice President, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. The initial officers of the Company shall be: Nicholas Paine President Ted Madden Vice-President Denis Weil Vice-President Ron Anderson Secretary Ron Anderson Treasurer 5.8.2 The officers be shall appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each offer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the President, Vice-President, Secretary and Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not -5- Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. -------------------------------- 6.1 No Commitments. -------------- In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in-Interest of the --------------------------------------------------------------- Members. - ------- Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof, (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into any other entity; (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. -6- 6.3 Meetings of the Members. ----------------------- Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. ------------------------ Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. ------- At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. ---------------------------------------- Any action which may be taken by the Members at a meeting may be taken by unanimous written action, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. ---------------- Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. 6.8 Tax Matters Partner. ------------------- Interactive Media (New York) Corp. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231(a)(7) of the Code. -7- 7. Limitation of Liability; Indemnification. ---------------------------------------- 7.1 Proof of Failure to Standard of Conduct. --------------------------------------- A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. ----------------------- No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any Member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. ------------------------------------------------------ The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement and in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. 8. Capital Contributions. --------------------- 8.1 Generally. --------- Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the prior approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital -8- Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. ------------------------- 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 8.2.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions. ----------------------------------------------- 9.1 Allocation of Profits and Losses. -------------------------------- 9.1.1 Allocation of Profits Generally. ------------------------------- Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; (B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. ---------------- Except as otherwise provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: -9- (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3 Other Allocation Rules. ---------------------- (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, to the extent required under the Section 1.704-2 of the Regulations. The items to be so allocated shall be determined in accordance with Section 1.704-2 of the Regulations. This Section 9.1.3(C) is in to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section -10- 1.7041(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. -------------------- The allocations set forth in Sections 9.1.3 (A), (B), (C) and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704-1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations of income, gain, deduction or loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. ---------- The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be as selected by the Management Committee. -11- 9.3 Distributions. ------------- The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. ------------------- Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of interests; Effect of Withdrawal Events. -------------------------------------------------- 10.1 Right to Transfer. ----------------- 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a security interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy or by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-in-Interest of the Members. -12- 10.2 Status of Third Party Transferee. -------------------------------- Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. --------------------------------- Notwithstanding any provision of this Agreement to the contrary, the transfer of an Interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. ---------------- Any transfer of an Interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred Interest. ---------------------------------------------------------------- If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5, whether or not any of them has knowledge of any transfer of ownership of any Interest. -13- 10.6 Effect of Withdrawal Events. --------------------------- 10.6.1 No Resign. --------- No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 10.3. 10.6.2 Death or Adjudication of Incompetency. ------------------------------------- If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the 'successor-in-interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. ------------------- Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. --------------------------------------- 11.1 Termination and Winding Up of the Company. ----------------------------------------- 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing; (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any of the events of dissolution stated in Section 18-801 of the Act. 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. -14- 11.2 Method of Distribution Upon Winding Up. -------------------------------------- Upon termination of the Company pursuant to Section 11.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company; and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. ------------------- A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. ------------------------ 12.1 Notices. ------- Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. 12.2 Books of Accounts and Records. ----------------------------- Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business in the detail and completeness -15- customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. ------------- The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4 Waiver of Action for Partition. ------------------------------ Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. ---------- This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. ------------ Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. ------- The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. ------------------------------ The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. 12.9 Entire Agreement. ---------------- This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. -16- 12.10 Severability. ------------ If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. ----------------------------- Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. --------- None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. ------------ This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. ------------------------------- In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written.
The Company The Member Interactive Voice Media Baltimore L.L.C. Interactive Voice Media (New York) Corp. By: /s/ Nicholas Paine By: /s/ Nicholas Paine --------------------------------- ---------------------------------- Nicholas Paine, Manager Nicholas Paine, President
SCHEDULE A ---------- MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS --------------------------------------------------- MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media (New York) Corp., a New $1,000 York corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 [GRAPHIC OMITTED] EXHIBIT 1 --------- DEFINITIONS ----------- Certain capitalized words and phrases used in this Agreement shall have the following meanings: 1. "Agreement" means this Limited Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for relief, in any bankruptcy or insolvency proceeding; (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A) - (E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed, or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. -2- 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2.3): (A) To each Member's Capital Account, there shall be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on May 29, 1997, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7. "Company' means Interactive Media Baltimore L.L.C., a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704-2(d) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18-101, et seq.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: -3- (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in, exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media (New York) Corp. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. -4- 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704-2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.704-2(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704-2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.704-2(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate distributions made during the year of proceeds of any Nonrecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nonrecourse Liability" has the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. -5- (B) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not btherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (11)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Allocations" is defined in Section 9.1.4. 26. "Withdrawal Event" means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.5 6 ex3-5_043004.txt CERTIFICATE OF FORMATION & MERGER (COLORADO) CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA COLORADO LLC (Under Section 18-201 of the Delaware Limited Liability Company Act) 1. The name of the limited liability company is: INTERACTIVE VOICE MEDIA COLORADO LLC. 2. The address of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is Corporation Service Company. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of INTERACTIVE VOICE MEDIA COLORADO LLC this 24th day of September, 1998. /s/ Candace Lynn Bell ------------------------------------ Candace Lynn Bell, Authorized Person CERTIFICATE of MERGER of INTERACTIVE VOICE MEDIA (CO) CORP. a Colorado corporation; into INTERACTIVE VOICE MEDIA COLORADO LLC, a Delaware Limited Liability Company. (pursuant to Sections 18-209 of the Delaware Limited Liability Company Act) The undersigned does hereby certify as follows: 1. The name and jurisdiction of formation or organization of the domestic limited liability company and the other business entity to the merger is as follows: - -------------------------------------------------------------------------------- Name Form of Entity Jurisdiction of Formation or Organization - -------------------------------------------------------------------------------- Interactive Voice Media (CO) Corp. corporation Colorado - ------------------------------------------------------------------------------- Interactive Voice Media Colorado LLC limited liability Delaware company - ------------------------------------------------------------------------------- 2. An agreement of merger has been approved, adopted, certified, executed and acknowledged by the domestic limited liability company and the other business entity in accordance with Section 18-209(c)(2) of the Delaware Limited Liability Company Act. 3. The name of the surviving domestic limited liability company is Interactive Voice Media Colorado LLC (the "Surviving Entity"). 4. The effective date of the merger shall be September 30, 1998 at 5:00pm Eastern Standard Time. 5. The executed agreement of merger is on file at the principal place of business of the Surviving Entity and the address of the principal place of business of the Surviving Entity is Dominion Plaza South Tower, 600 17th Street. Suite 1720, Denver, Colorado 80202. 6. A copy of the agreement of merger will be furnished by the Surviving Entity, on request and without cost, to any Shareholder of Interactive Voice Media (CO) Corp. or any member of the Surviving Entity. IN WITNESS WHEREOF, the undersigned have hereunto executed this Certificate of Merger this 25th day of September, 1998. Interactive Voice Media Colorado LLC, a Delaware Limited Liability Company (Limited Liability Company Seal) By: /s/ Nicholas Paine ------------------------------------ Nicholas Paine, Chief Executive Officer and Manager Attest: /s/ Ron Duke - ---------------------------- Ron Duke, Secretary EX-3.6 7 ex3-6_043004.txt LLC AGREEMENT WITH AMENDMENT (COLORADO) FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA COLORADO LLC (a Delaware limited liability company) THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between Interactive Voice Media Colorado LLC (the "Company"), a Delaware limited liability company, and Interactive Media Consolidated, Inc., a Delaware corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated September 24, 1998 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. Section 5.8 of the Original Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such -2- rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management of all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, -3- except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management -4- Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written. The Company The Sole Member Interactive Voice Media Colorado LLC Interactive Media Consolidated, Inc. By: /s/ Bruce Croxon By: /s/ Bruce Croxon ----------------------------------- ----------------------------- Bruce Croxon, Chief Executive Officer Bruce Croxon, Chief Executive Officer 139501 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA COLORADO LLC a Delaware limited liability company Dated September 24th, 1998 TABLE OF CONTENTS 1. DEFINITIONS ................................................................1 2. ORGANIZATION OF THE COMPANY.................................................1 2.1 ORGANIZATION...............................................................1 2.2 NAME.......................................................................2 2.3 PRINCIPAL PLACE OF BUSINESS ...............................................2 2.4 STATUTORY AGENT............................................................2 2.5 TERM.......................................................................2 3. PURPOSES OF THE COMPANY ....................................................2 4. NAMES AND ADDRESSES OF MEMBERS..............................................2 5. MANAGEMENT OF THE COMPANY...................................................3 5.1 MANAGEMENT COMMITTEE.......................................................3 5.2 RESIGNATION................................................................3 5.3 FIDUCIARY RELATIONSHIP.....................................................3 5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3 5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4 5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING......................4 5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4 5.8 OFFICERS...................................................................4 6. RIGHTS AND POWERS OF THE MEMBERS............................................5 6.1 NO COMMITMENTS.............................................................5 6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY-IN-INTEREST OF THE MEMBERS ...5 6.3 MEETINGS OF THE MEMBERS....................................................6 6.4 DECISIONS OF THE MEMBERS...................................................6 6.5 PROXIES....................................................................6 6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6 6.7 WAIVER OF NOTICE...........................................................6 6.8 TAX MATTERS PARTNER........................................................7 7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7 7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7 7.2 LIMITATION OF LIABILITY....................................................7 7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7 8. CAPITAL CONTRIBUTIONS.......................................................8 8.1 GENERALLY..................................................................8 8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8 9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8 9.1 ALLOCATION OF PROFITS AND LOSSES ..........................................8 9.2 ACCOUNTING................................................................11 9.3 DISTRIBUTIONS.............................................................11 9.4 GUARANTEED PAYMENTS.......................................................11 10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11 10.1 RIGHT TO TRANSFER........................................................11 -ii- 10.2 STATUS OF THIRD PARTY TRANSFEREE.........................................12 10.3 ABSOLUTE RESTRICTION ON TRANSFERS........................................12 10.4 TIME OF TRANSFER.........................................................12 10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST.........12 10.6 EFFECT OF WITHDRAWAL EVENTS..............................................13 11. TERMINATION, LIQUIDATION AND WINDING UP...................................13 11.1 TERMINATION AND WINDING UP OF THE COMPANY................................13 11.2 METHOD OF DISTRIBUTION UPON WINDING UP...................................14 11.3 ORDERLY LIQUIDATION......................................................14 12. MISCELLANEOUS PROVISIONS .................................................14 12.1 NOTICES..................................................................14 12.2 BOOKS OF ACCOUNTS AND RECORDS............................................15 12.3 GOVERNING LAW............................................................15 12.4 WAIVER OF ACTION FOR PARTITION...........................................15 12.5 AMENDMENTS...............................................................15 12.6 CONSTRUCTION.............................................................15 12.7 WAIVERS..................................................................15 12.8 RIGHTS AND REMEDIES CUMULATIVE...........................................15 12.9 ENTIRE AGREEMENT.........................................................16 12.10 SEVERABILITY............................................................16 12.11 HEIRS, SUCCESSORS AND ASSIGNS...........................................16 12.12 CREDITORS...............................................................16 12.13 COUNTERPARTS............................................................16 12.14 FEDERAL INCOME ME TAX ELECTIONS.........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA COLORADO LLC (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into, effective as of the 24th day of September, 1998, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media Colorado LLC (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein by reference. 2. Organization of the Company. 2.1 Certificate of Formation. On September 24th, 1998, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Bell as an authorized person of the Company, and the assignment by Ms. Bell to the Members of all her right, title and interest, if any, as an authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, and to indemnify and hold harmless -2- Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement. This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. 2.3 Admission of Members. This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4 Name. The name of the Company is Interactive Voice Media Colorado LLC. 2.5 Principal Place of Business. The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. The name and address of the registered agent for service of process in Delaware shall be Corporation Service Company, 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement. 3. Purposes of the Company The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. The names and addresses of the Members are as set forth on Schedule A attached to this Agreement and incorporated herein by reference. -3- 5. Management of the Company. 5.1 Management Committee. Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of eight (8) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: John Bradlow Michael Cohen Bruce Croxon Ian Kidson William Landman Nicholas Paine Gilbert Palter Paul Woolner Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority-in-Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. Any Manager may call a meeting of the Management Committee upon forty-eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other -4- means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. 5.5 Decisions of the Management Committee. Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written consent without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7 Authority of Management Committee. The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. 5.8.1 The Company shall have a Chief Executive Officer, a Chief Operating Officer also know as a President, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, and such other officers as the Management Committee from time to time may appoint. The initial officers of the Company shall be: Nicholas W. Paine Chief Executive Officer W.E. Madden Chief Operating Officer and President Rob Gowans Chief Technology Officer James Norrie Chief People Officer Ron Duke Chief Financial Officer Ron Duke Secretary Ron Duke Treasurer 5.8.2 The officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with -5- respect to actions required to be taken by the Management Committee or the Members, the Chief Executive Officer, the Chief Operating Officer and President, the Chief Technology Officer, the Chief People Officer, the Chief Financial Officer, the Secretary and the Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. 6.1 No Commitments. In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in-Interest of the Members. Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof, (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into any other entity; -6- (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. 6.3 Meetings of the Members. Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. Any action which may be taken by the Members at a meeting may be taken by unanimous written consent, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. -7- 6.8 Tax Matters Partner. Interactive Media Consolidated, Inc. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231(a)(7) of the Code. 7. Limitation of Liability; Indemnification. 7.1 Proof of Failure to Standard of Conduct. A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any Member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement and in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. -8- 8. Capital Contributions. 8.1 Generally. Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the prior approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 8.2.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions. 9.1 Allocation of Profits and Losses. 9.1.1 Allocation of Profits Generally. Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; (B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below -9- for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. Except as otherwise provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3 Other Allocation Rules. (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, -10- subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, to the extent required under the Section 1.704-2 of the Regulations. The items to be so allocated shall be determined in accordance with Section 1.704-2 of the Regulations. This Section 9.1.3(C) is intended to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704l(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. The allocations set forth in Sections 9.1.3 (A), (B), (C), and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704-1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations -11- of income, gain, deduction or loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be as selected by the Management Committee. 9.3 Distributions. The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of Interests, Effect of Withdrawal Events. 10.1 Right to Transfer. 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a security interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy or by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted -12- transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-In-Interest of the Members. 10.2 Status of Third Party Transferee. Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. Notwithstanding any provision of this Agreement to the contrary, the transfer of an Interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. Any transfer of an Interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred Interest. If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all -13- distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5, whether or not any of them has knowledge of any transfer of ownership of any Interest. 10.6 Effect of Withdrawal Events. 10.6.1 No Resign. No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 10.3. 10.6.2 Death or Adjudication of Incompetency. If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the successor-in-interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. 11.1 Termination and Winding Up of the Company. 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing; (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any of the events of dissolution stated in Section 18-801 of the Act. 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its -14- business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. 11.2 Method of Distribution Upon Winding Up. Upon termination of the Company pursuant to Section 11.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company; and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. 12.1 Notices. Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. -15- 12.2 Books of Accounts and Records. Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business in the detail and completeness customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4. Waiver of Action for Partition. Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. -16- 12.9 Entire Agreement. This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. 12.10 Severability. If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written. The Company The Members Interactive Voice Media Colorado LLC Interactive Media Consolidated, Inc. By: /s/ Nicholas W. Paine By: /s/ Nicholas W. Paine ----------------------------------- ----------------------------------- Nicholas W. Paine, Manager Nicholas W. Paine, Chief Executive Officer SCHEDULE A ---------- MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS --------------------------------------------------- MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media Consolidated, Inc., $1,000 a Delaware corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario, Canada M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 EXHIBIT 1 --------- DEFINITIONS Certain capitalized words and phrases used in this Agreement shall have the following meanings: 1. "Agreement" means this Limited Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for relief, in any bankruptcy or insolvency proceeding, (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A) - (E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed, or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. -2- 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2.3): (A) To each Member's Capital Account, there shall be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on September 24, 1998, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7. "Company" means Interactive Voice Media Colorado LLC, a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704-2(d) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18-101, et seq.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: -3- (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committeee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m), provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media Consolidated, Inc. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. -4- 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704-2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.704-2(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704-2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.704-2(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate distributions made during the year of proceeds of any Nonrecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nonrecourse Liability" has the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. -5- (B) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (11)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Allocations" is defined in Section 9.1.4. 26. "Withdrawal Event" means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.7 8 ex3-7_043004.txt CERTIFICATE OF FORMATION & MERGER (GEORGIA) CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA GEORGIA LLC (Under Section 18-201 of the Delaware Limited Liability Company Act) 1. The name of the limited liability company is: INTERACTIVE VOICE MEDIA GEORGIA LLC. 2. The address of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is Corporation Service Company. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of INTERACTIVE VOICE MEDIA GEORGIA LLC this 3rd day of July, 1998. /s/ Candace Lynn Bell ------------------------------------ Candace Lynn Bell, Authorized Person CERTIFICATE OF MERGER of INTERACTIVE VOICE MEDIA CORPORATION (GA.) a Georgia corporation; into INTERACTIVE VOICE MEDIA GEORGIA LLC, a Delaware Limited Liability Company, authorized to do business in Georgia (pursuant to Sections 18-209 of the Delaware Limited Liability Company Act) The undersigned does hereby certify as follows: 1. The name and jurisdiction of formation or organization of the domestic limited liability company and the other business entity to the merger is as follows: - -------------------------------------------------------------------------------- Name Form of Entity Jurisdiction of Formation or Orqanization - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Interactive Voice Media Corporation (GA.) corporation Georgia - -------------------------------------------------------------------------------- Interactive Voice Media Georgia LLC limited liability Delaware company - -------------------------------------------------------------------------------- 2. An agreement of merger has been approved, adopted, certified, executed and acknowledged by the domestic limited liability company and the other business entity in accordance with Section 18-209(c)(2) of the Delaware Limited Liability Company Act. 3. The name of the surviving domestic limited liability company is Interactive Voice Media Georgia LLC (the "Surviving Entity"). 4. The effective date of the merger shall be July 31, 1998 at 5:00pm Eastern Standard Time. 5. The executed agreement of merger is on file at the principal place of business of the Surviving Entity and the address of the principal place of business of the Surviving Entity is 260 Peachtree Street, Suite 950, Atlanta, Georgia 30303. 6. A copy of the agreement of merger will be furnished by the Surviving Entity, on request and without cost, to any shareholder of Interactive Voice Media Corporation (GA.) or any member of the Surviving Entity. IN WITNESS WHEREOF, the undersigned have hereunto executed this Certificate of Merger this 30th day of July, 1998. Interactive Voice Media Georgia LLC, a Delaware Limited Liabiliy Company (Limited Liability Company Seal) By: /s/ Nicholas Paine ------------------------------------ Nicholas Paine, Chief Executive Officer and Manager Attest: /s/ Ron Duke - ------------------------------------ Ron Duke, Secretary EX-3.8 9 ex3-8_043004.txt LLC AGREEMENT (GEORGIA) FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA GEORGIA LLC (a Delaware limited liability company) THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between Interactive Voice Media Georgia LLC (the "Company"), a Delaware limited liability company, and Interactive Media Consolidated, Inc., a Delaware corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated July 7, 1998 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. Section 5.8 of the Original Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such -2- rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management of all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, -3- except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management -4- Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written. The Company The Sole Member Interactive Voice Media Georgia LLC Interactive Media Consolidated, Inc. By: /s/ Bruce Croxon By: /s/ Bruce Croxon ----------------------------------- ------------------------------------ Bruce Croxon, Bruce Croxon, Chief Executive Officer Chief Executive Officer LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA GEORGIA LLC a Delaware limited liability company Dated July 7, 1998 TABLE OF CONTENTS 1. Definitions.............................................................1 2. Organization of the Company.............................................1 2.1 Organization............................................................1 2.2 Name....................................................................2 2.3 Principal Place of Business.............................................2 2.4 Statutory Agent.........................................................2 2.5 Term....................................................................2 3. Purposes of the Company.................................................2 4. Names and Addresses of Members..........................................2 5. Management of the Company...............................................2 5.1 Management Committee....................................................2 5.2 Resignation.............................................................3 5.3 Fiduciary Relationship..................................................3 5.4 Meetings of the Management Committee....................................3 5.5 Decisions of the Management Committee...................................3 5.6 Actions of the Management Committee Without a Meeting...................4 5.7 Authority of Management Committee.......................................4 5.8 Officers................................................................4 6. Rights and Powers of the Members........................................5 6.1 No Commitments..........................................................5 6.2 Actions Requiring the Approval of a Majority-in-Interest of the Members.......................................................5 6.3 Meetings of the Members.................................................5 6.4 Decisions of the Members................................................6 6.5 Proxies.................................................................6 6.6 Actions of the Members Without a Meeting................................6 6.7 Waiver of Notice........................................................6 6.8 Tax Matters Partner.....................................................6 7. Limitation of Liability; Indemnification................................6 7.1 Proof of Failure to Standard of Conduct.................................6 7.2 Limitation of Liability.................................................7 7.3 Indemnification of Members, Managers and the President..................7 8. Capital Contributions...................................................7 8.1 Generally...............................................................7 8.2 Members' Capital Accounts...............................................7 9. Allocation of Profits and Losses; Distributions.........................8 9.1 Allocation of Profits and Losses........................................8 9.2 Accounting.............................................................10 9.3 Distributions..........................................................10 9.4 Guaranteed Payments....................................................11 10. Transfer of Interests, Effect of Withdrawal Events.....................11 10.1 Right to Transfer......................................................11 -ii- 10.2 Status of Third Party Transferee.......................................11 10.3 Absolute Restriction on Transfers......................................11 10.4 Time of Transfer.......................................................12 10.5 Distributions and Allocations in Respect of Transferred Interest.............................................12 10.6 Effect of Withdrawal Events............................................12 11. Termination, Liquidation and Winding Up................................13 11.1 Termination and Winding Up of the Company..............................13 11.2 Method of Distribution Upon Winding Up.................................13 11.3 Orderly liquidation....................................................14 12. Miscellaneous Provisions...............................................14 12.1 Notices................................................................14 12.2 Books of Accounts and Records..........................................14 12.3 Governing Law..........................................................14 12.4 Waiver of Action for Partition.........................................14 12.5 Amendments.............................................................14 12.6 Construction...........................................................15 12.7 Waivers................................................................15 12.8 Rights and Remedies Cumulative.........................................15 12.9 Entire Agreement.......................................................15 12.10 Severability...........................................................15 12.11 Heirs, Successors and Assigns..........................................15 12.12 Creditors..............................................................15 12.13 Counterparts...........................................................16 12.14 Federal Income me Tax Elections........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA GEORGIA LLC (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into, effective as of the 7th day of July, 1998, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media Georgia LLC (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein by reference. 2. Organization of the Company. 2.1 Certificate of Formation. On July 7, 1998, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Bell as an authorized person of the Company, and the assignment by Ms. Bell to the Members of all her right, title and interest, if any, as an authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, and to indemnify and hold harmless -2- Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement. This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. 2.3 Admission of Members. This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4 Name. The name of the Company is Interactive Voice Media Georgia LLC. 2.5 Principal Place of Business. The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. The name and address of the registered agent for service of process in Delaware shall be Corporation Service Company, 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement. 3. Purposes of the Company. The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. The names and addresses of the Members are as set forth on Schedule A attached to this Agreement and incorporated herein by reference. -3- 5. Management of the Company. 5.1 Management Committee. Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of eight (8) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: John Bradlow Michael Cohen Bruce Croxon Ian Kidson William Landman Nicholas Paine Gilbert Palter Paul Woolner Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority-in-Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. Any Manager may call a meeting of the Management Committee upon forty-eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other -4- means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. 5.5 Decisions of the Management Committee. Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written consent without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7 Authority of Management Committee. The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. 5.8.1 The Company shall have a Chief Executive Officer, a Chief Operating Officer also know as a President, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, and such other officers as the Management Committee from time to time may appoint. The initial officers of the Company shall be: Nicholas W. Paine Chief Executive Officer Ted Madden Chief Operating Officer and President Rob Gowans Chief Technology Officer James Norrie Chief People Officer Ron Duke Chief Financial Officer Ron Duke Secretary Ron Duke Treasurer 5.8.2 The officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with -5- respect to actions required to be taken by the Management Committee or the Members, the Chief Executive Officer, the Chief Operating Officer and President, the Chief Technology Officer, the Chief People Officer, the Chief Financial Officer, the Secretary and the Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. 6.1 No Commitments. In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in-Interest of the Members. Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof; (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into any other entity; -6- (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. 6.3 Meetings of the Members. Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. Any action which may be taken by the Members at a meeting may be taken by unanimous written consent, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. -7- 6.8 Tax Matters Partner. Interactive Media Consolidated, Inc. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231(a)(7) of the Code. 7. Limitation of Liability; Indemnification. 7.1 Proof of Failure to Standard of Conduct. A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any Member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement and in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. -8- 8. Capital Contributions. 8.1 Generally. Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the prior approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 8.2.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions 9.1 Allocation of Profits and Losses. 9.1.1 Allocation of Profits Generally. Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; (B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below -9- for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. Except as otherwise provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3 Other Allocation Rules. (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, -10- subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, to the extent required under the Section 1.704-2 of the Regulations. The items to be so allocated shall be determined in accordance with Section 1.704-2 of the Regulations. This Section 9.1.3(C) is intended to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.7041(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. The allocations set forth in Sections 9.1.3 (A), (B), (C), and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704-1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations -11- of income, gain, deduction or loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be as selected by the Management Committee. 9.3 Distributions. The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of Interests, Effect of Withdrawal Events. 10.1 Right to Transfer. 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a security interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy or by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted -12- transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-in-Interest of the Members. 10.2 Status of Third Party Transferee. Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. Notwithstanding any provision of this Agreement to the contrary, the transfer of an Interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. Any transfer of an Interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred Interest. If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all -13- distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5, whether or not any of them has knowledge of any transfer of ownership of any Interest. 10.6 Effect of Withdrawal Events. 10.6.1 No Resign. No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 10.3. 10.6.2 Death or Adjudication of Incompetency. If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the successor-in-interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. 11.1 Termination and Winding Up of the Company. 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing; (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any of the events of dissolution stated in Section 18-801 of the Act. 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its -14- business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. 11.2 Method of Distribution Upon Winding Up. Upon termination of the Company pursuant to Section 11.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company; and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. 12.1 Notices. Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. -15- 12.2 Books of Accounts and Records. Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business in the detail and completeness customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4 Waiver of Action for Partition. Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. -16- 12.9 Entire Agreement. This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. 12.10 Severability. If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written. The Company The Sole Member Interactive Voce Media Georgia LLC Interactive Media Consolidated, Inc. By: /s/ Nicholas W. Paine By: /s/ Nicholas W. Paine ---------------------------------- -------------------------------- Nicholas W. Paine, Manager Nicholas W. Paine, Chief Executive Officer SCHEDULE A MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS --------------------------------------------------- MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media Consolidated, Inc., $1,000 a Delaware corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario, Canada M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 EXHIBIT 1 --------- DEFINITIONS Certain capitalized words and phrases used in this Agreement shall have the following meanings: 1. "Agreement" means this Limited Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for relief in any bankruptcy or insolvency proceeding; (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A) - (E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed, or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. -2- 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2:3): (A) To each Member's Capital Account, there shall be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on July 7, 1998, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7. "Company" means Interactive Voice Media Georgia LLC, a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704-2(d)) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18-101, et Seq.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: -3- (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media Consolidated, Inc. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. -4- 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704-2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.704-2(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704-2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.704-2(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate distributions made during the year of proceeds of any Nonrecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nonrecourse Liability" has the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. -5- (B) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (11)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Allocations" is defined in Section 9.1.4. 26. "Withdrawal Event" means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.9 10 ex3-9_043004.txt CERTIFICATE OF FORMATION (MICHIGAN) STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 05/29/1997 971176726 - 2756642 CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA MICHIGAN L.L.C. (Under Section 18-201 of the Delaware Limited Liability Company Act) 1. The name of the limited liability company is: Interactive Voice Media Michigan L.L.C. 2. The address of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of Interactive Voice Media Michigan L.L.C. this 28th day of May, 1997. /s/ Candace Lynn Bell ------------------------------------ Candace Lynn Bell, Authorized Person EX-3.10 11 ex3-10_043004.txt LLC AGREEMENT WITH AMENDMENTS (MICHIGAN) SECOND AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA MICHIGAN L.L.C. (a Delaware limited liability company) THIS SECOND AMENDMENT TO, THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between Interactive Voice Media Michigan L.L.C. (the "Company"), a Delaware limited liability company, and Interactive Voice Media New York LLC, a Delaware limited liability company and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated May 29, 1997 (the "Original Agreement"); and WHEREAS, the Member and the Company entered into a First Amendment to the Limited Liability Company Agreement dated March 26, 1998 (the "First Amendment") (the Original Agreement, as amended by the First Amendment, is referred to herein as the "Entire Agreement"); and WHEREAS, the Member and the Company desire to amend the Entire Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. --------- Section 5.8 of the Entire Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. -------- 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be 2 taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18 407 of the Delaware Act, to the extent of their authority to act as provided herein. Officerss who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18 303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management of all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may 3 sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. 4 (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. Except as specifically provided herein, the Entire Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this Second Amendment to the Limited Liability Company Agreement as of the date first above written.
The Company The Sole Member Interactive Voice Media Michigan L.L.C. Interactive Voice Media New York LLC By: /s/ Bruce Croxon By: /s/ Bruce Croxon ------------------------------------ ------------------------------------- Bruce Croxon, Chief Executive Officer Bruce Croxon, Chief Executive Officer
FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA MICHIGAN L.L.C. (a Delaware limited liability company) THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 26th day of March 1998, by and between Interactive Voice Media Michigan L.L.C. (the "Company"), a Delaware limited liability company, and Interactive Media (New York) Corp., a New York corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated May 29, 1997 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. --------- Section 5.8 of the Original Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. -------- 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Chief Executive Officer, President and Chief Operating Officer, Chief Technology Officer, Chief People Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such rights, powers, 2 duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18 407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (c) The President is authorized to be an executive officer of the Company; shall (in the absence of both the Chairman of the Management Committee and the Chief Executive Officer) preside at meetings of the Members and of the Management Committee; and shall have general and active management 3 of the business of the Company; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. The President shall also be known as the Chief Operating Officer of the Company. (d) The Chief Technology Officer is authorized to be an executive officer of the Company. The Chief Technology Officer shall be responsible to the Management Committee, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. (e) The Chief People Officer is authorized to be an executive officer of the Company. The Chief People Officer shall be responsible to the Management Committee, the Chief Executive Officer and President for the management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. (f) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee, the Chief Executive Officer and the President for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. 4 (g) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the President, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (h) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the President or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Management Committee from time to time. 5 2. Original Agreement. ------------------ Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written.
The Company The Sole Member Interactive Voice Media Michigan L.L.C. Interactive Voice Media (New York) Corp. By: /s/ Nicholas Paine By: /s/ Nicholas Paine ----------------------------------- --------------------------------------- Nicholas Paine, Manager Nicholas Paine, Chief Executive Officer
LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA MICHIGAN L.L.C. a Delaware limited liability company Dated May 29, 1997 TABLE OF CONTENTS 1. DEFINITIONS.................................................................1 2. ORGANIZATION OF THE COMPANY.................................................1 2.1 ORGANIZATION...............................................................1 2.2 NAME.......................................................................2 2.3 PRINCIPAL PLACE OF BUSINESS................................................2 2.4 STATUTORY AGENT............................................................2 2.5 TERM.......................................................................2 3. PURPOSES OF THE COMPANY.....................................................2 4. NAMES AND ADDRESSES OF MEMBERS..............................................2 5. MANAGEMENT OF THE COMPANY...................................................3 5.1 MANAGEMENT COMMITTEE.......................................................3 5.2 RESIGNATION................................................................3 5.3 FIDUCIARY RELATIONSHIP.....................................................3 5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3 5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4 5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING......................4 5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4 5.8 OFFICERS...................................................................4 6. RIGHTS AND POWERS OF THE MEMBERS............................................5 6.1 NO COMMITMENTS.............................................................5 6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY IN INTEREST OF THE MEMBERS....6 6.3 MEETINGS OF THE MEMBERS....................................................6 6.4 DECISIONS OF THE MEMBERS...................................................6 6.5 PROXIES....................................................................6 6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6 6.7 WAIVER OF NOTICE ..........................................................6 6.8 TAX MATTERS PARTNER........................................................6 7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7 7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7 7.2 LIMITATION OF LIABILITY....................................................7 7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7 8. CAPITAL CONTRIBUTIONS.......................................................7 8.1 GENERALLY..................................................................7 8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8 9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8 9.1 ALLOCATION OF PROFITS AND LOSSES...........................................8 9.2 ACCOUNTING................................................................10 9.3 DISTRIBUTIONS.............................................................11 9.4 GUARANTEED PAYMENTS ......................................................11 10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11 10.1 RIGHT TO TRANSFER........................................................11 10.2 STATUS OF THIRD PARTY TRANSFEREE.........................................12 ii 10.3 ABSOLUTE RESTRICTION ON TRANSFERS........................................12 10.4 TIME OF TRANSFER.........................................................12 10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST.........12 10.6 EFFECT OF WITHDRAWAL EVENTS..............................................13 11. TERMINATION, LIQUIDATION AND WINDING UP...................................13 11.1 TERMINATION AND WINDING UP OF THE COMPANY................................13 11.2 METHOD OF DISTRIBUTION UPON WINDING UP...................................14 11.3 ORDERLY LIQUIDATION......................................................14 12. MISCELLANEOUS PROVISIONS..................................................14 12.1 NOTICES..................................................................14 12.2 BOOKS OF ACCOUNTS AND RECORDS............................................14 12.3 GOVERNING LAW............................................................15 12.4 WAIVER OF ACTION FOR PARTITION...........................................15 12.5 AMENDMENTS...............................................................15 12.6 CONSTRUCTION.............................................................15 12.7 WAIVERS..................................................................15 12.8 RIGHTS AND REMEDIES CUMULATIVE...........................................15 12.9 ENTIRE AGREEMENT.........................................................15 12.10 SEVERABILITY............................................................16 12.11 HEIRS, SUCCESSORS AND ASSIGNS...........................................16 12.12 CREDITORS...............................................................16 12.13 COUNTERPARTS............................................................16 12.14 FEDERAL INCOME ME TAX ELECTIONS.........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA MICHIGAN L.L.C. (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 29th day of May, 1997, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media Michigan L.L.C. (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18 101 of the Delaware Act. NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. ----------- Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein by reference. 2. Organization of the Company. --------------------------- 2.1 Certificate of Formation. ------------------------ On May 29, 1997, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Bell as authorized person of the Company, and the assignment by Ms. Bell to the Members of all her right, title and interest, if any, as authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, and to indemnify and hold 2 harmless Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement. --------- This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18 101 of the Delaware Act. 2.3 Admission of Members. -------------------- This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4 Name. ---- The name of the Company is Interactive Voice Media Michigan L.L.C. 2.5 Principal Place of Business. --------------------------- The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. --------------- The name and address of the registered agent for service of process in Delaware shall be Prentice Hall Corporation System, Inc., 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. ---- The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement. 3. Purposes of the Company ----------------------- The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. ------------------------------ The names and addresses of the Members are as set forth on Schedule A attached to this Agreement and incorporated herein by reference. 3 5. Management of the Company. ------------------------- 5.1 Management Committee. -------------------- Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of four (4) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: Nicholas Paine Bruce Croxon Paul Woolner John Bradlow Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority in Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. ----------- Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. ---------------------- At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. ------------------------------------ Any Manager may call a meeting of the Management Committee upon forty eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. 4 5.5 Decisions of the Management Committee. ------------------------------------- Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. ----------------------------------------------------- Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written action without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7 Authority of Management Committee. --------------------------------- The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. -------- 5.8.1 The Company shall have a President, Vice President, Secretary and Treasurer, and such other officers as the Management Committee fromm time to time may appoint. The initial officers of the Company shall be: Nicholas Paine President Ted Madden Vice President Denis Weil Vice President Ron Anderson Secretary Ron Anderson Treasurer 5.8.2 The officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each offer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the President, Vice President, Secretary and Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18 407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not 5 Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18 303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. -------------------------------- 6.1 No Commitments. -------------- In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in-Interest of the --------------------------------------------------------------- Members. - ------- Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof, (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into any other entity; (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. 6 6.3 Meetings of the Members. ----------------------- Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. ------------------------ Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. ------- At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. ---------------------------------------- Any action which may be taken by the Members at a meeting may be taken by unanimous written action, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. ---------------- Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. 6.8 Tax Matters Partner. ------------------- Interactive Media (New York) Corp. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231 (a)(7) of the Code. 7 7. Limitation of Liability; Indemnification. ---------------------------------------- 7.1 Proof of Failure to Standard of Conduct. --------------------------------------- A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. ----------------------- No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any Member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. ------------------------------------------------------ The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement and in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. 8. Capital Contributions. --------------------- 8.1 Generally. --------- Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the prior approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital 8 Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. ------------------------- 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 8.2.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions. ----------------------------------------------- 9.1 Allocation of Profits and Losses. -------------------------------- 9.1.1 Allocation of Profits Generally. ------------------------------- Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; (B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. ---------------- Except as otherwise provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: 9 (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3 Other Allocation Rules. ---------------------- (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704 1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, to the extent required under the Section 1.704 2 of the Regulations. The items to be so allocated shall be determined in accordance with Section 1.704 2 of the Regulations. This Section 9.1.3(C) is intended to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 10 1.7041(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. -------------------- The allocations set forth in Sections 9.1.3(A), (B), (C), and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704 1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations of income, gain, deduction or loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. ---------- The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be as selected by the Management Committee. 11 9.3 Distributions. ------------- The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate, equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. ------------------- Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of interests; Effect of Withdrawal Events. -------------------------------------------------- 10.1 Right to Transfer. ----------------- 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a seeurity interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy or by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-in-Interest of the Members. 12 10.2 Status of Third Party Transferee. -------------------------------- Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. --------------------------------- Notwithstanding any provision of this Agreement to the contrary, the transfer of an Interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. ---------------- Any transfer of an Interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred ------------------------------------------------------- Interest. - -------- If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5, whether or not any of them has knowledge of any transfer of ownership of any Interest. 13 10.6 Effect of Withdrawal Events. --------------------------- 10.6.1 No Resign. --------- No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 10.3. 10.6.2 Death or Adjudication of Incompetence. ------------------------------------- If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the successor in interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. ------------------- Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. --------------------------------------- 11.1 Termination and Winding Up of the Company. ----------------------------------------- 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any of the events of dissolution stated in Section 18 801 of the Act 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. 14 11.2 Method of Distribution Upon Winding Up. -------------------------------------- Upon termination of the Company pursuant to Section 11.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company; and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. ------------------- A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. ------------------------ 12.1 Notices. ------- Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. 12.2 Books of Accounts and Records. ----------------------------- Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business in the detail and completeness 15 customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. ------------- The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4 Waiver of Action for Partition. ------------------------------ Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. ---------- This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. ------------ Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. ------- The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. ------------------------------ The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. 12.9 Entire Agreement. ---------------- This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. 16 12.10 Severability. ------------ If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. ----------------------------- Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. --------- None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. ------------ This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. ------------------------------- In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written.
The Company The Members Interactive Voice Media Michigan L.L.C. Interactive Voice Media (New York) Corp. By: /s/ Nicholas Paine By: /s/ Nicholas Paine ---------------------------------------- ---------------------------------------- Nicholas Paine, Manager Nicholas Paine, President
SCHEDULE A ---------- MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS --------------------------------------------------- MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media (New York) Corp., a New $1,000 York corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 EXHIBIT 1 --------- DEFINITIONS Certain capitalized words and phrases used in this Agreement shall have the following meanings: 1. "Agreement" means this Limited Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for relief, in any bankruptcy or insolvency proceeding; (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A) (E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed, or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. 2 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2.3): (A) To each Member's Capital Account, there shall be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on May 29, 1997, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7. "Company" means Interactive Media Michigan L.L.C., a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704 2(d) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18 101, et seq.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: 3 (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704 1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704 1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media (New York) Corp. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. 4 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704 2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.704 2(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704 2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704 2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.704 2(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1.704 2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate distributions made during the year of proceeds of any Nonrecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nonrecourse Liability" has the meaning set forth in Sections 1.704 2(b)(3) and 1.752 1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. 5 (B) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704 1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (11)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Al1ocations" is defned in Section 9.1.4. 26. "Withdrawal Event" means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.11 12 ex3-11_043004.txt CERTIFICATE OF FORMATION & MERGER (NEW JERSEY) CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA NEW JERSEY LLC (Under Section 18-201 of the Delaware Limited Liability Company Act) 1. The name of the limited liability company is: INTERACTIVE VOICE MEDIA NEW JERSEY LLC. 2. The address of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is Corporation Service Company. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of INTERACTIVE VOICE MEDIA NEW JERSEY LLC this 24th day of September, 1998. /s/ Candace Lynn Bell ------------------------------------ Candace Lynn Bell, Authorized Person CERTIFICATE OF MERGER of INTERACTIVE VOICE MEDIA (NJ) CORP. a New Jersey corporation; into INTERACTIVE VOICE MEDIA NEW JERSEY LLC, a Delaware Limited Liability Company, (pursuant to Sections 18-209 of the Delaware Limited Liability Company Act) The undersigned does hereby certify as follows: 1. The name and jurisdiction of formation or organization of the domestic limited liability company and the other business entity to the merger is as follows: - -------------------------------------------------------------------------------- Name Form of Entity Jurisdiction of Formation or Orqanization - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Interactive Voice Media (NJ) Corp. corporation New Jersey - -------------------------------------------------------------------------------- Interactive Voice Media New Jersey LLC limited liability Delaware company - -------------------------------------------------------------------------------- 2. An agreement of merger has been approved, adopted, certified, executed and acknowledged by the domestic limited liability company and the other business entity in accordance with Section 18-209(c)(2) of the Delaware Limited Liability Company Act. 3. The name of the surviving domestic limited liability company is Interactive Voice Media New Jersey LLC (the "Surviving Entity"). 4 The effective date of the merger shall be September 30, 1998 at 5:00pm Eastern Standard Time. 5. The executed agreement of merger is on file at the principal place of business of the Surviving Entity and the address of the principal place of business of the Surviving Entity is c/o Interactive Voice Media New York LLC, 342 Madison Avenue, Suite 2008, New York, New York 10173. 6. A copy of the agreement of merger will be furnished by the Surviving Entity, on request and without cost, to any shareholder of Interactive Voice Media (NJ) Corp. or any member of the Surviving Entity. IN WITNESS WHEREOF, the undersigned have hereunto executed this Certificate of Merger this 25th day of September, 1998. Interactive Voice Media New Jersey LLC, a Delaware Limited Liability Company (Limited Liability Company Seal) By: /s/ Nicholas Paine ------------------------------------ Nicholas Paine, Chief Executive Officer and Manager Attest: /s/ Ron Duke - ------------------------------------ Ron Duke, Secretary EX-3.12 13 ex3-12_043004.txt LLC AGREEMENT WITH AMENDMENT (NEW JERSEY) FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA NEW JERSEY LLC (a Delaware limited liability company) THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between Interactive Voice Media New. Jersey LLC (the "Company"), a Delaware limited liability company, and Interactive Media Consolidated, Inc., a Delaware corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated September 24, 1998 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. Section 5.8 of the Original Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such -2- rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officerse shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management of all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, -3- except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management -4- Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay . out and dispose of such under the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to. any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written. The Company The Sole Member Interactive Voice Media Interactive Media Consolidated, Inc. New Jersey LLC By: /s/ Bruce Croxon By: /s/ Bruce Croxon --------------------------- --------------------------------- Bruce Croxon, Bruce Croxon, Chief Executive Officer Chief Executive Officer 139509 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA NEW JERSEY LLC a Delaware limited liability company Dated September 24th, 1998 TABLE OF CONTENTS 1. DEFINITIONS ................................................................1 2. ORGANIZATION OF THE COMPANY.................................................1 2.1 ORGANIZATION...............................................................1 2.2 NAME.......................................................................2 2.3 PRINCIPAL PLACE OF BUSINESS ...............................................2 2.4 STATUTORY AGENT............................................................2 2.5 TERM.......................................................................2 3. PURPOSES OF THE COMPANY ....................................................2 4. NAMES AND ADDRESSES OF MEMBERS..............................................2 5. MANAGEMENT OF THE COMPANY...................................................3 5.1 MANAGEMENT COMMITTEE.......................................................3 5.2 RESIGNATION................................................................3 5.3 FIDUCIARY RELATIONSHIP.....................................................3 5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3 5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4 5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT AMEETING ......................4 5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4 5.8 OFFICERS...................................................................4 6. RIGHTS AND POWERS OF THE MEMBERS............................................5 6.1 NO COMMITMENTS.............................................................5 6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY-IN-INTEREST OF THE MEMBERS ...5 6.3 MEETINGS OF THE MEMBERS....................................................6 6.4 DECISIONS OF THE MEMBERS...................................................6 6.5 PROXIES....................................................................6 6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6 6.7 WAIVER OF NOTICE...........................................................6 6.8 TAX MATTERS PARTNER........................................................7 7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7 7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7 7.2 LIMITATION OF LIABILITY....................................................7 7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7 8. CAPITAL CONTRIBUTIONS.......................................................8 8.1 GENERALLY..................................................................8 8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8 9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8 9.1 ALLOCATION OF PROFITS AND LOSSES ..........................................8 9.2 ACCOUNTING................................................................11 9.3 DISTRIBUTIONS.............................................................11 9.4 GUARANTEED PAYMENTS.......................................................11 10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11 10.1 RIGHT TO TRANSFER........................................................11 -ii- 10.2 STATUS OF THIRD PARTY TRANSFEREE.........................................12 10.3 ABSOLUTE RESTRICTION ONTRANSFERS ........................................12 10.4 TIME OF TRANSFER.........................................................12 10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST.........12 10.6 EFFECT OF WITHDRAWAL EVENTS..............................................13 11. TERMINATION, LIQUIDATION AND WINDING UP...................................13 11.1 TERMINATION AND WINDING UP OF THE COMPANY................................13 11.2 METHOD OF DISTRIBUTION UPON WINDING UP...................................14 11.3 ORDERLY LIQUIDA7TON......................................................14 12. MISCELLANEOUS PROVISIONS .................................................14 12.1 NOTICES..................................................................14 12.2 BOOKS OF ACCOUNTS AND RECORDS............................................15 12.3 GOVERNING LAW............................................................15 12.4 WAIVER OF ACTION FOR PARTITION...........................................15 12.5 AMENDMENTS...............................................................15 12.6 CONSTRUCTION.............................................................15 12.7 WAIVERS..................................................................15 12.8 RIGHTS AND REMEDIES CUMULATIVE...........................................15 12.9 ENTIRE AGREEMENT.........................................................16 12.10 SEVERABILITY............................................................16 12.11 HEIRS, SUCCESSORS AND ASSIGNS...........................................16 12.12 CREDITORS...............................................................16 12.13 COUNTERPARTS............................................................16 12.14 FEDERAL INCOME ME TAX ELECTIONS.........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA NEW JERSEY LLC (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into, effective as of the 24th day of September, 1998, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media New Jersey LLC (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein by reference. 2. Organization of the Company. 2.1 Certificate of Formation. On September 24th, 1998, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Bell as an authorized person of the Company, and the assignment by Ms. Bell to the Members of all her right, title and interest, if any, as an authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, and to indemnify and hold harmless Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement. This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware. Act. 2.3 Admission of Members. This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4 Name. The name of the Company is Interactive Voice Media New Jersey LLC. 2.5 Principal Place of Business. The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. The name and address of the registered agent for service of process in Delaware shall be Corporation Service Company, 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delawaree and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement. 3. Purposes of the Company The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. The names and addresses of the Members are as set forth on Schedule A attached to this Agreement and incorporated herein by reference. -3- 5. Management of the Company. 5.1 Management Committee. Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of eight (8) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: John Bradlow Michael Cohen Bruce Croxon Ian Kidson William Landman Nicholas Paine Gilbert Palter Paul Woolner Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority-in-Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. Any Manager may call a meeting of the Management Committee upon forty-eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other -4- means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. 5.5 Decisions of the Management Committee. Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written consent without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7 Authority of Management Committee. The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and. to perform any and o all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. 5.8.1 The Company shall have a Chief Executive Officer, a Chief Operating Officer also know as a President, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, and such other officers as the Management Committee from time to time may appoint. The initial officers of the Company shall be: Nicholas W. Paine Chief Executive Officer W.E. Madden Chief Operating Officer and President Rob Gowans Chief Technology Officer James Norri Chief People Officer Ron Duke Chief Financial Officer Ron Duke Secretary Ron Duke Treasurer 5.8.2 The officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with -5- respect to actions required to be taken by the Management Committee or the Members, the Chief Executive Officer, the Chief Operating Officer and President, the Chief Technology Officer, the Chief People Officer, the Chief Financial Officer, the Secretary and the Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. 6.1 No Commitments. In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in-Interest of the Members. Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof, (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into any other entity, -6- (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and` (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. 6.3 Meetings of the Members. Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. Any action which may be taken by the Members at a meeting may be taken by unanimous written consent, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. -7- 6.8 Tax Matters Partner. Interactive Media Consolidated, Inc. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231(a)(7) of the Code. 7. Limitation of Liability; Indemnification. 7.1 Proof of Failure to Standard of Conduct. A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any Member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement and in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. 8. Capital Contributions. 8.1 Generally. Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the prior approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 82.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions. 9.1 Allocation of Profits and Losses. 9.1.1 Allocation of Profits Generally. Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; {B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below -9- for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. Except as otherwise provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3 Other Allocation Rules. (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, -10- subsequent years) in an amount equal to such Member's share of the net decreasee in Company Minimum Gain, to the extent required under the Section 1.704-2 of the Regulations. The items to be so allocated shall be determined in accordance with Section 1.704-2 of the Regulations. This Section 9.1.3(C) is intended to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.7041(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which. their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. The allocations set forth in Sections 9.1.3 (A), (B), (C), and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704-1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations -11- of income, gain, deduction or loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be as selected by the Management Committee. 9.3 Distributions. The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of Interests; Effect of Withdrawal Events. 10.1 Right to Transfer. 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a security interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy or by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted -12- transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-In-Interest of the Members. 10.2 Status of Third Party Transferee. Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. Notwithstanding any provision of this Agreement to the contrary, the transfer of an Interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. Any transfer of an interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred Interest. If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all -13- distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5, whether or not any of them has knowledge of any transfer of ownership of any Interest. 10.6 Effect of Withdrawal Events. 10.6.1 No Resign. No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 103. 10.6.2 Death or Adjudication of Incompetency. If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the successor-in-interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. 11.1 Termination and Winding Up of the Company. 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing; (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any, of the events of dissolution stated in Section 18-801 of the Act. 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its -14- business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. 11.2 Method of Distribution Upon Winding Up. Upon termination of the Company pursuant to Section 11.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company; and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. 12.1 Notices. Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. -15- 12.2 Books of Accounts and Records. Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business in the detail and completeness customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4 Waiver of Action for Partition. Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. -16- 12.9 Entire Agreement. This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. 12.10 Severability. If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written. The Company The Members Interactive Voice Media New Jersey LLC Interactive Media Consolidated, Inc. By: /s/ Nicholas W. Paine By: /s/ Nicholas W. Paine ----------------------------------- --------------------------------- Nicholas W. Paine, Manager Nicholas W. Paine, Chief Executive officer SCHEDULE A MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media Consolidated, Inc., $1,000 a Delaware corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario, Canada M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 EXHIBIT I DEFINITIONS Certain capitalized words and phrases used in this Agreement shall have the following meanings: 1. "Agreement" means this Limited Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for reliel in any bankruptcy or insolvency proceeding; (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A) - (E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any proceeding against the Member seeking - reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed, or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. -2- 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2.3): (A) To each Member's Capital Account, there shall.be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on September 24th, 1998, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7. "Company" means Interactive Voice Media New Jersey LLC, a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704-2(d) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18-101, et sc.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows:' (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to-Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media Consolidated, Inc. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. -4- 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704-2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.7042(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704-2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.7042(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1,704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate o distributions made during the year of proceeds of any Nomecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nomecourse Liability" has the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a.Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. -5- (B) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (11)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Allocations" is defined in Section 9.1.4. 26. "Withdrawal Event means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.13 14 ex3-13_043004.txt CERTIFICATE OF FORMATION & MERGER (NEW YORK) CERTIFICATE OF MERGER of INTERACTIVE MEDIA (New York) CORP. a New York corporation; into INTERACTIVE VOICE MEDIA NEW YORK LLC, a Delaware Limited Liability Company, (pursuant to Sections 18-209 of the Delaware Limited Uablity Company Act) The undersigned does hereby certify as follows: 1. The name and Jurisdiction of formation or organization of the domestic limited liability company and the other business entity to the merger is as follows: - -------------------------------------------------------------------------------- Name Form of Entity Jurisdiction of Formation or Organization - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Interactive Media (New York) Corp. corporation New York - -------------------------------------------------------------------------------- Interactive Voice Media New York LLC limited liability Delaware company - -------------------------------------------------------------------------------- 2. An agreement of merger has been approved, adopted, certified, executed and acknowledged by the domestic limited liability company and the other business entity in accordance with Section 18-209(c)(2) of the Delaware Limited Liability Company Act. 3. The name of the surviving domestic limited liability company is Interactive Voice Media New York LLC (the 'Surviving Entity"), 4. The effective date of the merger shall be September 30, 1998 at 5:00pm Eastern Standard Time. 5. The executed agreement of merger is on file at the principal place of business of the Surviving Entity and the address of the principal place of business of the Surviving Entity Is 342 Madison Avenue, Suite 2008, New York, New York 10173. 6. A copy of the agreement of merger will be furnished by the Surviving Entity, on request and without cost, to any shareholder of Interactive Media (New York) Corp. or any member of the Surviving Entity. IN WITNESS WHEREOF, the undersigned have hereunto executed this Certificate of Merger this 25th day of September, 1998. Interactive Voice Media New York LLC, a Delaware Limited Liability Company (Limited Liability Company Seal) By: /s/ Nicholas Paine ------------------------------------ Nicholas Paine, Chief Executive Officer and Manager Attest: /s/ Ron Duke - ----------------------------- Ron Duke, Secretary CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA NEW YORK LLC (Under Section 18-201 of the Delaware Limited LIability Company Act) 1. The name of the limited liability company is: INTERACTIVE VOICE MEDIA NEW YORK LLC. 2. The addres of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such addres is Corporation Service Company. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of INTERACTIVE VOICE MEDIA NEW YORK LLC this 24th day of September, 1998. /s/ Candace Lynn Bell ---------------------------------------- Candace Lynn Bell, Authorized Person EX-3.14 15 ex3-14_043004.txt LLC AGREEMENT WITH AMENDMENT (NEW YORK) FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA NEW YORK LLC (a Delaware limited liability company) THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between Interactive Voice Media New York LLC (the "Company"), a Delaware limited liability company, and Interactive Media Consolidated, Inc., a Delaware corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated September 24, 1998 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. Section 5.8 of the Original Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such -2- rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management of all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, -3- except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management -4- Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written. The Company The Sole Member Interactive Voice Media Interactive Media Consolidated, Inc. New York LLC By: /s/ Bruce Croxon By: /s/ Bruce Croxon --------------------------- --------------------------------- Bruce Croxon, Bruce Croxon, Chief Executive Officer Chief Executive Officer 139517 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA NEW YORK LLC a Delaware limited liability company Dated September 24th, 1998 TABLE OF CONTENTS 1. DEFINITIONS ................................................................1 2. ORGANIZATION OF THE COMPANY.................................................1 2.1 ORGANIZATION...............................................................1 2.2 NAME.......................................................................2 2.3 PRINCIPAL PLACE OF BUSINESS ...............................................2 2.4 STATUTORY AGENT............................................................2 2.5 TERM.......................................................................2 3. PURPOSES OF THE COMPANY ....................................................2 4. NAMES AND ADDRESSES OF MEMBERS..............................................2 5. MANAGEMENT OF THE COMPANY...................................................3 5.1 MANAGEMENT COMMITTEE.......................................................3 5.2 RESIGNATION................................................................3 5.3 FIDUCIARY RELATIONSHIP.....................................................3 5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3 5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4 5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING......................4 5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4 5.8 OFFICERS...................................................................4 6. RIGHTS AND POWERS OF THE MEMBERS............................................5 6.1 NO COMMITMENTS.............................................................5 6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY-IN-INTEREST OF THE MEMBERS....5 6.3 MEETINGS OF THE MEMBERS....................................................6 6.4 DECISIONS OF THE MEMBERS...................................................6 6.5 PROXIES....................................................................6 6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6 6.7 WAIVER OF NOTICE...........................................................6 6.8 TAX MATTERS PARTNER........................................................7 7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7 7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7 7.2 LIMITATION OF LIABILITY....................................................7 7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7 8. CAPITAL CONTRIBUTIONS.......................................................8 8.1 GENERALLY..................................................................8 8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8 9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8 9.1 ALLOCATION OF PROFITS AND LOSSES ..........................................8 9.2 ACCOUNTING................................................................11 9.3 DISTRIBUTIONS.............................................................11 9.4 GUARANTEED PAYMENTS.......................................................11 10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11 10.1 RIGHT TO TRANSFER........................................................11 ii 10.2 STATUS OF THIRD PARTY TRANSFEREE.........................................12 10.3 ABSOLUTE RESTRICTION ON TRANSFERS........................................12 10.4 TIME OF TRANSFER.........................................................12 10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST.........12 10.6 EFFECT OF WITHDRAWAL EVENTS..............................................13 11. TERMINATION, LIQUIDATION AND WINDING UP...................................13 11.1 TERMINATION AND WINDING UP OF THE COMPANY................................13 11.2 METHOD OF DISTRIBUTION UPON WINDING UP...................................14 11.3 ORDERLY LIQUIDATION......................................................14 12. MISCELLANEOUS PROVISIONS .................................................14 12.1 NOTICES..................................................................14 12.2 BOOKS OF ACCOUNTS AND RECORDS............................................15 12.3 GOVERNING LAW............................................................15 12.4 WAIVER OF ACTION FOR PARTITION...........................................15 12.5 AMENDMENTS...............................................................15 12.6 CONSTRUCTION.............................................................15 12.7 WAIVERS..................................................................15 12.8 RIGHTS AND REMEDIES CUMULATIVE...........................................15 12.9 ENTIRE AGREEMENT.........................................................16 12.10 SEVERABILITY............................................................16 12.11 HEIRS, SUCCESSORS AND ASSIGNS...........................................16 12.12 CREDITORS...............................................................16 12.13 COUNTERPARTS............................................................16 12.14 FEDERAL INCOME ME TAX ELECTIONS.........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA NEW YORK LLC (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into, effective as of the 24th day of September, 1998, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media New York LLC (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein by reference. 2. Organization of the Company. 2.1 Certificate of Formation. On September 24th, 1998, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Bell as an authorized person of the Company, and the assignment by Ms. Bell to the Members of all her right, title and interest, if any, as an authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, and to indemnify and hold harmless -2- Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement. This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. 2.3 Admission of Members. This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4 Name. The name of the Company is Interactive Voice Media New York LLC. 2.5 Principal Place of Business. The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. The name and address of the registered agent for service of process in Delaware shall be Corporation Service Company, 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement. 3. Purposes of the Company The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. The names and addresses of the Members are as set forth on Schedule A attached to this Agreement and incorporated herein by reference. -3- 5. Management of the Company. 5.1 Management Committee. Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of eight (8) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: John Bradlow Michael Cohen Bruce Croxon Ian Kidson William Landman Nicholas Paine Gilbert Palter Paul Woolner Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority-in-Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. Any Manager may call a meeting of the Management Committee upon forty-eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other -4- means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. 5.5 Decisions of the Management Committee. Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written consent without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7 Authority of Management Committee. The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. 5.8.1 The Company shall have a Chief Executive Officer, a Chief Operating Officer also know as a President, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, and such other officers as the Management Committee from time to time may appoint. The initial officers of the Company shall be: Nicholas W. Paine Chief Executive Officer W.E. Madden Chief Operating Officer and President Rob Gowans Chief Technology Officer James Norri Chief People Officer Ron Duke Chief Financial Officer Ron Duke Secretary Ron Duke Treasurer 5.8.2 The officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with -5- respect to actions required to be taken by the Management Committee or the Members, the Chief Executive Officer, the Chief Operating Officer and President, the Chief Technology Officer, the Chief People Officer, the Chief Financial Officer, the Secretary and the Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. 6.1 No Commitments. In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in-Interest of the Members. Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof, (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into any other entity; -6- (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. 6.3 Meetings of the Members. Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. Any action which may be taken by the Members at a meeting may be taken by unanimous written consent, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. -7- 6.8 Tax Matters Partner. Interactive Media Consolidated, Inc. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231(a)(7) of the Code. 7. Limitation of Liability; Indemnification. 7.1 Proof of Failure to Standard of Conduct. A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any Member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement and in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. -8- 8. Capital Contributions. 8.1 Generally. Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the prior approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 8.2.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions. 9.1 Allocation of Profits and Losses. 9.1.1 Allocation of Profits Generally. Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; (B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below -9- for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. Except as otherwise provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3 Other Allocation Rules. (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, -10- subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, to the extent required under the Section 1.704-2 of the Regulations. The items to be so allocated shall be determined in accordance with Section 1.704-2 of the Regulations. This Section 9.1.3(C) is intended to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.7041(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. The allocations set forth in Sections 9.1.3 (A), (B), (C), and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704-1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations -11- of income, gain, deduction or loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be as selected by the Management Committee. 9.3 Distributions. The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of Interests; Effect of Withdrawal Events. 10.1 Right to Transfer. 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a security interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy or by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted -12- transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-In-Interest of the Members. 10.2 Status of Third Party Transferee. Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. Notwithstanding any provision of this Agreement to the contrary, the transfer of an Interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. Any transfer of an Interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred Interest. If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all -13- distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5, whether or not any of them has knowledge of any transfer of ownership of any Interest. 10.6 Effect of Withdrawal Events. 10.6.1 No Resign. No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 10.3. 10.6.2 Death or Adjudication of Incompetency. If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the successor-in-interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. 11.1 Termination and Winding Up of the Company. 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing; (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any of the events of dissolution stated in Section 18-801 of the Act. 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its -14- business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. 11.2 Method of Distribution Upon Winding Up. Upon termination of the Company pursuant to Section 11.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company; and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. 12.1 Notices. Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. -15- 12.2 Books of Accounts and Records. Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business in the detail and completeness customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4 Waiver of Action for Partition. Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. -16- 12.9 Entire Agreement. This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. 12.10 Severability. If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written. The Company The Members Interactive Voice Media Interactive Media Consolidated, Inc. New York LLC By: /s/ Nicholas W. Paine By: /s/ Nicholas W. Paine --------------------------- --------------------------------- Nicholas W. Paine, Manager Nicholas W. Paine, Chief Executive Officer SCHEDULE A MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media Consolidated, Inc., $1,000 a Delaware corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario, Canada M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 EXHIBIT 1 DEFINITIONS Certain capitalized words and phrases used in this Agreement shall have the following meanings: 1. "Agreement" means this Limited Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for relief, in any bankruptcy or insolvency proceeding; (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A)-(E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed, or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. -2- 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2.3): (A) To each Member's Capital Account, there shall be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on September 24th, 1998, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7. "Company" means Interactive Voice Media New York LLC, a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704-2(d) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18-101, et seq.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: -3- (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media Consolidated, Inc. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. -4- 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704-2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.704-2(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704-2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.704-2(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate distributions made during the year of proceeds of any Nonrecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nonrecourse Liability" has the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. -5- (B) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (11)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Allocations" is defined in Section 9.1.4. 26. "Withdrawal Event" means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.15 16 ex3-15_043004.txt CERTIFICATE OF FORMATION AND MERGER (OHIO) CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA OHIO LLC (Under Section 18-201 of the Delaware Limited Liability Company Act) 1. The name of the limited liability company is: INTERACTIVE VOICE MEDIA OHIO LLC. 2. The address of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is Corporation Service Company. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of INTERACTIVE VOICE MEDIA OHIO LLC this 3rd day of July,1908. /s/ Candace Lynn Bell -------------------------------------- Candace Lynn Bell, Authorized Person CERTIFICATE OF MERGER of INTERACTIVE VOICE MEDIA (CINCINNATI) CORP., an Ohio corporation; INTERACTIVE VOICE MEDIA (CLEVELAND) CORP., an Ohio corporation; INTERACTIVE MEDIA (OH) CORP., an Ohio corporation into INTERACTIVE VOICE MEDIA OHIO LLC, a Delaware Limited Liability Company, authorized to do business in Ohio (pursuant to Sections 18-209 of the Delaware Limited Liability Company Act) The undersigned does hereby certify as follows: 1. The name and jurisdiction of formation or organization of the domestic limited liability company and the other business entities to the merger are as follows: - -------------------------------------------------------------------------------- Name Form of Entity Jurisdiction of Formation or Organization - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Interactive Voice Media (Cincinnati) Corp. corporation Ohio - -------------------------------------------------------------------------------- Interactive Voice Media (Cleveland) Corp. corporation Ohio - -------------------------------------------------------------------------------- Interactive Media (OH) Corp. corporation Ohio - -------------------------------------------------------------------------------- Interactive Voice Media Ohio LLC limited liability Delaware company - -------------------------------------------------------------------------------- 2. An agreement of merger has been approved, adopted, certified, executed and acknowledged by the domestic limited liability company and each other business entity in accordance with Section 18-209(c)(2) of the Delaware Limited Liability Company Act. 3. The name of the surviving domestic limited liability company is Interactive Voice Media Ohio LLC (the "Surviving Entity"). 4. The effective date of the merger shall be July 31, 1998 at 5:00pm Eastern Standard Time. 5. The executed agreement of merger is on file at the principal place of business of the Surviving Entity and the address of the principal place of business of the Surviving Entity is Corporate Hill II, 100 Old Wilson Bridge Road, Suite 310, Worthington, Ohio 43805-2255. 6. A copy of the agreement of merger will be furnished by the Surviving Entity, on request and without cost, to any shareholder of Interactive Voice Media (Cincinnati) Corp.; Interactive Voice Media (Cleveland) Corp.; and Interactive Media (OH) Corp.; or any member of the Surviving Entity. IN WITNESS WHEREOF, the undersigned have hereunto executed this Certificate of Merger this 30th day of July, 1998. Interactive Voice Media Ohio LLC, a Delaware Limited Liability Company (Limited Liability Company Seal) By: /s/ Nicholas Paine ----------------------------------- Nicholas Paine, Chief Executive Officer and Manager Attest: /s/ Ron Duke - ------------------------ Ron Duke, Secretary EX-3.16 17 ex3-16_043004.txt LLC AGREEMENT WITH AMENDMENT (OHIO) FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA OHIO LLC (a Delaware limited liability company) THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between interactive Voice Media Ohio LLC (the "Company"), a Delaware limited liability company, and Interactive Media Consolidated, Inc., a Delaware corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated July 7, 1998 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. --------- Section 5.8 of the Original Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. -------- 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such -2- rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise, specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management of all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, -2- except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management -3- Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such underr the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. ---------------- Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written.
The Company The Sole Member Interactive Voice Media Ohio LLC Interactive Media Consolidated, Inc. By: /s/ Bruce Croxon By: /s/ Bruce Croxon ---------------------------------- ------------------------------- Bruce Croxon, Chief Executive Officer Bruce Croxon, Chief Executive Officer
LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA OHIO LLC a Delaware limited liability company Dated July 7, 1998 TABLE OF CONTENTS 1. DEFINITIONS ................................................................1 2. ORGANIZATION OF THE COMPANY ................................................1 2.1 ORGANIZATION...............................................................1 2.2 NAME.......................................................................2 2.3 PRINCIPAL PLACE OF BUSINESS................................................2 2.4 STATUTORY AGENT............................................................2 2.5 TERM.......................................................................2 3. PURPOSES OF THE COMPANY.....................................................2 4. NAMES AND ADDRESSES OF MEMBERS .............................................2 5. MANAGEMENT OF THE COMPANY ..................................................3 5.1 MANAGEMENT COMMITTEE.......................................................3 5.2 RESIGNATION................................................................3 5.3 FIDUCIARY RELATIONSHIP.....................................................3 5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3 5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4 5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING......................4 5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4 5.8 OFFICERS...................................................................4 6. RIGHTS AND POWERS OF THE MEMBERS............................................5 6.1 No COMMITMENTS.............................................................5 6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY-IN-INTEREST OF THE MEMBERS....5 6.3 MEETINGS OF THE MEMBERS....................................................6 6.4 DECISIONS OF THE MEMBERS...................................................6 6.5 PROXIES....................................................................6 6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6 6.7 WAIVER OF NOTICE ..........................................................6 6.8 TAX MATTERS PARTNER .......................................................7 7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7 7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7 7.2 LIMITATION OF LIABILITY....................................................7 7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7 8. CAPITAL CONTRIBUTIONS.......................................................8 8.1 GENERALLY..................................................................8 8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8 9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8 9.1 ALLOCATION OF PROFITS AND LOSSES...........................................8 9.2 ACCOUNTING................................................................11 9.3 DISTRIBUTIONS.............................................................11 9.4 GUARANTEED PAYMENTS.......................................................11 10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11 10.1 RIGHT TO TRANSFER........................................................11 -ii- 10.2 STATUS OF THIRD PARTY TRANSFEREE............................:...........12 10.3 ABSOLUTE RESTRICTION ON TRANSFERS.......................................12 10.4 TIME OF TRANSFER........................................................12 10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST........12 10.6 EFFECT OF WITHDRAWAL EVENTS ............................................13 11. TERMINATION, LIQUIDATION AND WINDING UP..................................13 11.1 TERMINATION AND WINDING UP OF THE COMPANY...............................13 11.2 METHOD OF DISTRIBUTION UPON WINDING UP..................................14 11.3 ORDERLY LIQUIDATION.....................................................14 12. MISCELLANEOUS PROVISIONS ................................................14 12.1 NOTICES.................................................................14 12.2 BOOKS OF ACCOUNTS AND RECORDS...........................................15 12.3 GOVERNING LAW...........................................................15 12.4 WAIVER OF ACTION FOR PARTITION .........................................15 12.5 AMENDMENTS..............................................................15 12.6 CONSTRUCTION............................................................15 12.7 WAIVERS.................................................................15 12.8 RIGHTS AND REMEDIES CUMULATIVE..........................................15 12.9 ENTIRE AGREEMENT........................................................16 12.10 SEVERABILITY...........................................................16 12.11 HEIRS, SUCCESSORS AND ASSIGNS..........................................16 12.12 CREDITORS..............................................................16 12.13 COUNTERPARTS...........................................................16 12.14 FEDERAL INCOME ME TAX ELECTIONS........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA OHIO LLC (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into, effective as of the 7th day of July, 1998, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media Ohio LLC (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. ----------- Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit I attached hereto and incorporated herein by reference. 2. Organization of the Company. --------------------------- 2.1 Certificate of Formation. ------------------------ On July 7, 1998, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Bell as an authorized person of the Company, and the assignment by Ms. Bell to the Members of all her right, title and interest, if any, as an authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, and to indemnify and hold harmless -2- Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement. --------- This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. 2.3 Admission of Members. -------------------- This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4 Name. ---- The name of the Company is Interactive Voice Media Ohio LLC. 2.5 Principal Place of Business. --------------------------- The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. --------------- The name and address of the registered agent for service of process in Delaware shall be Corporation Service Company, 1013 Centre Road, Wilmington, County of New Castle, Delaware, 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. ---- The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement. 3. Purposes of the Company ----------------------- The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. ------------------------------ The names and addresses of the Members are as set forth on Schedule A attached to this Agreement and incorporated herein by reference. -3- 5. Management of the Company. ------------------------- 5.1 Management Committee. -------------------- Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of eight (8) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: John Bradlow Michael Cohen Bruce Croxon Ian Kidson William Landman Nicholas Paine Gilbert Palter Paul Woolner Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority-in-Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. ----------- Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. ---------------------- At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. ------------------------------------ Any Manager may call a meeting of the Management Committee upon forty-eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other -4- means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. 5.5 Decisions of the Management Committee. ------------------------------------- Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. ----------------------------------------------------- Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written consent without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7 Authority of Management Committee. --------------------------------- The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. -------- 5.8.1 The Company shall have a Chief Executive Officer, a Chief Operating Officer also know as a President, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, and such other officers as the Management Committee from time to time may appoint. The initial officers of the Company shall be: Nicholas W. Paine Chief Executive Officer Ted Madden Chief Operating Officer and President Rob Gowans Chief Technology Officer James Nome Chief People Officer Ron Duke Chief Financial Officer Ron Duke Secretary Ron Duke Treasurer 5.8.2 The officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with -5- respect to actions required to be taken by the Management Committee or the Members, the Chief Executive Officer, the Chief Operating Officer and President, the Chief Technology Officer, the Chief People Officer, the Chief Financial Officer, the Secretary and the Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. -------------------------------- 6.1 No Commitments. -------------- In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in-Interest of the --------------------------------------------------------------- Members. - ------- Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof, (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into any other entity; -6- (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. 6.3 Meetings of the Members. ----------------------- Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. ------------------------ Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. ------- At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. ---------------------------------------- Any action which may be taken by the Members at a meeting may be taken by unanimous written consent, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. ---------------- Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. -7- 6.8 Tax Matters Partner. ------------------- Interactive Media Consolidated, Inc. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231(a)(7) of the Code. 7. Limitation of Liability; Indemnification. ---------------------------------------- 7.1 Proof of Failure to Standard of Conduct. --------------------------------------- A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. ----------------------- No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any Member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. ------------------------------------------------------ The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement and in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. -8- 8. Capital Contributions. --------------------- 8.1 Generally. --------- Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the prior approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. ------------------------- 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 8.2.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions. ----------------------------------------------- 9.1 Allocation of Profits and Losses. -------------------------------- 9.1.1 Allocation of Profits Generally. ------------------------------- Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; (B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below -9- for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. ---------------- Except as otherwise provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3 Other Allocation Rules. ---------------------- (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, -10- subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, to the extent required under the Section 1.704-2 of the Regulations. The items to be so allocated shall be, determined in accordance with Section 1.704-2 of the Regulations. This Section 9.1.3(C) is intended to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.7041(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. -------------------- The allocations set forth in Sections 9.1.3(A), (B), (C), and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704-1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations -11- of income, gain, deduction or loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. ---------- The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be as selected by the Management Committee. 9.3 Distributions. ------------- The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, o in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. ------------------- Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of Interests; Effect of Withdrawal Events. 10.1 Right to Transfer. ----------------- 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a security interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy or by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted -12- transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-In-Interest of the Members. 10.2 Status of Third Party Transferee. -------------------------------- Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. --------------------------------- Notwithstanding any provision of this Agreement to the contrary, the transfer of an Interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. ---------------- Any transfer of an Interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred ------------------------------------------------------- Interest. - -------- If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all -13- distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5,. whether or not any of them has knowledge of any transfer of ownership of any Interest. 10.6 Effect of Withdrawal Events. --------------------------- 10.6.1 No Resign. --------- No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 10.3. 10.6.2 Death or Adjudication of Incompetency. ------------------------------------- If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the successor-in-interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. ------------------- Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. --------------------------------------- 11.1 Termination and Winding Up of the Company. ----------------------------------------- 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing; (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrencee of any of the events of dissolution stated in Section 18-801 of the Act. 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its -14- business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. 11.2 Method of Distribution Upon Winding Up. -------------------------------------- Upon termination of the Company pursuant to Section 1.1.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company, and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances, of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. ------------------- A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. ------------------------ 12.1 Notices. ------- Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. -15- 12.2 Books of Accounts and Records. ----------------------------- Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business in the detail and completeness customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. ------------- The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4 Waiver of Action for Partition. ------------------------------ Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. ---------- This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. ------------ Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. ------- The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. ------------------------------ The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. -16- 12.9 Entire Agreement. ----------------- This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. 12.10 Severability. ------------ If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. ----------------------------- Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. --------- None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. ------------ This Agreement maybe executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. ------------------------------- In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written.
The Company The Members Interactive Voice Media Ohio LLC Interactive Media Consolidated, Inc. By: /s/ Nicholas Paine By: /s/ Nicholas Paine ---------------------------------- ------------------------------- Nicholas Paine, Manager Nicholas Paine,Chief Executive Officer
SCHEDULE A ---------- MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS --------------------------------------------------- MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media Consolidated, Inc., $1,000 a Delaware corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario, Canada M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 EXHIBIT I --------- DEFINITIONS Certain capitalized words and phrases used in this Agreement shall have the following meanings: 1. "Agreement" means this Limited, Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for relief; in any bankruptcy or insolvency proceeding; (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A) - (E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any, proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed, or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. -2- 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2.3): (A) To each Member's Capital Account, there shall be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on July 7, 1998, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7. "Company" means interactive Voice Media Ohio LLC, a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704-2(d) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18-101, et seq.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: -3- (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media Consolidated, Inc. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. -4 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704-2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.704-2(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704-2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nomecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.704-2(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate distributions made during the year of proceeds of any Nonrecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nonrecourse Liability" has the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. -5- (B) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (11)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Allocations" is defined in Section 9.1.4. 26. "Withdrawal Event" means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.17 18 ex3-17_043004.txt CERTIFICATE OF FORMATION & MERGER (PENNSYLVANIA) CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC (Under Section 18-201 of the Delaware Limited Liability Company Act) 1. The name of the limited liability company is: INTERACTIVE VOICE MEDIA PENNSYLVANIA L.L.C. 2. The address of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is Corporation Service Company. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC this 3rd day of July, 1998. /s/ Candace Lynn Bell ------------------------------------ Candace Lynn Bell, Authorized Person CERTIFICATE OF MERGER of INTERACTIVE MEDIA (PA) CORP., a Pennsylvania corporation; INTERACTIVE VOICE MEDIA (PA) CORP., a Pennsylvania corporation; into INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC, a Delaware Limited Liability Company, authorized to do business in Pennsylvania (pursuant to Sections 18-209 of the Delaware Limited Liability Company Act) The undersigned does hereby certify as follows: 1. The name and jurisdiction of formation or organization of the domestic limited liability company and the other business entities to the merger are as follows: - -------------------------------------------------------------------------------- Name Form of Entity Jurisdiction of Formation or Organization - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Interactive Media (PA) Corp., Corporation Pennsylvania - -------------------------------------------------------------------------------- Interactive Voice Media (PA) Corp. Corporation Pennsylvania - -------------------------------------------------------------------------------- Interactive Voice Media Pennsylvania LLC limited liability Delaware company - -------------------------------------------------------------------------------- 2. An agreement of merger has been approved, adopted, certified, executed and acknowledged by the domestic limited liability company and each other business entity in accordance with Section 18-209(c)(2) of the Delaware Limited Liability Company Act. 3. The name of the surviving domestic limited liability company is Interactive Voice Media Pennsylvania LLC (the "Surviving Entity"). 4. The effective date of the merger shall be July 31, 1998 at 5:00pm Eastern Standard Time. 5. The executed agreement of merger is on file at the principal place of business of the Surviving Entity and the address of the principal place of business of the Surviving Entity is One Penn Centre, 1617 JFK Boulevard, Suite 805, Philadelphia, Pennsylvania 19103. 6. A copy of the agreement of merger will be furnished by the Surviving Entity, on request and without cost, to any shareholder of Interactive Media (PA) Corp., and Interactive Voice Media (PA) Corp.; or any member of the Surviving Entity. IN WITNESS WHEREOF, the undersigned have hereunto executed this Certificate of Merger this 30th day of July, 1998. Interactive Voice Media Pennsylvania LLC, a Delaware Limited Liability Company (Limited Liability Company Seal) By: /s/ Nicholas Paine -------------------------------------- Nicholas Paine, Chief Executive Officer and Manager Attest: /s/ Ron Duke - ------------------------------ Ron Duke, Secretary EX-3.18 19 ex3-18_043004.txt LLC AGREEMENT WITH AMENDMENT (PENNSYLVANIA) FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC (a Delaware limited liability company) THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between Interactive Voice Media Pennsylvania LLC (the "Company"), a Delaware limited liability company, and Interactive Media Consolidated, Inc., a Delaware corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated July 7, 1998 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. --------- Section 5.8 of the Original Agreement is hereby amended to read in its entirety as follows: 5.8 Officers. -------- 5.8.1 The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2 The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such -2- rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3 The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management of all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, -3- except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep thee minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management -4- Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. ---------------- Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written.
The Company The Sole Member Interactive Voice Media Pennsylvania LLC Interactive Media Consolidated, Inc. By: /s/ Bruce Croxon By: /s/ Bruce Croxon ---------------------------------- ------------------------------------- Bruce Croxon, Chief Executive Officer Bruce Croxon, Chief Executive Officer
LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC a Delaware limited liability company Dated July 7, 1998 TABLE OF CONTENTS 1. DEFINITIONS................................................................1 2. ORGANIZATION OF THE COMPANY.................................................1 2.1 ORGANIZATION...............................................................1 2.2 NAME.......................................................................2 2.3 PRINCIPAL PLACE OF BUSINESS................................................2 2.4 STATUTORY AGENT............................................................2 2.5 TERM.......................................................................2 3. PURPOSES OF THE COMPANY.....................................................2 4. NAMES AND ADDRESSES OF MEMBERS..............................................2 5. MANAGEMENT OF THE COMPANY...................................................3 5.1 MANAGEMENT COMMITTEE.......................................................3 5.2 RESIGNATION................................................................3 5.3 FIDUCIARY RELATIONSHIP.....................................................3 5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3 5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4 5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING......................4 5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4 5.8 OFFICERS...................................................................4 6. RIGHTS AND POWERS OF THE MEMBERS............................................5 6.1 NO COMMITMENTS.............................................................5 6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY-IN-INTEREST OF THE MEMBERS....5 6.3 MEETINGS OF THE MEMBERS....................................................6 6.4 DECISIONS OF THE MEMBERS...................................................6 6.5 PROXIES....................................................................6 6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6 6.7 WAIVER OF NOTICE ..........................................................6 6.8 TAX MATTERS PARTNER........................................................7 7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7 7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7 7.2 LIMITATION OF LIABILITY....................................................7 7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7 8. CAPITAL CONTRIBUTIONS.......................................................8 8.1 GENERALLY..................................................................8 8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8 9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8 9.1 ALLOCATION OF PROFITS AND LOSSES...........................................8 9.2 ACCOUNTING................................................................11 9.3 DISTRIBUTIONS.............................................................11 9.4 GUARANTEED PAYMENTS ......................................................11 10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11 10.1 RIGHT TO TRANSFER........................................................11 -ii- 10.2 STATUS OF THIRD PARTY TRANSFEREE.........................................12 10.3 ABSOLUTE RESTRICTION ON TRANSFERS........................................12 10.4 TIME OF TRANSFER.........................................................12 10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST.........12 10.6 EFFECT OF WITHDRAWAL EVENTS..............................................13 11. TERMINATION, LIQUIDATION AND WINDING UP...................................13 11.1 TERMINATION AND WINDING UP OF THE COMPANY................................13 11.2 METHOD OF DISTRIBUTION UPON WINDING UP...................................14 11.3 ORDERLY LIQUIDATION......................................................14 12. MISCELLANEOUS PROVISIONS..................................................14 12.1 NOTICES..................................................................14 12.2 BOOKS OF ACCOUNTS AND RECORDS............................................15 12.3 GOVERNING LAW............................................................15 12.4 WAIVER OF ACTION FOR PARTITION...........................................15 12.5 AMENDMENTS...............................................................15 12.6 CONSTRUCTION.............................................................15 12.7 WAIVERS..................................................................15 12.8 RIGHTS AND REMEDIES CUMULATIVE...........................................15 12.9 ENTIRE AGREEMENT.........................................................16 12.10 SEVERABILITY............................................................16 12.11 HEIRS, SUCCESSORS AND ASSIGNS...........................................16 12.12 CREDITORS...............................................................16 12.13 COUNTERPARTS............................................................16 12.14 FEDERAL INCOME ME TAX ELECTIONS.........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into, effective as of the 7th day of July, 1998, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media Pennsylvania LLC (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. ----------- Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein by reference. 2. Organization of the Company. --------------------------- 2.1 Certificate of Formation. ------------------------ On July 7, 1998, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Bell as an authorized person of the Company, and the assignment by Ms. Bell to the Members of all her right, title and interest, if any, as an authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, and to indemnify and hold harmless -2- Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement. --------- This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. 2.3 Admission of Members. -------------------- This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4 Name. ---- The name of the Company is Interactive Voice Media Pennsylvania LLC. 2.5 Principal Place of Business. --------------------------- The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. --------------- The name and address of the registered agent for service of process in Delaware shall be Corporation Service Company, 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. ---- The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement. 3. Purposes of the Company ----------------------- The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. ------------------------------ The names and addresses of the Members are as set forth on Schedule A attached to this Agreement and incorporated herein by reference. -3- 5. Management of the Company. ------------------------- 5.1 Management Committee. -------------------- Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of eight (8) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: John Bradlow Michael Cohen Bruce Croxon Ian Kidson William Landman Nicholas Paine Gilbert Palter Paul Woolner Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority-in-Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. ----------- Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. ---------------------- At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. ------------------------------------ Any Manager may call a meeting of the Management Committee upon forty-eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other -4- means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. 5.5 Decisions of the Management Committee. ------------------------------------- Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. ----------------------------------------------------- Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written consent without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7 Authority of Management Committee. --------------------------------- The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. -------- 5.8.1 The Company shall have a Chief Executive Officer, a Chief Operating Officer also know as a President, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, and such other officers as the Management Committee from time to time may appoint. The initial officers of the Company shall be: Nicholas W. Paine Chief Executive Officer Ted Madden Chief Operating Officer and President Rob Gowans Chief Technology Officer James Norrie Chief People Officer Ron Duke Chief Financial Officer Ron Duke Secretary Ron Duke Treasurer 5.8.2 The officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with -5- respect to actions required to be taken by the Management Committee or the Members, the Chief Executive Officer, the Chief Operating Officer and President, the Chief Technology Officer, the Chief People Officer, the Chief Financial Officer, the Secretary and the Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. -------------------------------- 6.1 No Commitments. -------------- In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in-Interest of the --------------------------------------------------------------- Members. - ------- Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof, (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into any other entity; -6- (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. 6.3 Meetings of the Members. ----------------------- Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. ------------------------ Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. ------- At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. ---------------------------------------- Any action which may be taken by the Members at a meeting may be taken by unanimous written consent, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. ---------------- Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. -7- 6.8 Tax Matters Partner. ------------------- Interactive Media Consolidated, Inc. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231(a)(7) of the Code. 7. Limitation of Liability; Indemnification. ---------------------------------------- 7.1 Proof of Failure to Standard of Conduct. --------------------------------------- A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. ----------------------- No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any Member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. ------------------------------------------------------ The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement and in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. -8- 8. Capital Contributions. --------------------- 8.1 Generally. --------- Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the prior approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. ------------------------- 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 8.2.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions. ----------------------------------------------- 9.1 Allocation of Profits and Losses. -------------------------------- 9.1.1 Allocation of Profits Generally. ------------------------------- Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; (B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below -9- for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. ---------------- Except as otherwise provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3 Other Allocation Rules. ---------------------- (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, -10- subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, to the extent required under the Section 1.704-2 of the Regulations. The items to be so allocated shall be determined in accordance with Section 1.704-2 of the Regulations. This Section 9.1.3(C) is intended to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704l(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. -------------------- The allocations set forth in Sections 9.1.3(A), (B), (C), and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704-1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations -11- of income, gain, deduction or loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. ---------- The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be as selected by the Management Committee. 9.3 Distributions. ------------- The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. ------------------- Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of Interests; Effect of Withdrawal Events. -------------------------------------------------- l0.1 Right to Transfer. ----------------- 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a security interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy or by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted -12- transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-In-Interest of the Members. 10.2 Status of Third Party Transferee. -------------------------------- Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. --------------------------------- Notwithstanding any provision of this Agreement to the contrary, the transfer of an Interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. ---------------- Any transfer of an Interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred ------------------------------------------------------- Interest. - -------- If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all -13- distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5, whether or not any of them has knowledge of any transfer of ownership of any Interest. 10.6 Effect of Withdrawal Events. --------------------------- 10.6.1 No Resign. --------- No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 10.3. 10.6.2 Death or Adjudication of Incompetency. ------------------------------------- If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the successor-in-interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. ------------------- Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. --------------------------------------- 11.1 Termination and Winding Up of the Company. ----------------------------------------- 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing; (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any of the events of dissolution stated in Section 18-801 of the Act. 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its -14- business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. 11.2 Method of Distribution Upon Winding Up. -------------------------------------- Upon termination of the Company pursuant to Section 11.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company; and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. ------------------- A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. ------------------------ 12.1 Notices. ------- Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. -15- 12.2 Books of Accounts and Records. ----------------------------- Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business, in the detail and completeness customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. ------------- The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4 Waiver of Action for Partition. ------------------------------ Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. ---------- This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. ------------ Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. ------- The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. ------------------------------ The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. -16- 12.9 Entire Agreement. ---------------- This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. 12.10 Severability. ------------ If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. ----------------------------- Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. --------- None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. ------------ This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. ------------------------------- In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written.
The Company The Members Interactive Voice Media Pennsylvania LLC Interactive Media Consolidated, Inc. By: /s/ Nicholas W. Paine By:/s/ Nicholas W. Paine ---------------------------------- ------------------------------------------ Nicholas W. Paine, Manager Nicholas W. Paine, Chief Executive Officer
SCHEDULE A ---------- MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS --------------------------------------------------- MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media Consolidated, Inc., $1,000 a Delaware corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario, Canada M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 EXHIBIT I --------- DEFINITIONS Certain capitalized words and phrases used in this Agreement shall have the following meanings: 1. "Agreement" means this Limited Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for relief, in any bankruptcy or insolvency proceeding; (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A) - (E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed, or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. -2- 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2.3): (A) To each Member's Capital Account, there shall be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on July 7, 1998, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7. "Company" means Interactive Voice Media Pennsylvania LLC, a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704-2(d) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18-101, et seq.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: -3- (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media Consolidated, Inc. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. -4- 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704-2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.704-2(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704-2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.704-2(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate distributions made during the year of proceeds of any Nonrecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nonrecourse Liability" has the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. -5- (B) Any expendituress of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (11)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Allocations" is defined in Section 9.1.4. 26. "Withdrawal Event" means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.19 20 ex3-19_043004.txt CERTIFICATE OF FORMATION & AMEND (WASHINGTON DC) CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA WASHINGTON, D.C. L.L.C. (Under Section 18-201 of the Delaware Limited Liability Company Act) 1. The name of the limited liability company is: Interactive Voice Media Washington, D.C. L.L.C. 2. The address of its registered office in the State of Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of Interactive Voice Media Washington, D.C. L.L.C. this 28th day of May, 1997. /s/ Candace Lynn Bell ------------------------------------ Candace Lynn Bell, Authorized Person STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 10/22/2001 010527145 - 2756643 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF FORMATION OF INTERACTIVE VOICE MEDIA WASHINGTON, D.C. L.L.C. ----------------------------------------------- Pursuant to Section 18-202 of the Delaware Limited Liability Company Act THE UNDERSIGNED Manager of INTERACTIVE VOICE MEDIA WASHINGTON, D.C. L.L.C. (the "LLC"), a limited liability company organized under and by virtue of the Delaware Limited Liability Company Act of the State of Delaware, DOES HEREBY CERTIFY: 1. The Certificate of Formation of this Limited Liability Company is amended by changing "Paragraph 1:" to read as follows: 1. The name of the limited liability company is Lavalife Washington, D.C. LLC. 2. This amendment was duly adopted in accordance with the provisions of Section 18-202 of the Delaware Limited Liability Company Act by the Unanimous Written Consent of the Members and by the Unanimous Written Consent of the Managers of the Limited Liability Company. IN WITNESS WHEREOF, I have hereunto signed this Certificate of Amendment of Certificate of Formation of INTERACTIVE VOICE MEDIA WASHINGTON, D.C. L.L.C. this 22nd day of October, 2001. /s/ Bruce Croxon --------------------------------- Bruce Croxon, Manager Authorized Person EX-3.20 21 ex3-20_043004.txt LLC AGREEMENT WITH AMENDMENTS (WASHINGTON DC) SECOND AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA WASHINGTON, D.C. L.L.C. (a Delaware limited liability company) THIS SECOND AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 28th day of February 2000, by and between Interactive Voice Media Washington, D.C. L.L.C. (the "Company"), a Delaware limited liability company, and Interactive Voice Media New York LLC, a Delaware limited liability company and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into Limited Liability Company Agreement dated May 29, 1997 (the "Original Agreement"}; and WHEREAS, the Member and the Company entered into a First Amendment to the Limited Liability Company Agreement dated March 26, 1998 (the "First Amendment") (the Original Agreement, as amended by the First Amendment, is referred to herein as the "Entire Agreement"); and WHEREAS, the Member and the Company desire to amend the Entire Agreement, as hereinafter provided. NOW THEREFORE, in consideration of the covenants an agreements herein contained, the parties hereto agree as follows: 1. Amendment. --------- Section 5.8 of the entire Agreement is hereby amended to read in its entirety as follows: 5.8. Officers. -------- 5.8.1. The Company shall have the following Officers: Chairman of the Management Committee, Vice Chairman of the Management Committee, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2. The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be -2- taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3. The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Vice Chairman of the Management Committee shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee. (c) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee and the Vice Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He shall have general and active management off all aspects of the business of the Company. He shall have general responsibility for all technological systems and related operations of the Company, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He may -3- sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (d) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee and the Chief Executive Officer for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee or the Chief Executive Officer. (e) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. -4- (f) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the Chief Executive Officer or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of -the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Management Committee from time to time. 2. Entire Agreement. ---------------- Except as specifically provided herein, the Entire Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this Second Amendment to the Limited Liability Company Agreement as of the date first above written.
The Company The Sole Member Interactive Voice Media Washington, D.C. L.L.C. Interactive Voice Media New York LLC By: /s/ Bruce Croxon By: /s/ Bruce Croxon ------------------------------------- ------------------------------------- Bruce Croxon, Chief Executive Officer Bruce Croxon, Chief Executive Officer
FIRST AMENDMENT TO THE LIMITED.LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA WASHINGTON, D.C. L.L.C. (a Delaware limited liability company) THIS FIRST- AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 26th day of March 1998, by and between Interactive Voice Media Washington, D.C. L.L.C. (the "Company"), a Delaware limited liability company, and Interactive Media (New York) Corp., a New York corporation and the sole member of Company (the "Member"). WITNESSETH: WHEREAS, the Member and the Company entered into a Limited Liability Company Agreement dated May 29, 1997 (the "Original Agreement"); and WHEREAS, the Member and the Company desire to amend the Original Areement as hereinafter provided. NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Amendment. --------- Section 5.8 of the entire Agreement is hereby amended to read in its entirety as follows: 5.8. Officers. -------- 5.8.1. The Company shall have the following Officers: Chairman of the Management Committee, Chief Executive Officer, President and Chief Operating Officer, Chief Technology Officer, Chief People Officer, Chief Financial Officer, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. 5.8.2. The Officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each Officer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the Officers shall have the rights, powers, duties and responsibilities stated in Section 5.8.3 below, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other Officers shall have such rights, powers, -2- duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.8.3. The Officers shall have the following rights, powers, duties and responsibilities: (a) The Chairman of the Management Committee is authorized to preside at meetings of the Members and of the Management Committee. (b) The Chief Executive Officer is authorized to be the chief executive officer of the Company; shall (in the absence of the Chairman of the Management Committee) preside at meetings of the Members and of the Management Committee and shall see that all orders and resolutions of the Management Committee are carried into effect. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. (c) The President is authorized to be an executive officer of the Company; shall (in the absence of both the Chairman of the Management Committee and the Chief Executive Officer) preside at meetings of the Members and of the Management Committee; and shall have general and active management -3- of the business of the Company; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper Officer, certificates for membership interests in the Company and any deeds, bonds, mortgages, contracts and other documents which the Management Committee has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Management Committee to some other Officer or agent of the Company. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Management Committee. The President shall also be known as the Chief Operating Officer of the Company. (d) The Chief Technology Officer is authorized to be an executive officer of the Company. The Chief Technology Officer shall be responsible to the Management Committee, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. (e) The Chief People Officer is authorized to be an executive officer of the Company. The Chief People Officer shall be responsible to the Management Committee, the Chief Executive Officer and President for the management of all personnel of the Company, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. (f) The Chief Financial Officer is authorized to be an executive officer of the Company. The Chief Financial Officer shall be responsible to the Management Committee, the Chief Executive Officer and the President for all financial control and internal audit of the Company. He shall perform such other duties as may be assigned to him by the Management Committee, the Chief Executive Officer or the President. -4- (g) The Secretary is authorized to attend all meetings of the Members and all meetings of the Management Committee. The Secretary shall keep the minutes of the Meetings of the Members and the Management Committee in appropriate books and record all votes. The Secretary; shall give, or cause to be given, notice of all meetings of the Members and the Management Committee as required by law or the Agreement. The Secretary shall be custodian of the records and seal of the Company and when authorized by the Management Committee, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the membership certificate books of the Company and shall perform such other duties as may be prescribed by the Management Committee or the President, under whose supervision the Secretary shall be. The Secretary shall sign, with any other proper Officer, certificates for membership interests in the Company. The Secretary shall respond to all correspondence and present to the Management Committee at its meeting all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Company. (h) The Treasurer is authorized to have the care and custody of and be responsible for all of the funds and securities of the Company and shall deposit such funds and securities in the name and to the credit of the Company in such banks and/or safe deposit companies as the Management Committee may designate. The Treasurer shall make, sign, and endorse in the name of the Company all checks, drafts, notes and other orders for the payment of money, and pay out and dispose of such under the direction of the President or the Management Committee. The Treasurer shall keep accurate books of account of all the business and transactions of the Company and shall exhibit at all reasonable times the books and accounts to any Manager or member of the Company upon application at the office of the Company during business hours. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Management Committee from time to time. -5- 2. Original Agreement. ------------------ Except as specifically provided herein, the Original Agreement shall remain in full force and effect, without amendment or modification. IN WITNESS WHEREOF, each of the parties hereto has executed this First Amendment to the Limited Liability Company Agreement as of the date first above written.
The Company The Sole Member Interactive Voice Media Washington, D.C. L.L.C. Interactive Media (New York) Corp. By: /s/ Nicholas Paine By: /s/ Nicholas Paine ------------------------- --------------------------------------- Nicholas Paine, Manager Nicholas Paine, Chief Executive Officer
LIMITED LIABILITY COMPANY AGREEMENT of the members of INERACTIVE VOICE MEDIA WASHINGTON, D.C., L.L.C. a Delaware limited liability company Dated May 29, 1997 TABLE OF CONTENTS 1. DEFINITIONS ................................................................1 2. ORGANIZATION OF THE COMPANY.................................................1 2.1 ORGANIZATION...............................................................1 2.2 NAME.......................................................................2 2.3 PRINCIPAL PLACE OF BUSINESS ...............................................2 2.4 STATUTORY AGENT............................................................2 2.5 TERM.......................................................................2 3. PURPOSES OF THE COMPANY ....................................................2 4. NAMES AND ADDRESSES OF MEMBERS..............................................2 5. MANAGEMENT OF THE COMPANY...................................................3 5.1 MANAGEMENT COMMITTEE.......................................................3 5.2 RESIGNATION................................................................3 5.3 FIDUCIARY RELATIONSHIP.....................................................3 5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3 5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4 5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING......................4 5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4 5.8 OFFICERS...................................................................4 6. RIGHTS AND POWERS OF THE MEMBERS............................................5 6.1 NO COMMITMENTS.............................................................5 6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY-IN-INTEREST OF THE MEMBERS....5 6.3 MEETINGS OF THE MEMBERS....................................................6 6.4 DECISIONS OF THE MEMBERS...................................................6 6.5 PROXIES....................................................................6 6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6 6.7 WAIVER OF NOTICE...........................................................6 6.8 TAX MATTERS PARTNER........................................................7 7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7 7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7 7.2 LIMITATION OF LIABILITY....................................................7 7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7 8. CAPITAL CONTRIBUTIONS.......................................................8 8.1 GENERALLY..................................................................8 8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8 9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8 9.1 ALLOCATION OF PROFITS AND LOSSES ..........................................8 9.2 ACCOUNTING................................................................11 9.3 DISTRIBUTIONS.............................................................11 9.4 GUARANTEED PAYMENTS.......................................................11 10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11 10.1 RIGHT TO TRANSFER........................................................11 10.2 STATUS OF THIRD PARTY TRANSFEREE.........................................12 -ii- 10.3 ABSOLUTE RESTRICTION ONTRANSFERS ........................................12 10.4 TIME OF TRANSFER.........................................................12 10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST.........12 10.6 EFFECT OF WITHDRAWAL EVENTS..............................................13 11. TERMINATION, LIQUIDATION AND WINDING UP...................................13 11.1 TERMINATION AND WINDING UP OF THE COMPANY................................13 11.2 METHOD OF DISTRIBUTION UPON WINDING UP...................................14 11.3 ORDERLY LIQUIDATION......................................................14 12. MISCELLANEOUS PROVISIONS .................................................14 12.1 NOTICES..................................................................14 12.2 BOOKS OF ACCOUNTS AND RECORDS............................................15 12.3 GOVERNING LAW............................................................15 12.4 WAIVER OF ACTION FOR PARTITION...........................................15 12.5 AMENDMENTS...............................................................15 12.6 CONSTRUCTION.............................................................15 12.7 WAIVERS..................................................................15 12.8 RIGHTS AND REMEDIES CUMULATIVE...........................................15 12.9 ENTIRE AGREEMENT.........................................................16 12.10 SEVERABILITY............................................................16 12.11 HEIRS, SUCCESSORS AND ASSIGNS...........................................16 12.12 CREDITORS...............................................................16 12.13 COUNTERPARTS............................................................16 12.14 FEDERAL INCOME ME TAX ELECTIONS.........................................16 LIMITED LIABILITY COMPANY AGREEMENT of the members of INTERACTIVE VOICE MEDIA WASHINGTON, D.C., L.L.C. (a Delaware limited liability company) THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered into effective as of the 29th day of May, 1997, by and among the persons listed on Schedule A attached hereto under the caption "Members" (the "Members"), and Interactive Voice Media Washington, D.C., L.L.C. (the "Company"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Members have organized the Company as a Delaware limited liability company for the purposes provided herein; and WHEREAS, the Members desire, by executing this Agreement, to acknowledge their intent to become members of the Company; and WHEREAS, the Members desire to enter into a written agreement as to the affairs of the Company and the conduct of the Company's business; and WHEREAS, the Members intend this Agreement to be a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act. . NOW THEREFORE, In consideration of the covenants and agreements herein contained, the parties hereto agree as follows: 1. Definitions. ----------- Certain capitalized words and phrases used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein by reference. 2. Organization of the Company. --------------------------- 2.1 Certificate of Formation. ------------------------ On May 29, 1997, the Members organized the Company by executing and filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with and pursuant to the Delaware Act. The Members and the Company acknowledge the resignation of Ms. Ball as authorized person of the Company, and the assignment by Ms. Bell to the Members of all pier right, title and interest, if any, as authorized person of the Company. The Members and the Company hereby agree to assume all duties and responsibilities in connection therewith, land to indemnify and hold -2- harmless Ms. Bell from and against any and all liability of any kind whatsoever which Ms. Bell may incur or suffer as a result of being the initial authorized person of the Company. Ms. Bell shall be a third party beneficiary of the provisions of this Section of the Agreement. 2.2 Agreement --------- This Agreement shall constitute a "limited liability company agreement" of the Company, within the meaning of Section 18-101 of the Delaware Act 2.3 Admission of Members. -------------------- This Agreement acknowledges that the Members were admitted as members of the Company upon the formation of the Company. 2.4. Name. ---- The name of the Company is Interactive Voice Media Washington, D.C., L.L.C. 2.5 Principal Place of Business. -------------------------- The principal place of business of the Company shall be located at such address as shall be determined from time to time by the Management Committee. 2.6 Statutory Agent. -------------- The name and address of the registered agent for service of process in Delaware shall be Prentice-Hall Corporation System, Inc., 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805, or such other agent as the Company may appoint from time to time in accordance with the Delaware Act. 2.7 Term. ---- The term of the Company commenced on the dat of filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of Section 11.1 of this Agreement 3. Purposes of the Company ----------------------- The purposes of the Company are to engage in any and all businesses or activities for which limited liability companies may be organized under the Delaware Act. 4. Names and Addresses of Members. ------------------------------ The names and addresses of the Members are as set forth do Schedule A attached to this Agreement and incorporated herein by reference. -3- 5. Management of the Company. ------------------------- 5.1 Management Committee. -------------------- Subject to Section 6 hereof and to the right and power to delegate to one or more officers of the Company in accordance with Section 5.8 below, the management of the Company shall be vested in a management committee (the "Management Committee"), consisting initially of four (4) managers (each a "Manager"). The Managers shall be elected by a Majority-in-Interest of the Members. The initial Managers shall be: Nicholas Paine Bruce Croxon Paul Woolner John Bradlow Each Manager may resign at any time. The number of Managers comprising the Management Committee shall be determined from time to time by a Majority-in-Interest of the Members. Each Manager is subject to removal or replacement at any time by a Majority-in-Interest of the Members. A Majority-in-Interest of the Members may fill any vacancy created by the death, resignation or removal of any Manager or by the expansion of the Management Committee. 5.2 Resignation. ----------- Any Manager of the Company may resign at any time by giving written notice to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5.3 Fiduciary Relationship. ---------------------- At all times the Management Committee will have a fiduciary relationship to the Company and to each Member. In performing its duties under this Agreement, the Management Committee shall act in good faith and on a fair dealing basis with the Company and each of the Members. 5.4 Meetings of the Management Committee. ------------------------------------ Any Manager may call a meeting of the Management Committee upon forty-eight (48) hours notice in writing (which may be by facsimile), which notice shall specify the date and time of the meeting. Meetings of the Management Committee shall be held at the Company's principal executive offices, unless a majority of the Managers agree to meet at another location. Managers may be present at any meeting of the Management Committee by telephone or other means of communication, provided that each Manager can hear all other present Managers. A majority of all Managers shall constitute a quorum of the Management Committee for any meeting. -4- 5.5 Decisions of the Management Committee. ------------------------------------- Decisions of the Management Committee shall be made by a number of Managers in attendance at a duly called and held meeting constituting a majority of the entire Management Committee. 5.6 Actions of the Management Committee Without a Meeting. ----------------------------------------------------- Any action which may be taken by the Management Committee at a meeting may be taken by unanimous written action without a meeting, provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Management Committee. 5.7. Authority of Management Committee. --------------------------------- The Management Committee shall direct, manage and control the business of the Company. Except for situations in which the approval of the Members is expressly required by this Agreement or by nonwaivable provisions of the Act, the Management Committee shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Managers may take action permitted hereunder or under the Act, only if approved by the Management Committee. 5.8 Officers. -------- 5.8.1 The Company shall have a President, Vice President, Secretary and Treasurer, and such other officers as the Management Committee from time to time may appoint. The initial officers of the Company shall be: Nicholas Paine President Ted Madden Vice-President Denis Weil Vice-President Ron Anderson Secretary Ron Anderson Treasurer 5.8.2 The officers shall be appointed by the Management Committee, and shall serve at the sufferance of the Management Committee. Each offer is subject to removal or replacement by the Managers at any time. Subject to the limitations of this Agreement with respect to actions required to be taken by the Management Committee or the Members, the President, Vice-President, Secretary and Treasurer shall have those rights, powers, duties and responsibilities as are customarily possessed by such officers of a Delaware corporation, except as such rights, powers, duties and responsibilities may be limited or expanded by action of the Management Committee; and any other officers shall have such rights, powers, duties and responsibilities as shall be granted by action of the Management Committee. Officers shall be considered to have a delegation of the Managers' powers, pursuant to Section 18-407 of the Delaware Act, to the extent of their authority to act as provided herein. Officers who are not -5- Managers under this Agreement shall nevertheless be deemed "managers" for purposes of Section 18-303 of the Delaware Act, regarding limited liability, but shall not, by virtue of this sentence be a Manager under this Agreement or a "manager" under or within the meaning of the Act, except as specifically hereinabove provided. Any Officer of the Company may resign at any time by giving written notice to the Management Committee. The resignation of any Officer shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 6. Rights and Powers of the Members. -------------------------------- 6.1 No Commitments. -------------- In dealing with third parties with respect to the Company's business or on behalf of the Company, the Members shall act in accordance with policies established by the Management Committee or by consent of a Majority-in-Interest of the Members. No Member shall, in the name of or on behalf of the Company, sign or execute any contract, instrument or document, perform any other act, engage in any transaction, commit or bind the Company to any act, contract, instrument or document, or incur any debt, except as expressly permitted by this Agreement or with the written concurrence of a Majority-in-Interest of the Members. 6.2 Actions Requiring the Approval of a Majority-in Interest of the --------------------------------------------------------------- Members. - ------- Notwithstanding anything to the contrary contained in this Agreement, any action with respect to the following matters shall require prior approval of a Majority-in-Interest of the Members: (A) any amendment, modification or change to the authority and powers of the Management Committee as contemplated by Section 5 hereof, (B) any sale, exchange, lease, transfer or other disposition of all or substantially all of the assets of the Company; (C) any merger or consolidation of the Company with or into another entity; (D) any other matter requiring the approval of a Majority-in-Interest of the Members under any other provision of this Agreement; and (E) the admission of a person as a substituted Member of the Company in accordance with Section 10.2. -6- 6.3 Meetings of the Members. ----------------------- Any Member may call a meeting of the Members upon fifteen (15) days notice in writing (which may be by facsimile), which notice shall specify the date, time and purpose or purposes of the meeting. Meetings of the Members shall be held at the Company's principal executive offices, unless a Majority-in-Interest of the Members agree to meet at another location. Members may be present at any meeting of the Members by telephone or other means of communication, provided that each Member can hear all other present Members. Members holding a Majority-in-Interest of all of the Members shall constitute a quorum of the Members, or Members of that class of Members, for the transaction of business at any meeting. 6.4 Decisions of the Members. ------------------------ Decisions of the Members shall be made by those Members holding a Majority-in-Interest of the Members. 6.5 Proxies. ------- At all meetings of the Members, a Member may be present in person or by proxy executed in writing by the Member. Any such proxy shall be filed with the Company before or at the time of the meeting. No such proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 6.6 Actions of the Members Without a Meeting. ---------------------------------------- Any action which may be taken by the Members at a meeting may be taken by unanimous written action, without a meeting, of the Members entitled to vote at a meeting with respect to such action; provided that the writing setting forth such action shall be kept with the minutes of the meetings of the Members. 6.7 Waiver of Notice. ---------------- Notice of any meeting of the Members may be waived by a Member by a waiver of the notice in writing, signed by the Member entitled to the notice, whether before, at or after the time stated for the meeting. Attendance of a Member at any meeting, whether in person, by proxy as provided above or by telephone as provided above, shall constitute waiver of notice of such meeting. Any waiver of notice of a meeting by a Member hereunder shall be equivalent to the giving of such notice. 6.8 Tax Matters Partner. ------------------- Interactive Media (New York) Corp. shall act as the initial "tax matters partner" for the Company, as that term is defined in, and for all purposes of, Section 6231(a)(7) of the Code. -7- 7. Limitation of Liability; Indemnification. ---------------------------------------- 7.1 Proof of Failure to Standard of Conduct. --------------------------------------- A Member, a Manager or an Officer shall not be deemed to have violated any standard of conduct under this Section 7 unless such violation is proved, by clear and convincing evidence, in an action brought against such person. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself constitute proof or create a presumption that the appropriate standard of conduct has been violated. 7.2 Limitation of Liability. ----------------------- No Member, no Manager and no person serving as an Officer shall be liable to the Company or to any member in damages for any action that such Member, Manager or Officer takes or fails to take in such capacity, unless it is proved, by clear and convincing evidence, in a court of competent jurisdiction that such action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. 7.3 Indemnification of Members, Managers and the President. ------------------------------------------------------ The Company agrees to indemnify (A) each Member, (B) each Manager and (C) each Officer (each an "indemnified party"), to the fullest extent permitted by law, and to save and hold each indemnified party harmless from, and in respect of, all (1) fees, costs and expenses incurred in connection with or resulting from any claim, action or demand against such indemnified party or the Company that arise out of or in any way relate to the Company, its properties, business or affairs, and (2) such claims, actions and demands, and any losses or damages resulting from such claims, actions and demands, including amounts paid in settlement or compromise (if recommended by attorneys for the Company) of any such claim, action or demand; provided, however, that this indemnification shall apply only so long as the indemnified party has acted in good faith on behalf of the Company, in a manner reasonably believed by him to be within the scope of his authority under this Agreement add in the best interests of the Company, and only if such action or failure to act did not constitute willful misconduct, fraud or gross negligence. 8. Capital Contributions. --------------------- 8.1 Generally. --------- Each Member has made a Capital Contribution in cash to the Company as set forth on Schedule A attached hereto. Except as set forth in Section 8.2, no Member shall make any additional Capital Contributions to the Company without the poor approval of a Majority-in-Interest of the Members. No Member shall be obligated to make any additional Capital Contributions to the Company. In particular, no Member shall be obligated to make any Capital -8- Contribution to restore any deficit balance in such Member's Capital Account. No interest shall be paid on any Capital Contributions. 8.2 Members' Capital Accounts. ------------------------- 8.2.1 A separate Capital Account shall be established and maintained for each Member. As funded and adjusted in accordance with this Agreement, the Capital Accounts of the Members shall reflect the underlying economic arrangements of the Members. 8.2.2 Upon a transfer of all or part of an Interest in accordance with Section 10, the Capital Account of the transferor Member that is attributable to the transferred Interest shall carry over to the transferee thereof. 8.2.3 The determination and maintenance of the Members' Capital Accounts, and any adjustments thereof, shall be made in a manner consistent with tax accounting and other principles set forth in Section 704(b) of the Code and applicable Income Tax Regulations thereunder, as finally determined for federal income tax purposes. 9. Allocation of Profits and Losses; Distributions. ----------------------------------------------- 9.1 Allocation of Profits and Losses. -------------------------------- 9.1.1 Allocation of Profits Generally. ------------------------------- Except as otherwise provided in sections 9.1.3 and 9.1.4 below, Profits shall be allocated among the Members in the following order and priority: (A) first, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(A) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(C) below for all prior periods, and in the proportions that such Losses have been so allocated; (B) then, among the Members until the cumulative Profits allocated pursuant to this Section 9.1.1(B) are equal to the cumulative Losses allocated among the Members pursuant to Section 9.1.2(B) below for all prior periods, and in the proportions that such Losses have been so allocated; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.2 Losses Generally. ---------------- Except as provided in Section 9.1.4 below, the Losses of the Company shall be allocated among the Members in the following order and priority: -9- (A) first, among the Members until the cumulative Losses allocated pursuant to this Section 9.1.2(A) are equal to the cumulative Profits allocated among the Members pursuant to Section 9.1.1(C) above for all prior periods, and in the proportions that such Profits have been so allocated; (B) then, among the Members in proportion to, and to the extent of, the positive Capital Account balances of such Members; and (C) thereafter, among the Members, pro rata, in proportion to their Percentage Interests. 9.1.3. Other Allocation Rules. ---------------------- (A) Except as provided in Section 9.1.3(C) below, in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any deficit balance in his/her Capital Account of such Member as quickly as possible. (B) Except as provided in Section 9.1.3(C) below, in the event any Member has a deficit balance in his/her Capital Account at the end of any fiscal year, such Member shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit balance in the Capital Account of such Member as quickly as possible. (C) Notwithstanding any other provision of this Section 9, if there is a net decrease in Company Minimum Gain during any fiscal year of the Company, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, to the extent required under the Section 1.704-2 of the Regulations. The items to be so allocated shall be determined in accordance with Section 1.704-2 of the Regulations. This Section 9.1.3(C) is intended to comply with the "minimum gain chargeback" requirement in such Section of the Regulations and shall be interpreted consistently therewith. (D) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section -10- 1.7041(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (E) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal year or other period shall be allocated among the Members, pro rata, in proportion to their Percentage Interests. Member Nonrecourse Deductions and Member Nonrecourse Debt for any fiscal year or other period shall be allocated among the Members in accordance with applicable Regulations under Sections 704 and 752 of the Code. (F) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be deemed to have been earned ratably over the period of the fiscal year of the Company. (G) Except as otherwise provided in this Agreement, all items of income, gain, loss and deduction, and any other allocations not otherwise provided for, shall be allocated among the Members in the same proportions as they share Profits or Losses (as the case may be) for each fiscal year. 9.1.4 Curative Allocations. -------------------- The allocations set forth in Sections 9.13 (A), (B), (C), and (E) above (the "Regulatory Allocations") are intended to comply with certain of the requirements of Section 1.704-1(b) of the Income Tax Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to share distributions from the Company. Accordingly, a Majority-in-Interest of Members hereby are authorized to divide other allocations of income, gain, deduction of loss among the Members so as to prevent the Regulatory Allocations from distorting the manner in which distributions from the Company are intended to be shared among the Members pursuant to this Agreement. The Members will have the discretion to accomplish this result in any reasonable manner. 9.2 Accounting. ---------- The Company's books shall be kept on the basis of the accounting method of the Company for federal income tax purposes, as selected by the Management Committee. The fiscal year of the Company shall be selected by the Management Committee. -11- 9.3 Distributions. ------------- The Company may make distributions to the Members when, as and if declared by the Management Committee (i) to enable the Members to pay federal, state and local income taxes attributable to their Interests (including quarterly tax distributions to those Members who make estimated tax payments), and all distributions under this clause (i) shall be made to the Members based upon an assumed tax rate equal to the highest marginal tax rate then applicable to any of the Members and, except as hereinafter provided, among the Members based upon their relative shares of the Company's taxable income for the period; provided, that, in the case of a tax distribution hereunder to a Member which is attributable to a special allocation of items of income and gain in accordance with Section 704(c) of the Code, a corresponding distribution shall be made to all other Members so that such tax distribution and such corresponding distributions are, in the aggregate, shared by the Members, pro rata, in proportion to their Percentage Interests; or (ii) otherwise as the Management Committee may determine (except in connection with the termination and winding up of the Company), and all distributions under this clause (ii) shall be made among the Members in proportion to their Capital Account balances. Assets or cash available for distribution in connection with the termination and winding up of the Company shall be distributed in accordance with the provisions of Section 11.2. 9.4 Guaranteed Payments. ------------------- Any payment to a Member for services rendered by the Company which is not governed for all purposes by an agreement other than this Agreement shall be deemed to be a "guaranteed payment" described in and governed by Section 707(c) of the Code. 10. Transfer of interests; Effect of Withdrawal Events. -------------------------------------------------- 10.1 Right to Transfer. ----------------- 10.1.1 No Member shall be entitled to sell, mortgage, hypothecate, transfer, pledge, assign, donate, create a security interest in or lien on, encumber, give, place in trust (voting or other) or otherwise dispose of, including but not limited to any involuntary transfer or transfer by operation of law upon divorce, in bankruptcy of by way of execution, seizure or sale by legal process (hereinafter "transfer") his/her Interest or any portion thereof unless the applicable provisions of this Section 10 are complied with in full. Any attempted transfer of an Interest other than in accordance with the preceding sentence shall be null and void and be of no force or effect. Any transfer of an Interest shall be made only in compliance with all applicable securities laws and the Company may require the transferor to obtain and deliver to the Company an opinion of counsel (reasonably acceptable, as to both the opinion and the counsel, to the Company) that such proposed transfer so complies. 10.1.2 A Member shall be entitled to transfer all or any part of his/her interest to any person, upon the approval of a Majority-In-Interest of the Members. -12- 10.2 Status of Third Party Transferee. -------------------------------- Except as otherwise provided, no third party transferee of an Interest shall, without the prior written consent of all of the Members, acquire the status of a substituted Member of the Company under the Delaware Act or this Agreement, but shall have solely the economic rights to share in the Company's allocations of Profits and Losses and distributions with respect to the transferred Interest. In the event a substitute Member is admitted to the Company in accordance with this Section 10.2, such substitute Member shall be responsible for the payment of all fees and expenses associated with the transfer and such substitution as the Management Committee may deem reasonable and appropriate. 10.3 Absolute Restriction on Transfers. --------------------------------- Notwithstanding any provision of this Agreement to the contrary, the transfer of an interest to any person or entity other than the Company or a Member will not be permitted if the Interest sought to be transferred, when added to the total of all other Interests transferred within the period of twelve (12) consecutive months ending with the proposed date of the transfer, results in the termination of the Company under Section 708 of the Code, unless the transfer is consented to by a Majority-in-Interest of the Members. 10.4 Time of Transfer. ---------------- Any transfer of an Interest to a third party or to a Member permitted under this Section 10 shall be effective as of midnight of the last day of the calendar month in which it is made, or, at the election of a Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following the date of the transfer (the "Effective Transfer Date"). 10.5 Distributions and Allocations in Respect of Transferred ------------------------------------------------------- Interest. - -------- If any Interest is transferred during any accounting period to a third party or to a Member in compliance with the provisions of this Section 10, Profits, Losses, each item thereof and all other items attributable to such Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Section 9 hereof and Code Section 706(d), using the Effective Transfer Date as the date upon which the change in ownership of the Interest occurred, and using any conventions permitted by law and selected by the unanimous action of the remaining Members. All distributions on or before the Effective Transfer Date shall be made to the transferor and all distributions thereafter shall be made to the transferee. Neither the Company nor any Manager or Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.5, whether or not any of them has knowledge of any transfer of ownership of any Interest. -13- 10.6 Effect of Withdrawal Events. --------------------------- 10.6.1 No Resign. --------- No Member shall be entitled to resign as a Member, except in connection with a transfer of such Member's entire Interest in the Company in compliance with the terms and conditions of this Section 10 and with respect to which such Member's transferee has been admitted as a substituted Member in accordance with Section 10.3. 10.6.2 Death or Adjudication of Incompetency. ------------------------------------- If the Company is continued in accordance with Section 11.1(B) below following the death or adjudication of incompetency of a Member, such Member's Interest shall not be terminated or repurchased and the successor-in-interest or legal representative of such Member shall thereafter be the Member with respect to such Interest and such successor-in-interest shall be substituted as a Member upon compliance with the terms and conditions of Section 10.2. 10.6.3 No Other Withdrawal. ------------------- Except as expressly provided in Section 11.2 in connection with the termination and winding up of the Company, the Company shall not be obligated to repurchase the Interest of any Member, nor shall any Member be entitled to receive any other payment or distribution in connection with such Member's withdrawal from the Company. 11. Termination, Liquidation and Winding Up. --------------------------------------- 11.1 Termination and Winding Up of the Company. ----------------------------------------- 11.1.1 The Company shall terminate upon the first to occur of (A) the unanimous agreement of the Members in writing; (B) the occurrence of a Withdrawal Event as to any Member, unless at such time there is at least one (1) remaining Member(s) of the Company and a Majority-in-Interest of the remaining Member(s) agree to continue the Company within ninety (90) days after the occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any of the events of dissolution stated in Section 18-801 of the Act. 11.1.2 As soon as possible following the occurrence of any event of termination, the Company shall execute and file as provided in the Delaware Act a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State of Delaware or which otherwise complies with the Delaware Act. Upon the filing of such statement of intent to dissolve with the Secretary of State of Delaware, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up of its affairs, but its separate existence shall continue until a certificate of dissolution has been filed with the Secretary of State of Delaware or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The filing of the statement of intent to dissolve shall not affect the limited liability of the Members, Managers and Officers of the Company. -14- 11.2 Method of Distribution Upon Winding Up. -------------------------------------- Upon termination of the Company pursuant to Section 11.1 above, the Management Committee shall supervise and control the termination and winding up of the Company and the assets of the Company and the proceeds of any liquidation shall be applied and distributed in the following manner and order of priority: (A) to the payment and discharge of all of the Company's debts and liabilities and the expenses of liquidation and dissolution; (B) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company; and (C) to the payment of the balance, if any, of the respective Capital Accounts of the Members (after making the allocations required under the provisions of Section 9), but if the amount available for such payment shall be insufficient, then pro rata among all of the Members according to the respective positive balances of their Capital Accounts at such time; and (D) to the payment of any remaining balance to the Members, according to their Percentage Interests. 11.3 Orderly liquidation. ------------------- A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 12. Miscellaneous Provisions. ------------------------ 12.1 Notices. ------- Any notice or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been given and received for all purposes when delivered personally to the party to whom the same is directed; or when mailed, sent by overnight delivery service, charges prepaid, or sent by facsimile addressed to the party to whom the same is directed, at the address set forth in this Agreement or such other address as the Company has received written notice from time to time. 12.2 Books of Accounts and Records. ----------------------------- Proper and complete records and books of account shall be kept or shall be caused to be kept by the Management Committee, in which shall be entered fully and accurately all transactions and other matters relating to the Company's business in the detail and completeness -15- customary and usual for businesses of the type engaged in by the Company. The books and records shall at all times be maintained at the principal executive offices of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during reasonable business hours. 12.3 Governing Law. ------------- The Company, this Agreement and the rights of the Members, Managers and Officers of the Company hereunder shall be governed by the laws of the State of Delaware. 12.4 Waiver of Action for Partition. ------------------------------ Each Member irrevocably waives any right that such Member may have to maintain any action for partition with respect to the property of the Company. 12.5 Amendments. ---------- This Agreement may not be amended except in writing by the affirmative vote of all of the Members. 12.6 Construction. ------------ Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 12.7 Waivers. ------- The failure of any party to seek redress for default of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default, from having the effect of an original default. 12.8 Rights and Remedies Cumulative. ------------------------------ The rights and remedies provided by this operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any other remedy. Said rights and remedies are given in addition to any other legal rights the parties may have. 12.9 Entire Agreement. ---------------- This Agreement contains the entire understanding among the parties with respect to the subject matter hereof and supersedes any prior understandings and agreements, whether written or oral, with respect to such subject matter. -16- 12.10 Severability. ------------ If any provision of this Agreement or its application to any person or circumstance shall, for any reason and to any extent, be invalid, illegal or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforceable to the fullest extent permitted by law. 12.11 Heirs, Successors and Assigns. ----------------------------- Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns. 12.12 Creditors. --------- None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. 12.13 Counterparts. ------------ This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 12.14 Federal Income me Tax Elections. ------------------------------- In the event of a transfer of all or any portion of the Interest of any Member, the Company may elect (by unanimous action of the Members) pursuant to Section 754 of the Code to adjust the basis of assets of the Company upon written request of the transferee. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written.
The Company The Members Interactive Voice Media Washington, D.C., LLC Interactive Media (New York) Corp. By: /s/ Nicholas Paine By: /s/ Nicholas Paine ----------------------- -------------------------- Nicholas Paine, Manager Nicholas Paine, President
SCHEDULE A MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS MEMBERS: CAPITAL CONTRIBUTION (name and address) Interactive Media (New York) Corp., a New $1,000 York corporation c/o Interactive Media Group 905 King Street West, Suite 500 Toronto, Ontario M6K 3G9 TOTAL CAPITAL CONTRIBUTIONS $1,000 EXHIBIT 1 --------- DEFINITIONS Certain capitalized words and phrases used in this Agreement shall have the following meanings: l. "Agreement" means this Limited Liability Company Agreement, as originally executed and as amended from time to time in accordance with Section 12.5 hereof. 2. "Bankruptcy Event" means, with respect to any Member: (A) the making of an assignment for the benefit of creditors; (B) the filing of a voluntary petition in bankruptcy; (C) the adjudication of bankruptcy or insolvency, or the entry of an order for relief, in any bankruptcy or insolvency proceeding; (D) the filing of a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) the filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of a nature described in (A)-(E) above; (F) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties; or (G) the passage of one hundred twenty (120) days after the commencement of any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulations, if the proceeding has not been dismissed, or the passage of ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, if the appointment is not vacated or stayed or the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated. -2- 3. "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member pursuant to the provisions of Section 8.2 of this Agreement, which shall be determined and adjusted as follows (but subject to the provisions of Section 8.2.3): (A) To each Member's Capital Account, there shall be credited the following: (a) such Member's Capital Contributions; (b) such Member's allocations of Profits; and (c) any items in the nature of income or gain which are specially allocated to such Member pursuant to Section 9.1.3; and (B) To each Member's Capital Account there shall be debited the following: (a) the amount of any distributions to such Member pursuant to any provision of this Agreement; (b) such Member's allocations of Losses; and (c) any items in the nature of expenses or losses which are specially allocated to such Member pursuant to Section 9.1.3. 4. "Capital Contribution" means the amount in cash contributed by each Member (or his or her predecessors in interest) to the capital of the Company for his or her Interest, as set forth on Schedule A attached hereto. 5. "Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of Delaware on May 29, 1997, as the same may be amended from time to time in accordance with the Delaware Act. 6. "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of succeeding federal revenue laws. 7 "Company" means Interactive Media Washington, D.C., L.L.C., a Delaware limited liability company. 8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Section 1.704-2(d) of the Regulations. 9. "Delaware Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Chapter 18 (Sections 18-101, et seq.), as amended from time to time (or any corresponding provisions of succeeding law). 10. "Effective Transfer Date" is defined in Section 10.4. 11. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: -3- (A) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values as of the following times: (a) the acquisition of an additional Interest (other than pursuant to Section 8.1) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property (including cash) as consideration for an Interest, if the Management Committee reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g). (B) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this section (11)(B) to the extent the Management Committee shall determine that an adjustment pursuant to section (11)(A) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this section (11)(B). 12. "Interest" means the entire interest in the Company owned by a Member, including such Member's (1) interest in the Company's allocations and distributions, (2) rights with respect to the management and administration of the Company, (3) access to or rights to demand or require any information or account of the Company or its affairs, and (4) rights to inspect the books and records of the Company. 13. "Management Committee" is defined in Section 5.1. 14. "Manager" is defined in Section 5.1. 15. "Majority-in-Interest", when used with respect to the Members, means Members holding more than 50% of the Interests, as measured by the Members respective Capital Contributions, held in the aggregate by all Members. 16. "Members" means Interactive Media (New York) Corp. and any persons admitted as additional or substituted Members pursuant to this Agreement. "Member" means any one of the Members, as the context requires. -4- 17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set forth in Sections 1.704-2(i)(3) and (5) of the Regulations, determined in accordance with Sections 1.704-2(g)(1) and (3) of the Regulations. 18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse debt" as set forth in Section 1.704-2(b)(4) of the Regulations. 19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the Regulations. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt, to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt determined in accordance with Section 1.704-2(i)(2) of the Regulations. 20. "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a fiscal year equals the net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the aggregate distributions made during the year of proceeds of any Nonrecourse Liability that are allocable to an increase in Company Minimum Gain. 21. "Nonrecourse Liability" has the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. 22. "Percentage Interest" means the percentage interest of a Member in the Company, determined by dividing the Member's Capital Contribution by the total Capital Contributions of all of the Members of the Company. 23. "Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (A) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this section 22 shall be added to such taxable income or loss. -5- (B) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this section 22, shall be subtracted from such taxable income or loss. (C) At any time the Gross Asset Value of any Company property is adjusted pursuant to section (1l)(A), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits or Losses. (D) Gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. (E) Notwithstanding any other provision of this section 22, any items which are specially allocated pursuant to Section 9.1.3 or 9.1.4 of the Agreement shall not be taken into account in computing Profits or Losses. 24. "Regulations" means the regulations promulgated under the Code, as the same may be amended from time to time, including corresponding provisions of any succeeding regulations. 25. "Regulatory Allocations" is defined in Section 9.1.4. 26. "Withdrawal Event" means the death, dissolution, adjudication of incompetency, occurrence of a Bankruptcy Event or resignation (except as expressly permitted by this Agreement) of or with respect to an Member. EX-3.21 22 ex3-21_043004.txt CERT. OF INCORPORATION & AMENDMENT (USA) LTD. STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 10/18/1991 912915175 - 2276569 STATE OF DELAWARE CERTIFICATE OF INCORPORATION OF INTERACTIVE MEDIA ENTERPRISES LTD. I, (We) the undersigned, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the General Corporation Law of the State of Delaware, do hereby certify as follows: FIRST: The name of the corporation is: INTERACTIVE MEDIA ENTERPRISES LTD. SECOND: The registered office of the corporation and place of business in the State of Delaware is to be located at 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent. The name of its registered agent is The Prentice-Hall Corporation System, Inc. THIRD: The nature of the business, and the objects and purposes proposed to be transacted, promoted and carried on, are to do any and all things therein mentioned, as fully and to the same extent as natural persons might or could do, and in any part of the world, viz: To do any lawful act or thing for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The total number of shares which the corporation is authorized to issue is 3000 shares no par value itemized as follows: SERIES NUMBER PAR VALUE/SHARE OR ARE CLASS (IF ANY) OF SHARES THEY WITHOUT PAR VALUE? Common 3000 No Par Value FIFTH: The name and address of each incorporator(s) is/are as follows: Joan Terry 500 Central Avenue Albany, NY 12206 DELAWARE - 1991 PAGE 1 SIXTH: The directors shall have power to make and to alter or amend the By-Laws; to fix the amount to be reserved as working capital, and to authorize and cause to be executed, mortgages and liens without limit as to the amount, upon the property and franchises of this Corporation. With the consent in writing, and pursuant to a vote of the holders of a majority of the capital stock issued and outstanding, the Directors shall have authority to dispose, in any manner, of the whole property of this Corporation. The By-Laws shall determine whether and to what extent the accounts and books of this Corporation, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have any right of inspecting any account, or book, or document of this Corporation, except as conferred by Law or the By-Laws, or by resolution of the stockholders. The stockholders and directors shall have power to hold their meetings and keep the books, documents and papers of the corporation outside the state of Delaware, at such places as may be from time to time designated by the By-Laws or by resolution of the stockholders or directors, except as otherwise required by the laws of Delaware. It is the intention that the objects, purposes and powers specified in the third paragraph hereof shall, except where otherwise specified in said paragraph, be in nowise limited or restricted by reference to or inference from the terms of any other clause or paragraph in this Certificate of Incorporation, but that the objects, purposes and powers specified in the third paragraph and in each of the clauses or paragraphs of this charter shall be regarded as independent objects, purposes and powers. IN WITNESS WHEREOF, I (we) have hereunto set my (our) hand(s) and seal this 17th day of October, 1991. /s/ Joan Terry - ------------------------------------ Joan Terry, Incorporator DELAWARE - 1991 PAGE 2 CERTIFICATE OF AMENDMENT Before Payment of Capital OF CERTIFICATE OF INCORPORATION OF INTERACTIVE MEDIA ENTERPRISES LTD. ---------------------------------- Pursuant to Section 241 of the Delaware General Corporation Law I, THE UNDERSIGNED, being the Sole Incorporator of the above named corporation, a corporation organized under and by virtue of the General Corporation Law of the State of Delaware, DO HEREBY CERTIFY: 1. The Certificate of Incorporation of this Corporation be, and it hereby is, amended by changing the article thereof numbered "First" to read as follows: "FIRST: The name of the Corporation is: INTERACTIVE MEDIA GROUP (USA) LTD." 2. The Corporation has not received any payment for any of its stock. This amendment was duly adopted in accordance with the provisions of Section 241 of the Delaware General Corporation Law by the unanimous written consent of all of the incorporators of the Corporation. IN WITNESS WHEREOF, I have duly executed this Certificate of Amendment this 7th day of November, 1991. /s/ JOAN TERRY ------------------------------------ JOAN TERRY, Incorporator EX-3.22 23 ex3-22_043004.txt BYLAWS INTERACTIVE MEDIA GROUP (USA) LTD SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE MEDIA GROUP (USA) LTD. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of one (1) member who shall be elected by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased from time to time by resolution adopted by a majority of the Board of Directors or the stockholders. ARTICLE V OFFICERS Section 1. Officers in General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at the Board of Directors annual meeting after each annual meeting of shareholders. The Board of Directors shall elect a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer and any other officer, assistant officers, and agents as it deems necessary, none of whom need be a member of the Board of Directors nor a shareholder of the Corporation. Each officer so elected shall hold office until his or her successor has been duly chosen and has qualified or until his or her death or his or her resignation or removal in the manner hereinafter provided. Section 8. President. DELETED Section 17. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board and the Vice Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general responsibility for all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 18. Chief Technology Officer. DELETED Section 19. Chief People Officer. DELETED Section 20. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 22. Vice Chairman of the Board. The Vice Chairman of the Board is authorized to preside at meetings of the shareholders and the Board of Directors in the absence of the Chairman of the Board. Dated: February 28, 2000 Schedule A February 28, 2000 Amendments BL 2 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA GROUP (USA) LTD. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of at least ten (10) members and no more than fifteen (15) members who shall be elected by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased from time to time by resolution adopted by a majority of the Board of Directors or the stockholders. Dated: October 20, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA GROUP (USA) LTD. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of nine (9) members who shall be elected by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased from time to time by resolution adopted by a majority of the Board of Directors or the stockholders. Dated: July 29, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE MEDIA GROUP (USA) LTD. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of eight (8) members who shall be elected by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased from time to time by resolution adopted by a majority of the Board of Directors or the stockholders. ARTICLE V OFFICERS Section 1: Officers in General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of President and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at the Board of Directors annual meeting after each annual meeting of shareholders. The Board of Directors shall elect a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer and any other officer, assistant officers, and agents as it deems necessary, none of whom need be a member of the Board of Directors nor a shareholder of the Corporation. Each officer so elected shall hold office until his or her successor has been duly chosen and has qualified or until his or her death or his or her resignation or removal in the manner hereinafter provided. Section 8. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the stockholders and Directors; and shall have general and active management of the business of the Corporation; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 17. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 18. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 19. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties Schedule A March 26, 1998 Amendments BL 2 1 as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 20. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Dated: March 26, 1998 Schedule A March 26, 1998 Amendments BL 3 BY-LAWS OF INTERACTIVE MEDIA GROUP (USA) LTD. ARTICLE I OFFICES Section 1. Principal Office. The offices of the Corporation shall be located in the County of the State of Delaware stockholders designated in the Certificate of Incorporation. The Corporation may also maintain offices at such. other places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II STOCKHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of Delaware, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any time and any place, either within or without the State of Delaware, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. Section 2. Annual Meeting. Annual meetings of stockholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at which the stockholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the stockholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by law or by the Certificate of Incorporation, may be called by the President, the Board of Directors or the holders of not less than a majority of all of the stock entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. BL 1 Section 4. Notice. Written or printed notice of all meetings of stockholders stating the place, day and hour thereof, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than sixty (60) days prior to the date of the meeting to the stockholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is an annual meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. Section 5. Closing of Transfer Books and Fixing of Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of. stockholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of stockholders is to be taken, and the determination of stockholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of stock on the books of the Corporation after such record date. Section 6. List of Stockholders. The officer who as charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of the 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 a least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not 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. BL 2 Section 7. Quorum. The holders of a majority of the stock entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except, as otherwise provided by law, by the Certificate of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote at such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. If the adjournment is for more than thirty (30) days, or if after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of the record entitled to vote at the meeting. Section 8. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the stockholders. In his absence, the President or a Vice President shall preside. In the absence of all of these officers, any stockholder or the duly appointed proxy of any stockholder may call the meeting to order and a chairman shall be elected from among the stockholders present. The Secretary of the Corporation shall act as secretary at all meetings of stockholders. In hiss or her absence an Assistant Secretary shall so act and in the absence of all of these officers the presiding officer may appoint any person to act as secretary of the meeting. Section 9. Proxies. At any meeting of the stockholders, every stockholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by such stockholder or by his duly authorized attorney-in-fact. No proxy shall be valid after three (3) years from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 10. Voting. Except as otherwise provided by law, the Certificate of incorporation or these By-laws, each stockholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the stock entitled to vote, present in person or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Certificate of Incorporation or of these BL 3 By-laws the vote of a greater number required, in which case the vote of such greater number shall govern and control the decision of such matter. Section 11. Voting of Stock by Certain Holders. Stock standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Stock held by an administrator, executor, guardian or conservator may be voted by him so long as such stock forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such stock into his name. Stock standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote stock held by him without a transfer of such stock into his name as trustee. Stock standing in the name of a receiver may be voted by such receiver, and stock held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A stockholder whose stock is pledged shall be entitled to vote such stock until the stock have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the stock so transferred. Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time. Section 11. Action. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Certificate of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 12. Election of Directors. At each election for Directors, each stockholder entitled to vote at such election shall, unless otherwise provided by the Certificate of Incorporation or by applicable law, have the right to vote the number of shares owned by BL 4 him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Certificate of Incorporation, no stockholder shall have the right or be permitted to cumulate his votes on any basis. Section 12. Telephone Meetings. Stockholders may participate in and hold a meeting of the stockholders by means of conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 13. Action Without Meeting. Any action required by any provision of law or of the Certificate of Incorporation or these By-laws to be taken at a meeting of the stockholders or any action which may be taken at a meeting of the stockholders may be taken without a meeting without prior written notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the stockholders entitled to vote with respect to the subject matter thereof holding the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than one (1) nor more than five (5) members who shall be elected by stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the stockholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the stockholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. BL 5 Section 3. Resignation. Any Director may resign at any time by giving written notice to the President or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the stockholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all stock outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the stockholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors though less than a quorum of the Board of Directors or by a sole remaining Director, and the Directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no Directors in office, then an election of Directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created Directorship, the Directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon Application of any stockholder or stockholders holding at least ten (10%) percent of the total number of the shares at the time outstanding having the right to vote for such Directors, summarily order an election to be held to fill any such vacancies or newly created Directorships, or to replace the Directors chosen by the Directors then in office. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of Delaware. Section 8. Annual Meeting. The first Meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the stockholders and no notice of such meeting BL 6 shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the President on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the President or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings of the Board the presence of a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Certificate of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the BL 7 Directors of the Corporation; The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence of disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, (except, that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of Directors as provided in Section 151(a) of the General Corporation Law fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversation into, or the exchange of any such shares for, shares of any other class or classes or any other series of thee same or any other class or classes of stock of the Corporation), adopting an agreement of merger or consolidation, recommending to the Stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the Stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation; and, unless the resolution or the Certificate of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name and names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. Section 14. Compensation. Directors, may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving Compensation therefor. BL 8 Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground` that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section l. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a President, a Vice President, a Secretary and a Treasurer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or BL 9 more Assistant Treasurers, all of whom shall also be officers. Two or more offices may be held by the same person, except the offices of President and Secretary. Section 2. Election, Term of office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of stockholders. The Board shall elect a President, Vice President, Treasurer, and Secretary, and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate of officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer may be removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy may be filled by the superior officer, upon whom such power may be conferred by the Board of Directors. Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the stockholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. President. The President shall be the chief executive officer of the corporation, shall (in absence of the Chairman of the Board) preside at meetings of the stockholders and Directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of BL 10 the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. Section 9. Vice President. In the absence of or inability of the President to act, the Vice President shall perform the duties and exercise the powers of the President and shall perform such other functions as the Board of Directors. may from time to time prescribe. Section 10. The Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He may sign, with any other proper officer, certificates for stock of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 12. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or stockholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of stockholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may BL 11 require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Board of Directors from time to time. Section 13. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasurer perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 14. Bonding. If required by the Board of Directors, all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of stockholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE VI CERTIFICATES REPRESENTING STOCK Section 1. Form of Certificates. The certificates representing stock of the Corporation shall be in such form, not inconsistent with statutory provisions and the Certificate of Incorporation, as shall be approved by the Board of Directors. The certificates shall be signed by the President of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a BL 12 certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the stock represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Stock. The Corporation shall be entitled to treat the holder of record of any share or as the owner of such stock with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion, and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of the uncertified shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors, may, from time to time, declare, and the Corporation may pay, dividends on its outstanding stock in the manner and upon the terms and conditions provided by the Certificate of Incorporation, the By-laws and the applicable laws of the State of Delaware. BL 13 Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. Section 3. Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th day of September of each year. Section 5. Reports of Situation and Amount of Business. The Board of Directors as and when requested by the holders of at least one-tenth (1/10) of the outstanding voting stock of the Corporation, present written reports of the situation and amount of business of the Corporation and shall present a full and clear statement of the business and condition of the Corporation at every annual meeting. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of stockholders of the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of Delaware, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any BL 14 action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of stockholders, or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the stockholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the. stockholders or by the Board of Directors, at any regular meeting of the stockholders or of the Board of Directors or at any.special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated: December 20, 1991 BL 15 EX-3.23 24 ex3-23_043004.txt CERTIFICATE OF INCORP. INTERATIVE MEDIA CONS. STATE OF DELAWARE CERTIFICATE OF INCORPORATION OF INTERACTIVE MEDIA CONSOLIDATED, INC. I, the undersigned, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the General Corporation Law of the State of Delaware, do hereby certify as follows: FIRST: The name of the corporation is INTERACTIVE MEDIA CONSOLIDATED, INC. (the "Corporation"). SECOND: The registered office of the Corporation in the State of Delaware is to be located at 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of its registered agent at such address is Corporation Service Company. THIRD: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The total number of shares which the Corporation is authorized to issue is 1500 shares, No Par Value, itemized as follows: SERIES NUMBER OF CLASS (IF ANY) SHARES PAR VALUE/SHARE Common 1500 No Par Value FIFTH: The name and mailing address of the incorporator is as follows: Candace Lynn Bell, Esq. c/o Kavinoky & Cook, LLP 120 Delaware Avenue Buffalo, New York 14202 SIXTH: The personal liability of a director of the Corporation to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director is eliminated to the fullest extent allowed under the laws of the State of Delaware in effect as of the date of this Certificate. This provision shall not eliminate the personal liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. IN WITNESS WHEREOF, I have hereunto signed this Certificate of Incorporation this 3rd day of July, 1998. /s/ Candace Lynn Bell ------------------------------------- Candace Lynn Bell, Esq., Incorporator EX-3.24 25 ex3-24_043004.txt BYLAWS OF INTERACTIVE MEDIA CONSOLIDATED SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE MEDIA CONSOLIDATED, INC. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of one (1) member who shall be elected by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased from time to time by resolution adopted by a majority of the Board of Directors or the stockholders. ARTICLE V OFFICERS Section 1. Officers in General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at the Board of Directors annual meeting after each annual meeting of shareholders. The Board of Directors shall elect a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer and any other officer, assistant officers, and agents as it deems necessary, none of whom need be a member of the Board of Directors nor a shareholder of the Corporation. Each officer so elected shall hold office until his or her successor has been duly chosen and has qualified or until his or her death or his or her resignation or removal in the manner hereinafter provided. Section 8. President. DELETED Section 17. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board and the Vice Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general responsibility for all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 18. Chief Technology Officer. DELETED Section 19. Chief People Officer. DELETED Section 20. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 22. Vice Chairman of the Board. The Vice Chairman of the Board is authorized to preside at meetings of the shareholders and the Board of Directors in the absence of the Chairman of the Board. Dated: February 28, 2000 Schedule A February 28, 2000 Amendments BL 2 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA CONSOLIDATED, INC. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than ten (10) nor more than fifteen (15) members who shall be elected by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased from time to time by resolution adopted by a majority of the Board of Directors or the stockholders. Dated: October 20, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA CONSOLIDATED, INC. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of nine (9) members who shall be elected by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased from time to time by resolution adopted by a majority of the Board of Directors or the stockholders. Dated: July 29, 1999 BY-LAWS OF INTERACTIVE MEDIA CONSOLIDATED, INC. ARTICLE I OFFICES Section 1. Principal Office. The Corporation may maintain offices at such places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II STOCKHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of Delaware as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any time and any place, either within or without the State of Delaware, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. Section 2. Annual Meeting. Annual meetings of stockholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at which the stockholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the stockholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof Section 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by law or by the Certificate of Incorporation, may be called by the President, the Board of Directors or the holders of not less than a majority of all of the stock entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. Section 4. Notice. Written or printed notice of all meetings of stockholders stating the place, day and hour thereof, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than sixty (60) days prior to the date of the meeting to the stockholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is an annual meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. Section 5. Closing of Transfer Books and Fixing of Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of stockholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of stockholders is to be taken, and the determination of stockholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of stock on the books of the Corporation after such record date. Section 6. List of Stockholders. The officer who as charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of the 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 a least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. Section 7. Quorum. The holders of a majority of the stock entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote at such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. If the adjournment is for more than thirty (30) days, or if after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of the record entitled to vote at the meeting. BL 2 Section 8. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the stockholders. In his absence, the Chief Executive Officer or the President shall preside. In the absence of all of these officers, any stockholder or the duly appointed proxy of any stockholder may call the meeting to order and a chairman shall be elected from among the stockholders present. The Secretary of the Corporation shall act as secretary at all meetings of stockholders. In his or her absence an Assistant Secretary shall so act and in the absence of all of these officers the presiding officer may appoint any person to act as secretary of the meeting. Section 9. Proxies. At any meeting of the stockholders, every stockholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by such stockholder or by his duly authorized attorney-in-fact. No proxy shall be valid after three (3) years from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 10. Voting. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, each stockholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the stock entitled to vote, present in person or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Certificate of Incorporation or of these By-laws the vote of a greater number is required, in which case the vote of such greater number shall govern and control the decision of such matter. Section 11. Voting of Stock by Certain Holders. Stock standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Stock held by an administrator, executor, guardian or conservator may be voted by him so long as such stock forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such stock into his name. Stock standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote stock held by him without a transfer of such stock into his name as trustee. Stock standing in the name of a receiver may be voted by such receiver, and stock held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A stockholder whose stock is pledged shall be entitled to vote such stock until the stock have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the stock so transferred. BL 3 Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time. Section 12. Action. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Certificate of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 13. Election of Directors. At each election for Directors, each stockholder entitled to vote at such election shall, unless otherwise provided by the Certificate of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Certificate of Incorporation, no stockholder shall have the right or be permitted to cumulate his votes on any basis. Section 14. Action Without Meeting. Any action required by any provision of law or of the Certificate of Incorporation or these By-laws to be taken at a meeting of the stockholders or any action which may be taken at a meeting of the stockholders may be taken without a meeting without prior written notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the stockholders entitled to vote with respect to the subject matter thereof holding the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than one (1) nor more than eight (8) members who shall be elected by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the stockholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the BL 4 stockholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. Section 3. Resignation. Any Director may resign at any time by giving written notice to the President or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the stockholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all stock outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the stockholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors, though less than a quorum of the Board of Directors or by a sole remaining Director, and the Directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no Directors in office, then an election of Directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created Directorship, the Directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10%) percent of the total number of the shares at the time outstanding having the right to vote for such Directors, summarily order an election to be held to fill any such vacancies or newly created Directorships, or to replace the Directors chosen by the Directors then in office. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of Delaware. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the stockholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. BL 5 Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the President on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the President or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings of the Board the presence of a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Certificate of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the Directors of the Corporation. The board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence of disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be BL 6 affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, (except, that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of Directors as provided in Section 151(a) of the General Corporation Law fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversation into, or the exchange of any such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation), adopting an agreement of merger or consolidation, recommending to the Stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the Stockholders a dissolution of the Corporation or a revocation of a dissolution or amending the By-laws of the Corporation; and, unless the resolution or the Certificate of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name and names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by BL 7 mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. ARTICLE V OFFICERS Section 1. Officers in General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at the Board of Directors annual meeting after each annual meeting of shareholders. The Board of Directors shall elect a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer and any other officer, assistant officers, and agents as it deems necessary, none of whom need be a member of the Board of Directors nor a shareholder of the Corporation. Each officer so elected shall hold office until his or her successor has been duly chosen and has qualified or until his or her death or his or her resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. BL 8 Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer may be removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the stockholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 9. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the stockholders and Directors; and shall have general and active management of the business of the Corporation; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 10. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. BL 9 Section 11. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 12. Vice President. In the absence of or inability of the President to act, the Vice President shall perform the duties and exercise the powers of the President and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 13. Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings, in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors as required by law or these By-Laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He may sign, with any other proper officer, certificates for stock of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring, it and, when so affixed, it shall be attested by his signature. Section 14. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 15. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 16. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or stockholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of stockholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Board of Directors from time to time. BL 10 Section 17. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasurer perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 18. Bonding. If required by the Board of Directors all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 19. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 20. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of stockholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE VI CERTIFICATES REPRESENTING STOCK Section 1. Form of Certificates. The certificates representing stock of the Corporation shall be in such form, not inconsistent with statutory provisions and the Certificate of Incorporation, as shall be approved by the Board of Directors. The certificates shall be signed by the President of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the stock represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Stock. The Corporation shall be entitled to treat the holder of record of any share or as the owner of such stock with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. BL 11 Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of the uncertified shares such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding stock in the manner and upon the terms and conditions provided by the Certificate of Incorporation, the By-Laws and the applicable laws of the State of Delaware. Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. Section 3. Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal, year of the Corporation shall commence on the 1st day of October and terminate on the 30th day of September of each year. BL 12 Section 5. Reports of Situation and Amount of Business. The Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the outstanding voting stock of the Corporation, present written reports of the situation and amount of business of the Corporation and shall present a full and clear statement of the business and condition of the Corporation at every annual meeting. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of stockholders of the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of Delaware, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of stockholders, or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the stockholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-Laws of the Corporation. BL 13 ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors, at any regular meeting of the stockholders or of the Board of Directors or, at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated: July 7, 1998 BL 14 EX-3.25 26 ex3-25_043004.txt ARTICLES OF INCORPORATION INTERACTIVE (TX) STATE OF TEXAS ARTICLES OF INCORPORATION OF INTERACTIVE (TX) VOICE MEDIA CORP. I, the undersigned, being a natural person of more than eighteen (18) years of age and in order to form a corporation for the purpose hereinafter stated, under and pursuant to the provisions of the Business Corporation Act of the State of Texas, do hereby certify as follows: FIRST: The name of the corporation is INTERACTIVE (TX) VOICE MEDIA, CORP. (the "Corporation"). SECOND: The period of the corporation is perpetual. THIRD: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the Business Corporation Act of the State of Texas. FOURTH: The total number of shares which the Corporation is authorized to issue is 1000 shares, No Par Value, itemized as follows: SERIES NUMBER OF CLASS (IF ANY) SHARES PAR VALUE/SHARE Common 1000 No Par Value FIFTH: The Corporation will not commence business until it has received for the issuance of its shares consideration of the value of at least one thousand dollars ($1000.00), consisting of money, labor done or property actually received. SIXTH: Shareholders of the Corporation shall have no preemptive right to acquire additional, unissued, or treasury shares of the Corporation. SEVENTH: The street address of the initial registered office of the Corporation in the State of Texas is 400 North St. Paul, Dallas, Texas, 75201. The name of its initial registered agent at such address is The Prentice-Hall Corporation System, Inc. EIGHTH: The number of directors constituting the initial Board of Directors of the Corporation is one (1) and the name and address of the person who is to serve as the director until the first annual meeting of the shareholders, or until his successor is duly elected and qualified, are: David Chamandy 181 Carlaw Avenue, Suite 310 Toronto, Ontario, Canada M4M 2S1 NINTH: The name and mailing address of the incorporator is as follows: Candace Lynn Bell c/o Kavinoky & Cook 120 Delaware Avenue Buffalo, New York 14202 IN WITNESS WHEREOF, I have hereunto signed these Articles of Incorporation this 26th day of April, 1995 under penalties of perjury. /s/ Candace Lynn Bell ------------------------------- Candace Lynn Bell, Incorporator EX-3.26 27 ex3-26_043004.txt BYLAWS OF INTERACTIVE (TX) VOICE MEDIA SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE (TX) VOICE MEDIA CORP. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. President. deleted Section 17. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board and the Vice Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general responsibility for all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 18. Chief Technology Officer. deleted Section 19. Chief People Officer. deleted Section 20. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 21. Vice Chairman of the Board. The Vice Chairman of the Board is authorized to preside at meetings of the shareholders and the Board of Directors in the absence of the Chairman of the Board. Dated: February 28, 2000 Schedule A February 28, 2000 Amendments BL 2 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE (TX) VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, consisting of not less than one (1) nor more than fifteen (15) members who shall be elected by the shareholders. Directors need not be residents of the State of Texas or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Dated: October 20, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE (TX) VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, consisting of not less than one (1) nor more than nine (9) members who shall be elected by the shareholders. Directors need not be residents of the State of Texas or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Dated: July 29, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE (TX) VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The powers of the Corporation shall be exercised by or under the authority of and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, consisting of not less than one (1) nor more than eight (8) members who shall be elected by the shareholders. Directors need not be residents of the State of Texas or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the shareholders and Directors; and shall have general and active management of the business of the Corporation; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 17. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 18. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 19. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties Schedule A March 26, 1998 Amendments BL 2 as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 20. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Dated: March 26, 1998 Schedule A March 26, 1998 Amendments BL 3 BY-LAWS OF INTERACTIVE (TX) VOICE MEDIA CORP. ARTICLE I OFFICES Section 1. Principal Office. The Corporation may maintain offices at such places within or without the State of Texas or the United States as the Board of Directors may, from time to time, determine. ARTICLE II SHAREHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of Texas, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate anytime and any place, either within or without the State of Texas, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. Section 2. Annual Meeting. Annual meetings of shareholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at which the shareholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the shareholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by law or by the Articles of Incorporation, may be called by President, the Board of Directors or the holders of not less than fifty (50) percent of all of the shares entitled to vote at the proposed special meeting. Business transacted at all special meetings shall be confined to the purpose or purposes described in the notice. Section 4. Notice. Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or -2- purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the president, the secretary, or the officer or person calling the meeting, to each shareholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at the address that appears on the share transfer records of the Corporation, with postage thereon prepaid. Any notice required to be given to any shareholder, under any provision of law or these bylaws, need not be given to a shareholder if (1) notice of two consecutive annual meetings and all notices of meetings held during the period between those annual meetings, if any, or (2) all (but in no event less than two) payments (if sent by first class mail) of distributions or interest on securities during a twelve month period have been mailed to that person, addressed at his address as shown on the share transfer records of the Corporation have been returned undeliverable. Any action or meeting taken or held without notice to such a person shall have the same force and effect as if the notice had been duly given and, if the action taken by the Corporation is reflected in any articles or document filed with the Secretary of State, those articles or that document may state that notice was duly given to all persons to whom notice was required to be given. If such a person delivers to the Corporation a written notice setting forth his then current address, the requirement that notice be given to that person shall be reinstated. Section 5. Closing of Transfer Books and Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive a distribution by a Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, or in order to make a determination of shareholders for any other proper purpose (other than determining shareholders entitled to consent to action by shareholders proposed to be taken without a meeting of shareholders), the Board of Directors may provide that the share transfer records shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the share transfer records shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such records shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the share transfer records, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken, and the determination of shareholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of shares in the records of the Corporation after such record date. -3- Section 6. Voting List. The officer having charge of the share transfer records for shares of the Corporation shall make, at least ten (10) days before each meeting of the shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, and showing the address of and the number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the registered office or principal place of business of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection. of any shareholder during the whole time of the meeting. The original share transfer records shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer records or to vote at any meeting of shareholders. Section 7. Quorum. With respect to any matter, a quorum shall be present at a meeting of shareholders if the holders of a majority of the shares entitled to vote on that matter are represented at the meeting in person or by proxy, unless otherwise provided in the Articles of Incorporation. Once a quorum is present at a meeting of shareholders, the shareholders represented in person or by proxy at the meeting may conduct such business as may be property brought before the meeting until it is adjourned, and the subsequent withdrawal from the meeting of any shareholder or the refusal of any shareholder represented in person or by proxy to vote shall not affect the presence of a quorum at the meeting. The shareholders represented in person or by proxy at a meeting of shareholders at which a quorum is not present may adjourn the meeting until such time and to such place as may be determined by a vote of the holders of a majority of the shares represented in person or by proxy at that meeting. Section 8. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders. In his absence, the Chief Executive Officer or a Vice President shall preside. In the absence of all of these officers, any shareholder or the duly appointed proxy of any shareholder may call the meeting to order and a chairman shall be elected from among the shareholders present. The Secretary of the Corporation shall act as secretary at all meetings of shareholders. In his or her absence an Assistant Secretary shall so act and in the absence of all of these officers the presiding officer may appoint any person to act as secretary of the meeting. Section 9. Proxies. At any meeting of the shareholders, any shareholder may vote either in person or by proxy executed in writing by the shareholder. No proxy shall be valid after eleven (11) months from the date of its execution unless otherwise provided in the proxy. A proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest. -4- Section 10. Voting. Each outstanding share shall be entitled to one (1) vote on each matter submitted to a vote at a meeting of shareholders, except as otherwise provided in the Articles of Incorporation or by law. Section 11. Voting of Shares by Certain Holders, Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine; provided, however, that when any foreign corporation without a permit to do business in Texas lawfully owns or may lawfully own or acquire shares in the Corporation, such foreign corporation may vote said shares and participate in the management and control of the business and affairs of the Corporation, as other shareholders, subject to all laws, rules and regulations governing the Corporation. Shares held by an administrator, executor, guardian, or conservator may be voted by him so long as such shares forming a part of an estate are in the possession and forming a part of the estate being served by him, either in person or, by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name as trustee. Shares standing inn the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such a receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Treasury shares, shares of its own stock owned by another corporation the majority of the voting shares of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary. capacity shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares at any given time. Section 11. Action. When a quorum is present at any meeting, the act of the shareholders shall be the affirmative vote of the holders of a majority of the shares entitled to vote on that matter unless otherwise provided in the Articles of Incorporation or these Bylaws. -5- Section 12. Election of Directors. At each election for Directors every shareholder entitled to vote at such election shall, unless otherwise provided by the Articles of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote. Unless otherwise provided by the Articles of Incorporation, no shareholder shall have the right or be permitted to cumulate his votes on any basis. A director shall be elected only if the director receives a majority of the votes cast by the holders of shares entitled to in the election of directors at a meeting of shareholders at which a quorum is present. Section 13: Action Without Meeting. Any action required by any provision of law or of the Articles of Incorporation or these By-laws to be taken at any annual or special meeting of shareholders or, any action which may be taken at any annual or special meeting of shareholders, 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 have been signed by the holder or holders of shares entitled to vote with respect to the action that is the subject of the consent having not less than the minimum number of votes that would be necessary to take such action at a meeting at which all shares entitled to vote thereon were present and voted. Every written consent signed by the holders of less than all the shares entitled to vote with respect to the action that is the subject of the consent shall bear the date of signature of each shareholder who signs the consent. No written consent signed by the holders of less than all the shares entitled to vote with respect to the action that is the subject of the consent shall be effective to take the action that is the subject of the consent unless, within 60 days after the date of the earliest dated consent delivered to the Corporation in the manner required by law, a consent or consents signed by the holder or holders of shares having not less than the minimum number of votes that would be necessary to take the action that is the subject of the consent are delivered to the Corporation by delivery to its registered office, registered agent, principal place of business, transfer agent, registrar, exchange agent or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of shareholders are recorded. Delivery shall be by hand or certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who have not consented in writing. -6- ARTICLE III DIRECTORS Section 1. Number of Directors. The powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, consisting of not less than one (1) nor more than five (5) members who shall be elected by the shareholders. Directors need not be residents of the State of Texas or shareholders of the Corporation. The number of Directors may be increased or decreased from time to time by resolution adopted by a majority of the Board of Directors. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the shareholders (except as provided in Section 5 of this Article). Directors shall be elected by a plurality of the votes cast by the holders of shares entitled to vote in the election of directors at a meeting of shareholders at which a quorum is present. Each Director elected shall hold office until his successor shall be elected and qualified at a subsequent annual meeting of the shareholders or until his death, his resignation or his removal in the manner hereinafter provided. Section 3. Resignation. Any Director may resign at any time by giving written notice to the President or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the shareholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all shares outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the shareholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of a majority of the remaining Directors though less than a quorum of the Board of Directors or by a sole remaining Director, and the Directors elected to fill vacancies shall be elected for the unexpired term of his or their predecessor in office. If there are no Directors in office, then an election of Directors may be held in the manner provided by statute. -7- Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Articles of Incorporation or by these By-laws directed or required to be exercised or done by the shareholders. Section 7. Place of Meetings. Meetings of the Board of Directors, regular or special, may be held either within or without the State of Texas. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the shareholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the President on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the Chief Executive Officer or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings of the Board of Directors, a majority of the number of Directors fixed by, or in the manner provided in, the Articles of Incorporation or these Bylaws shall constitute a quorum for the transaction of business unless a different number or portion is required by law or the Articles of Incorporation or these Bylaws, and the act 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 a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. -8- Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution adopted by a majority of the full Board of Directors, designate from among its members one or more committees, each of which shall be comprised of one or more of the Directors of the Corporation. The board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all of the authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Articles of Incorporation; proposing a reduction of stated capital of the Corporation; approving a plan of merger or share exchange of the Corporation; recommending to the shareholders the sale, lease or exchange of all or substantially all of the property and assets of the Corporation; recommending to the shareholders a voluntary dissolution of the Corporation or a revocation thereof; amending, altering or repealing the Bylaws of the Corporation or adopting new Bylaws of the Corporation; filling vacancies in the Board of Directors; filling vacancies in or designating alternate members of any committee; filling any directorship to be filled by reason of an increase in the number of directors; electing or removing officers of the Corporation or members or alternate members of any committee; fixing the compensation of any members or alternate members of such committee; altering or repealing any resolution of the board of directors that by its terms provides that it shall not be so amendable or repealable; and, unless the resolution or the Articles of Incorporation expressly so provides, no such committee shall have authority of authorize a distribution or to authorize the issuance of shares of the Corporation. Such committee or committees shall have such name and names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be -9- allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. -10- ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a President, a Vice President, a Secretary and a Treasurer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries. and one or more Assistant Treasurers, all of whom shall also be officers. Two or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders. The Board shall elect a President, Vice President, Secretary, Treasurer and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer may be removed by the Board whenever in its judgment the best interests of the Corporation will be served thereby. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy may be filled by the superior officer upon whom such power has been conferred by the Board of Directors. -11- Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. President. The President shall be the chief executive officer of the Corporation; shall (in absence of the Chairman of the Board) preside at meetings of the shareholders and Directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where requited by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. Sections 9. Vice President. An the absence of or inability of the President to act, the Vice President shall perform the duties and exercise the powers of the Chief Executive Officer and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 10. Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the share transfer records of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He may sign, with any other proper officer, certificates for shares of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 12. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may -12- designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Board of Directors from time to time. Section 13. Assistant Treasurers. Any Assistant Treasurer, in the absence or disability of the Treasurer, shall perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the President Section 14. Bonding. If required by the Board of Directors all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of subordinate officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of shareholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. -13- ARTICLE VI CERTIFICATES REPRESENTING SHARES Section 1. Form of Certificates. The certificates representing shares of the Corporation shall be in such form, not inconsistent with statutory provisions and the Articles of Incorporation, as shall be approved by the Board. of Directors. The certificates shall be signed by the President of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's share transfer records. Section 2. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares as the owner of such share or shares with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except ass otherwise provided by the laws of the State of Texas. Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Transfer of Shares. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction in the share transfer records. Upon receipt of proper transfer instructions from the registered owner of the uncertified shares such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation. -14- ARTICLE VII GENERAL PROVISIONS Section 1. Distributions. The Board of Directors may authorize and the Corporation may make distributions subject to any restrictions in its Articles of Incorporation and the applicable laws of the State of Texas. Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. Section 3. Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. The fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th day of September of each year. Section 5. Reports of Situation and Amount of Business. The Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the outstanding voting shares of the Corporation, present written reports of the situation and amount of business of the Corporation and shall present a full and clear statement of the business and condition of the Corporation at every annual meeting. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by the President of the Corporation. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least five percent (5%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent, accountant or attorney, at any reasonable time or times, for any proper purpose, its relevant books and records of account, minutes, and share transfer records, and to make extracts therefrom. -15- Section 8. Indemnification of Directors. Subject to the applicable laws of the State of Texas and the limitations contained in these Bylaws, the Corporation shall indemnify any person who was, is, or is threatened to be made a named defendant in any proceeding because the person is or was a director or former director of the Corporation, or any person who may have served at its request as a director of another corporation in which it owns stock, or of which it is a creditor, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by him. Indemnification will be made only where it is determined that the person conducted himself in good faith and in the case his conduct in his official capacity as a director, the person reasonably believed that his conduct was in the Corporation's best interests, and, in all other cases, reasonably believed that his conduct was not opposed to the Corporation's best interests, and, had no reasonable cause to believe that his conduct was unlawful. If a person is found liable to the Corporation or is found liable on the basis that personal benefit was improperly received by the person, indemnification is limited to reasonable expenses actually incurred by the person in connection with the proceeding and shall not be made in respect of any proceeding in which the person shall have been found liable for willful or intentional misconduct in the performance of his duty to the Corporation. Indemnification shall be not be made with respect to a proceeding in which a person is found liable on the basis that personal benefit was improperly received by him or in which he is found liable to the Corporation. Such a determination of indemnification is to be made by a majority vote of a quorum consisting of directors who at the time of the vote are not named defendants or respondents in the proceeding; or, if such a quorum cannot be obtained, by a majority vote of a committee of the board consisting of two or more directors who, at the time of the vote, are not named defendants or respondents in the proceeding, designated to act in the matter by a majority vote of all directors; or by special legal counsel selected by the Board or a committee of the board by majority vote of a quorum consisting of directors who at the time of the vote are not named defendants or respondents in the proceeding or by majority vote of a committee of the board consisting solely of two or more directors who at the time of the vote are not named defendants or respondents in the proceeding or by a majority vote of all directors; or by the shareholders in a vote that excludes the shares held by directors who are named defendants or respondents in the proceeding. -16- ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the shareholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the shareholders or by the Board of Directors, at any regular meeting of the shareholders or of the Board of Directors or at any special meeting of the shareholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new ByLaws be contained in the notice of such special meeting. Dated: May 5, 1995 EX-3.27 28 ex3-27_043004.txt ARTICLES OF INCORPORATION INTERACTIVE L.A. ARTICLES OF INCORPORATION OF INTERACTIVE L.A. VOICE MEDIA CORP. The undersigned, being a natural person of full age and acting as the incorporator for the purpose of forming the business corporation hereinafter named pursuant to the provisions of the California General Corporation Law, does hereby adopt the following Articles of Incorporation. FIRST: The name of the corporation is INTERACTIVE L.A. VOICE MEDIA CORP. SECOND: The existence of this corporation is perpetual. THIRD: The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California, other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California General Corporation Law. FOURTH: The name of this corporation's initial agent for service of process within the State of California in accordance with the provisions of subdivision (b) of Section 1502 of the California General Corporation Law is as follows: The Prentice-Hall Corporation Systems, Inc. FIFTH: The total number of shares which the corporation is authorized to issue is 3,000 shares no par value, all of which are one class and are common shares. The Board of Directors of this corporation may issue any and all of the aforesaid authorized shares of the corporation from time to time for such consideration as it shall determine and may determine from time to time the amount of such consideration, if any, to be credited to paid-in surplus. SIXTH: In the interim between meetings of shareholders held for the election of directors or for the removal of one or more directors and the election of the replacement or replacements thereat, any vacancy which results by reason of the removal of a director or directors by the shareholders entitled to vote in an election of directors, and which has not been filled by such shareholders, may be filed by a majority of the directors then in office, whether or not less than a quorum, or by the sole remaining director, as the case may be. SEVENTH: The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. EIGHTH: This corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California General Corporation Law) for breach of duty to the corporation and its stockholders through bylaw provisions or through agreements with the agents, or both, in excess of the indemnification otherwise permitted by Section 317 of the California General Corporation Law, subject to the limits on such excess indemnification set forth in Section 204 of the California General Corporation Law. NINTH: Pursuant to the provisions of Section 406 of the California General Corporation Law, each share of the corporation shall entitle the holder thereof, for a period of thirty days, to subscribe for or purchase authorized shares of the same class. Signed on May 11, 1994 /s/ Candace Lynn Bell --------------------------------- Candace Lynn Bell, Incorporator EX-3.28 29 ex3-28_043004.txt BYLAWS OF INTERACTIVE L.A. SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE L.A. VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of at least one (1) member who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board or the Vice Chairman of the Board of Directors) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general management of all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall be have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors and the Chief Executive Officer for all financial control and internal audit of the corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. SCHEDULE A February 28, 2000 Amendments BL 2 Section 18. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasure perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 19. President. DELETED Section 20. Chief Technology Officer. DELETED Section 21. Chief People Officer. DELETED Section 22. Vice Chairman of the Board. The Vice Chairman of the Board shall preside at all meetings of the shareholders and directors in the absence of the Chairman of the Board. In addition, the Vice Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Dated: February 28, 2000 SCHEDULE A February 28, 2000 Amendments BL 3 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE L.A. VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than ten (10) nor more than fifteen (15) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Dated: October 20, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE L.A. VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of nine (9) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Dated: July 29, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE L.A. VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of eight (8) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents, as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Operating Officer or Board of Directors from time to time. Schedule A March 26, 1998 Amendments BL 2 Section 18. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasure perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Operating Officer. Section 19. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the shareholders and Directors; and shall have general and active management of the business of the Corporation; and shall be responsible to the Chief Executive Officer. He may sign with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 20. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 21. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Dated: March 26, 1998 Schedule A March 26, 1998 Amendments BL 3 MINUTES and BY-LAWS of INTERACTIVE L.A. VOICE MEDIA CORP. INCORPORATED UNDER THE LAWS OF CALIFORNIA BY-LAWS OF INTERACTIVE L.A. VOICE MEDIA CORP. ARTICLE I OFFICES Section 1. Principal Office. The offices of the Corporation shall be located in County of Los Angeles in the State of California. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II SHAREHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of California, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any time and any place, either within or without the State of California, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. If there is a failure to hold the annual meeting for a period of (60) days after the date designated therefor or, if no date has been designated, for a period of fifteen (15) months after the organization of the corporation or after its last annual meeting, the superior court of the proper county may summarily order a meeting to be held upon the application of any shareholder after notice to the corporation giving it an opportunity to be heard. The shares represented at such meeting, either in person or by proxy, and entitled to vote thereat shall constitute a quorum for the purpose of such meeting, notwithstanding any provision of the Articles or By-Laws or ss.600 of the California General Corporation Law to the contrary. The court may issue such orders as may be appropriate, including, without limitation, orders designating the time and place of such meeting, the record date for determination of shareholders entitled to vote and the form of notice of such meeting. Section 2. Annual Meeting. Annual meetings of shareholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at which the shareholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the shareholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by law or by the Articles of Incorporation, may be called by the Chairman of the Board, the Board of Directors, the Chief Executive Officer or the holders of not less than ten percent (10%) of all of the shares entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. Section 4. Notice. Written or printed notice of all meetings of shareholders stating the place, day and hour thereof, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days (or if sent by third-class mail, thirty (30) days) nor more than sixty (60) days prior to the date of the meeting to the shareholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is a special meeting in which case, notice shall be delivered not less than thirty-five (35) days nor more than sixty (60) days prior to the date of the meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. If notice is not given within twenty (20) days after receipt of the request, the persons entitled to call the meeting may give the notice or the superior court of the proper county shall summarily order the giving of the notice, after notice to the corporation giving it an opportunity to be heard. Section 5. Closing of Transfer Books and Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken, and the determination of shareholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of shares on the books of the Corporation after such record date. BL 2 Section 6. Quorum. The holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for .the transaction of business, except as otherwise provided by law, by the Articles of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. If the adjournment is for more than forty-five (45) days, however, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Section 7. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders. In his absence, the Chief Executive Officer or the Vice President shall preside. In the absence of all of these officers, any shareholder or the duly appointed proxy of any shareholder may call the meeting to order and a chairman shall be elected from among the shareholders present. The Secretary of the Corporation shall act as secretary at all meetings of shareholders. In his or her absence, an Assistant Secretary shall so act and in the absence of all of these officers, the presiding officer may appoint any person to act as secretary of the meeting. Section 8. Proxies. At any meeting of the shareholders, every shareholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by such shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 9. Voting. Except as otherwise provided by law, the Articles of incorporation or these By-laws, each shareholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Articles of Incorporation or of these By-laws the vote of a greater number is required, in which case the vote of such greater number shall govern and control the decision of such matter. BL 3 Section 10. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him so long as such shares forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name as trustee. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares. have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time. Section 11. Election of Directors. At each election for Directors, each shareholder entitled to vote at such election shall, unless otherwise provided by the Articles of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Articles of Incorporation, no shareholder shall have the right or be permitted to cumulate his votes on any basis. Section 12. Action Without Meeting. Any action required by any provision of law or of the Articles of Incorporation or these By-laws to be taken at a meeting of the shareholders or any action which may be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof, and such consent shall have the same force and effect as a unanimous vote of the shareholders. BL 4 ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of four (4) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than-three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the shareholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the shareholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. Section 3. Resiqnation. Any Director may resign at any time by giving written notice to the Chief Executive Officer or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the shareholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all shares outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the shareholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors though less than a quorum of the Board of Directors; provided, however, any Directorship to be filled by reason of an increase in the number of Directors shall be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. BL 5 Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Articles of Incorporation or by these By-laws directed or required to be exercised or done by the shareholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of California. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the shareholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the Chief Executive Officer on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the Chief Executive Officer or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings, of the Board, the presence of a majority off the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Articles of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with BL 6 the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution adopted by a majority of the entire Board, designate from among its members an executive committee and other committees, each consisting of three or more directors and each of which shall have all the authority of the Board except to the extent provided in the resolution, the Articles of Incorporation, these By-laws or the law of the State of California. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. BL 7 Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chief Executive Officer, a Vice President, a Secretary and a Chief Financial Officer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Chief Financial Officers, all of whom shall also be officers. Two or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders. The Board shall elect a Chief Executive Officer, Vice President, Chief Financial Officer, and Secretary, and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resiqnation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer may be removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy BL 8 may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. Chief Executive Officer. The Chief Executive Officer of the Corporation shall (in absence of the Chairman of the Board) preside at meetings of the shareholders and directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. Section 9. Vice President. In the absence of or inability of the Chief Executive Officer to act, the Vice President shall perform the duties and exercise the powers of the Chief Executive Officer and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 10. Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the Shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the Shareholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer, under whose supervision he shall be. He may sign, with any other proper officer, certificates for shares of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 12. Chief Financial Officer. The Chief Financial Officer shall have the care and custody of and. be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He BL 9 shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Chief Financial Officer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. Section 13. Assistant Chief Financial Officers. Any Assistant Chief Financial Officer shall, in the absence or disability of the Chief Financial Officer perform the duties and exercise the powers of the Chief Financial Officer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 14. Bonding. If required by the Board of Directors all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of shareholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE VI CERTIFICATES REPRESENTING SHARES Section 1. Form of Certificates. The certificates representing shares of the Corporation shall be in such form, not inconsistent with statutory provisions and the BL 10 Articles of Incorporation, as shall be approved by the Board of Directors. The certificates shall be signed by the Chief Executive Officer and Secretary of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares as the owner of such shares with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of California. Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by the Articles of Incorporation, the By-laws and the applicable laws of the State of California. Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. BL 11 Section 3. Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th of September each calendar year. Section 5. Reports of Situation and Amount of Business. The Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the outstanding voting shares of the Corporation, present written reports of the situation and amount of business of the Corporation. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of shareholders of the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of California, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification BL 12 and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of shareholders, or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the shareholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the shareholders or by the Board of Directors, at any regular meeting of the shareholders or of the Board of Directors or at any special meeting of the shareholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated May 18, 1994 EX-3.29 30 ex3-29_043004.txt ARTICLES OF INCORPORATION INTERACTIVE MEDIA (IL) STATE OF ILLINOIS ARTICLES OF INCORPORATION OF INTERACTIVE MEDIA (IL) CORP. (Under Section 5/2.10 of the Illinois Business Corporation Act) I, the undersigned, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the Business Corporation Act of the State of Illinois, do hereby certify as follows: FIRST: The name of the corporation is INTERACTIVE MEDIA (IL) CORP. (the "Corporation"). SECOND: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the Business Corporation Act of the State of Illinois. THIRD: The initial registered office of the Corporation in the State of Illinois is to be located at 33 North LaSalle Street, Chicago, Illinois 60602. The name of the Corporation's initial registered agent at such address is The Prentice-Hall Corporation System, Inc.. Cook County FOURTH: The name and mailing address of the incorporator is as follows: Jonathan E. Rodwin, Esq. c/o Kavinoky & Cook 120 Delaware Avenue Buffalo, New York 14202 FIFTH: The total number of shares which the Corporation is authorized to issue is one thousand (1000) shares, No Par Value, itemized as follows: SERIES NUMBER OF CLASS (IF ANY) SHARES PAR VALUE/SHARE Common 1000 No Par Value SIXTH: The total number of shares which the Corporation proposes to issue without further report to the Illinois Secretary of State is one hundred (100) shares, No Par Value, and the consideration to be received for those shares is as follows: SERIES NUMBER OF CLASS (IF ANY) SHARES TO BE CONSIDERATION ISSUED Common 100 $100.00 SEVENTH: The personal liability of a director of the Corporation to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director is eliminated to the fullest extent allowed under the laws of the State of Illinois in effect as of the date of these Articles. This provision shall not eliminate the personal liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 8.65 of the Illinois Business Corporation Act, or (iv) for any transaction from which the director derived an improper personal benefit. IN WITNESS WHEREOF, I have hereunto signed these Articles of Incorporation this 9th day of January, 1996. /s/ Jonathan E. Rodwin ------------------------------------ Jonathan E. Rodwin, Incorporator EX-3.30 31 ex3-30_043004.txt BYLAWS OF INTERACTIVE MEDIA (IL) SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA (IL) CORP. ARTICLE III DIRECTORS Section 2. Number, Election and Term of Office of Directors. The Board of Directors of the Corporation shall consist of at least one (1) and no more than fifteen (15) members. The number of Directors may be increased or decreased from time to time by amendment to the By-Laws. The Directors shall be elected at an annual or a special meeting of the shareholders. The terms of all Directors expire at the next annual shareholder's meeting following their election. The term of a Director elected to fill a vacancy expires at the next annual shareholder's meeting at which his or her predecessor's term would have expired. The term of a Director elected as a result of an increase in the number of Directors expires at the next annual shareholders' meeting. Despite the expiration of a Directors term, he or she continues to serve until the next meeting of shareholders at which Directors are elected. A decrease in the number of Directors does not shorten an incumbent Director's term. ARTICLE IV OFFICERS Section 1. Officers in General, Election, Term of Office and Qualification. The officers of the Corporation shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. The officers of the Corporation shall be elected by the Board of Directors at the Board of Directors annual meeting after each annual meeting of shareholders. The Board of Directors shall elect a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer and any other officer, assistant officers, and agents as it deems necessary, none of whom need be a member of the Board of Directors nor a shareholder of the Corporation. Each officer so elected shall hold office until his or her successor has been duly chosen and has qualified or until his or her death or his or her resignation or removal in the manner hereinafter provided. Section 5. President. deleted Section 14. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board and the Vice Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general responsibility for all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 15. Chief Technology Officer. Deleted Section 16. Chief People Officer. deleted Section 17. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 18. Chairman of the Board. The Chairman of the Board is authorized to preside at meetings of the stockholders and the board of Directors. Section 19. Vice Chairman of the Board. The Vice Chairman of the Board is authorized to preside at meetings of the stockholders and the Board of Directors in the absence of the Chairman of the Board. Dated: February 28, 2000 Schedule A February 28, 2000 Amendments BL 2 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA (IL) CORP. ARTICLE III DIRECTORS Section 2. Number, Election and Term of Office of Directors. The Board of Directors of the Corporation shall consist of at least ten (10) and no more than fifteen (15) members. The number of Directors may be increased or decreased from time to time by amendment to the By-Laws. The Directors shall be elected at the annual meeting of the shareholders. The terms of all Directors expire at the next annual shareholder's meeting following their election. The term of a Director elected to fill a vacancy expires at the next annual shareholders meeting at which his or her predecessor's term would have expired. The term of a Director elected as a result of an increase in the number of Directors expires at the next annual shareholders' meeting. Despite the expiration of a Director's term, he or she continues to, serve until the next meeting of shareholders at which Directors are elected. A decrease in the number of Directors does not shorten an incumbent Director's term. Dated: October 20, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA (IL) CORP. ARTICLE III DIRECTORS Section 2. Number, Election and Term of Office of Directors. The Board of Directors of the Corporation shall consist of nine (9) members. The number of Directors may be increased or decreased from time to time by amendment to the By-Laws. The Directors shall be elected at the annual meeting of the shareholders. The terms of all Directors expire at the next annual shareholder's meeting following their election. The term of a Director elected to fill a vacancy expires at the next annual shareholder's meeting at which his or her predecessor's term would have expired. The term of a Director elected as a result of an increase in the number of Directors expires at the next annual shareholders' meeting. Despite the expiration, of a Director's term, he or she continues to serve until the next meeting of shareholders at which Directors are elected. A decrease in the number of Directors does not shorten an incumbent Director's term. Dated: July 29, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE MEDIA (IL) CORP. ARTICLE III DIRECTORS Section 2. Number, Election and Term of Office of Directors. The Board of Directors of the Corporation shall consist of eight (8) members. The number of Directors may be increased or decreased from time to time by amendment to the By-Laws. The Directors shall be elected at the annual meeting of the shareholders. The terms of all Directors expire at the next annual shareholder's meeting following their election. The term of a Director elected to fill a vacancy expires at the next annual shareholder's meeting at which his or her predecessor's term would have expired. The term of a Director elected as a result of an increase in the number of Directors expires at the next annual shareholders' meeting. Despite the expiration of a Director's term, he or she continues to serve until the next meeting of shareholders at which Directors are elected. A decrease in the number of Directors does not shorten an incumbent Director's term. ARTICLE IV OFFICERS Section 1. Officers in General, Election, Term of Office and Qualification. The officers of the Corporation shall be a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. The officers of the Corporation shall be elected by the Board of Directors at the Board of Directors annual meeting after each annual meeting of shareholders. The Board of Directors shall elect a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer and any other officer, assistant officers, and agents as it deems necessary, none of whom need be a member of the Board of Directors nor a shareholder of the Corporation. Each officer so elected shall hold office until his or her successor has been duly chosen and has qualified or until his or her death or his or her resignation or removal in the manner hereinafter provided. Section 5. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the stockholders and Directors; and shall have general and active management of the business of the Corporation; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 14. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 15. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 16. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business Schedule A March 26, 1998 Amendments BL 2 development, business units and customer service. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 17. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned too him by the Board of Directors, the Chief Executive Officer or the President. Dated: March 26, 1998 Schedule A March 26, 1998 Amendments BL 3 BY-LAWS OF INTERACTIVE MEDIA (IL) CORP. (Pursuant to the Illinois Business Corporation Act Section 5/2.25) ARTICLE I OFFICES AND AGENT Section 1. Registered Office. The registered office of the Corporation shall be located at the address, including street and number, or rural route number, and in the County of the State of Illinois stated in the Articles of Incorporation or any amendments thereto. Section 2. Registered Agent. The registered agent of the Corporation shall be either the individual, resident of the State of Illinois, whose business office is identical with the registered office of the Corporation, or a domestic corporation or a foreign corporation authorized to transact business in the State of Illinois that is authorized by its articles of incorporation to act as such an agent, having a business office identical with the registered office of the Corporation and stated in the Articles of Incorporation of the Corporation, or any amendments thereto. The Board of Directors may, from time to time, change the registered agent and corresponding registered office of the Corporation pursuant to the relevant provisions of the Illinois Business Corporation Act, as amended, then in effect. Section 3. Business Offices. The Corporation may also maintain business offices or principal places of business of the Corporation at such other places within or without the State of Illinois as the Board of Directors may, from time to time, determine. ARTICLE II SHAREHOLDERS Section 1. Annual Meeting. Annual meetings of the shareholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at any place, either within or without the State of Illinois, as designated by the Board of Directors or stated in the notice of the meeting or the waiver of notice. If no designation of place is made, the place of the annual meeting of the shareholders shall be the principal place of business of the Corporation. The annual meeting of the shareholders may be held on a date different than that given above if the Board of Directors so determines and so states in the notice of the meeting or if a waiver of notice signed by all shareholders entitled to vote at the annual meeting designates a different time as the time for the holding of such meeting. If an annual meeting has not been held within the earlier of six (6) months after the end of the Corporation's fiscal year or fifteen (15) months after its last annual meeting and if, after a request in writing directed to the President of the Corporation, a notice of meeting is not given within sixty (60) days of such request, then any shareholder entitled to vote at an annual meeting may apply to the circuit court of the county in which the registered office or principal place of business of the Corporation is located for an order directing that the meeting be held and fixing the time and place of the meeting. The court may issue such additional orders as may be necessary or appropriate for the holding of the meeting. At the annual meeting of the shareholders, the shareholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. Section 2. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by law or by the Articles of Incorporation, may be called by the President, the Board of Directors or the holders of not less than one-fifth of all of the outstanding shares entitled to vote on the matter for which the meeting is called. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. Any time and any place, either within or without the State of Illinois, may be designated in the notice or waiver notice as the time and place of meeting for any special meeting of the shareholders. If no designation is made, the time and place of the meeting shall be the principal place of business of the Corporation at 10:00 a.m. Section 3. Notice and Waiver of Notice. Written notice stating the place, day and hour of all meetings of the shareholders and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than sixty (60) days before the date of the meeting, or in the case of a merger, consolidation, share exchange, dissolution or sale, lease or exchange of assets not less than twenty (20) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or the officer or person or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at his or her address as it appears on the records of the Corporation. Whenever any notice is required to be given to any shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-Laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. Attendance at any meeting shall constitute BL 2 waiver of notice thereof unless the person at the meeting objects to the holding of the meeting because proper notice was not given. Section 4. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, for a meeting of shareholders, not less than ten (10) days, or in the case of a merger, consolidation, share exchange, dissolution or sale, lease or exchange of assets, not less than twenty (20) days, immediately proceeding such meeting. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors of the Corporation declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof. Section 5. Voting Lists. The officer or agent having charge of the transfer book for shares of the Corporation shall make, within twenty (20) days after the record date for a meeting of shareholders or ten (10) days before such meeting, whichever is earlier, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder, and to copying at the shareholder's expense, at any time during usual business hours. Such list shall be also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share ledger or transfer book, or a duplicate thereof kept in the State of Illinois, shall be prima facie evidence as to who are the shareholders entitled to examine such list or share ledger or transfer book or to vote at any meeting of shareholders. Section 6. Quorum and Action. A majority of the outstanding shares, entitled to vote on a matter, represented in person or by proxy, shall constitute a quorum for consideration of such matter at a meeting of shareholders, but in no event shall a quorum consist of less than one-third of the outstanding shares entitled so to vote. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on a matter shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by law or the Articles of Incorporation. BL 3 Section 7. Organization. The Chairman of the Board of Directors, if one shall be elected, shall preside at all meetings of the shareholders. In his or her absence, the President of the Corporation shall preside. In his or her absence, the Vice-President of the Corporation shall preside. In the absence of all of these officers, any shareholder or the duly appointed proxy of any shareholder may call the meeting to order and a chairman shall be elected from among the shareholders present. The Secretary of the Corporation shall act as secretary at all meetings of shareholders. In his or her absence, an Assistant Secretary shall so act and in the absence of all of these officers, the presiding officer may appoint any person to act as secretary of the meeting. Section 8. Proxies. A shareholder may appoint a proxy to vote or otherwise act for him or her by signing an appointment form and delivering it to the person so appointed. Unless the appointment of a proxy contains an express limitation on the proxy's authority, the Corporation may accept the proxy's votee or other action as that of the shareholder making the appointment. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided by law. Such revocation may be effected by a writing delivered to the Corporation stating that the proxy is revoked or by a subsequent proxy executed by, or by attendance at the meeting and voting in person by, the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest in the shares or in the Corporation generally. Such an appointment made irrevocable becomes revocable when the interest in the proxy terminates. A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if the transferee was ignorant of its existence when the shares were acquired and both the existence of the appointment and its irrevocability were not noted conspicuously on the certificate (or information statement for shares without certificates) representing the shares. The death or incapacity of the shareholder appointing a proxy does not revoke the proxy's authority unless notice of the death or incapacity is received by the officer or agent who maintains the Corporation's share transfer book before the proxy exercises his or her authority under the appointment. Section 9. Voting. Except as otherwise provided by law, the Articles of Incorporation or these By-Laws, each outstanding share, regardless of class, shall be entitled to one vote in each matter submitted to a vote at a meeting of shareholders, and in all elections for directors, every shareholder shall have the right to vote the number of shares owned by such shareholder for as many persons as there are BL 4 directors to be elected. A shareholder may vote either in person or by proxy subject to the provisions of Article II, Section 8 of these By-Laws. Section 10. Voting of Shares by Certain Holders. Shares of the Corporation held by the Corporation in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares entitled to vote at any given time. Shares registered in the name of another corporation, domestic or foreign, may be voted by any officer, agent, proxy or other legal representative authorized to vote such shares under the law of incorporation of such corporation. A corporation may treat the president or other person holding the position of chief executive officer of such other corporation as authorized to vote such shares, together with any other person indicated and any other holder of an office indicated by the corporate shareholder to the corporation as a person or an office authorized to vote such shares. Such persons and offices indicated shall be registered by the Corporation on the transfer books for shares and included in any voting list prepared in accordance with Article II, Section 5 of these By-Laws. Shares registered in the name of a deceased person, a minor ward or a person under legal disability may be voted by his or her administrator, executor, or court appointed guardian, either in person or by proxy without a transfer of such shares into the name of such administrator, executor, or court appointed guardian. Shares registered in the name of a trustee may be voted by him or her, either in person or by proxy. Shares registered in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his or her name if authority so to do is contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Section 11. Informal Action By Shareholders. Unless otherwise provided in the Articles of Incorporation or any applicable statute, any action required by the Illinois Business Corporation Act to be taken at any annual or special meeting of the shareholders of the Corporation, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by either the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voting or by all shareholders entitled to vote with respect to the subject matter thereof. If such consent is signed by less than all of the shareholders entitled to vote, then such consent shall become effective only if at least five (5) days prior to the execution of the consent, a notice in writing is delivered to all the shareholders entitled to vote with respect to the subject matter thereof and, after the BL 5 effective date of the consent, prompt notice of the taking of the Corporation action without a meeting by less than unanimous written consent shall be delivered in writing to those shareholders who have not consented in writing. In the event that the action which is consented to is such as would have required the filing of a certificate under any Section of the Illinois Business Corporation Act if such action had been voted on by the shareholders at a meeting thereof, the certificate filed under such Section shall state, in lieu of any statement required by such Section concerning any vote of shareholders, that written consent has been delivered in accordance with the provisions of Section 5/7.10 of the Illinois Business Corporation Act and that written notice has been delivered as provided in such Section. ARTICLE III DIRECTORS Section 1. Board of Directors. The Corporation shall have a Board of Directors and the property, business, and affairs of the Corporation shall be managed and controlled by or under the direction of the Board of Directors. A Director need not be a resident of the State of Illinois or a shareholder of the Corporation. The Board of Directors, by affirmative vote of a majority of the Directors then in office, and irrespective of any personal interest of any of its members, shall have the authority to establish reasonable compensation of all directors for services to the Corporation as Directors, Officers or otherwise. Section 2. Number, Election and Term of Office of Directors. The Board of Directors of the Corporation shall consist of four (4) members. The number of Directors may be increased or decreased from time to time by amendment to the By-Laws. The Directors shall be elected at the annual meeting of the shareholders. The terms of all Directors expire at the next annual shareholder's meeting following their election. The term of a Director elected to fill a vacancy expires at the next annual shareholder's meeting at which his or her predecessor's term would have expired. The term of a Director elected as a result of an increase in the number of Directors expires at the next annual shareholders' meeting. Despite the expiration of a Director's term, he or she continues to serve until the next meeting of shareholders at which Directors are elected. A decrease in the number of Directors does not shorten an incumbent Director's term. Section 3. Resignation of Directors. A Director may resign at any time by giving written notice to the Board of Directors, its chairman, or to the President or Secretary of the Corporation. A resignation is effective when the notice is given unless the notice specifies a future date. The pending vacancy may be filled before the effective date, but the successor shall not take office until the effective date. BL 6 Section 4. Removal of Directors. One or more of the Directors may be removed, with or without cause, at a meeting of shareholders by the affirmative vote of the holders of a majority of the outstanding shares then entitled to vote at an election of directors, except as follows; no Director shall be removed at a meeting of shareholders unless the notice of such meeting shall state that a purpose of the meeting is to vote upon the removal of one or more Directors named in the notice and only the named Director or Directors may be removed at such meeting. Section 5. Vacancies. Any vacancy occurring in the Board of Directors and any Directorship to be filled by reason of an increase in the number of Directors may be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose; provided, however, that vacancies arising between meetings of shareholders by reason of an increase in the number of Directors or otherwise, by Director or shareholder action, may be filled by the Board of Directors. A Director elected by the shareholders to fill a vacancy shall hold office for the balance of the term for which he or she was elected. A Director appointed to fill a vacancy shall serve until the next meeting of shareholders at which Directors are to be elected. Section 6. Place of Director's Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of Illinois. Section 7. Director's Annual, Regular and Special Meetings. The Board of Directors shall meet for the election or appointment of officers and for the transaction of any other business as soon as practicable after the adjournment of the annual meeting of the shareholders, and other regular meetings of the Board of Directors shall be held at such times as the Board of Directors may from time to time determine. Special meetings of the Board of Directors may be called by the President at any time; and he or she must, upon written request of any two (2) Directors, call a special meeting to be held not more than seven (7) days after the receipt of such request. Section 8. Notice and Waiver of Notice of Director's Meetings. No notice need be given of any annual or regular meeting of the Board of Directors. Notice of special meetings shall be served upon each Director in person or by mail addressed to him or her at his or her last known post office address, at least two (2) days prior to the date of the meeting, specifying the time and place of the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Whenever any notice is required to be given to any Director of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-Laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. Attendance of a Director at any meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express BL 7 purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Section 9. Quorum and Action of Directors. A majority of the number of Directors fixed by these By-Laws shall constitute a quorum for the transaction of business. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Members of the Board of Directors or of any committee of the Board of Directors may participate in and act at any meeting of such Board of Directors or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation is such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. Section 10. Compensation of Directors. Each Director shall be entitled to receive for attendance at each meeting of the Board of Directors or of any duly constituted committee thereof which he or she attends such fee as is fixed by the Board of Directors. Section 11. Committees. A majority of the Board of Directors may create one or more committees and appoint members of the Board of Directors to serve on the committee or committees. Each committee shall have two (2) or more members, who serve at the pleasure of the Board. A majority of any committee shall constitute a quorum and a majority of a quorum is necessary for committee action. A committee may act by unanimous written consent in writing without a meeting and, subject to action by the Board of Directors, the committee by majority vote of its members shall determine the time and place of meetings and the notice required thereof. Each committee may exercise the authority, of the Board of Directors provided, however, a committee may not: (1) authorize distributions, except for dividends to be paid with respect to shares of any preferred or special classes or any series thereof; (2) approve or recommend to shareholders any act the Illinois Business Corporation Act requires to be approved by shareholders; (3) fill vacancies on the Board of Directors or on any of its committees; (4) elect or remove officers or fix the compensation of any member of the committee; (5) adopt, amend or repeal the By-Laws; (6) approve a plan of merger not requiring shareholder approval; (7) authorize or approve reacquisition of shares, except according to a general formula or method prescribed by the Board of Directors; (8) authorize or approve the issuance or sale, or contract for sale, of shares or determine the designation and relative rights, preferences, and limitations of a series of shares, except that the Board of Directors may direct a committee to fix the specific terms of the issuance or sale or contract for sale or the number of shares to be allocated to particular employees under an employee benefit plan; or (9) amend, alter, repeal, or take action inconsistent with any resolution or action of the Board of Directors when the resolution or action of the Board of Directors provides by its terms that it shall not be amended, altered or repealed by action of a committee. BL 8 Section 12. Informal Action By Directors. Any action required by the Illinois Business Corporation Act to be taken at a meeting of the Board of Directors of the Corporation, or any other action which may be taken at a meeting of the Board of Directors or a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote with respect to the subject matter thereof, or by all the members of such committee, as the case may be. The consent shall be evidenced by one or more written approvals, each of which sets forth the action taken and bears the signature of one or more Directors. All the approvals evidencing the consent shall be delivered to the Secretary to be filed in the corporate records. The action taken shall be effective when all the Directors have approved the consent unless the consent specifies a different effective date. Any such consent signed by all the Directors or all the members of a committee shall have the same effect as a unanimous vote, and may be stated as such in any document filed with the Secretary of State under the Illinois Business Corporation Act. ARTICLE IV OFFICERS Section 1. Officers in General, Election, Term of Office and Qualification. The officers of the Corporation shall be a President, a Vice President, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. The officers of the Corporation shall be elected by the Board of Directors at the Board of Directors annual meeting after each annual meeting of shareholders. The Board of Directors shall elect a President, Vice President, Treasurer, and Secretary, and any other officer, assistant officers, and agents as it deems necessary, none of whom need be a member of the Board of Directors nor a shareholder of the Corporation. Each officer so elected shall hold office until his or her successor has been duly chosen and has qualified or until his or her death or his or her resignation or removal in the manner hereinafter provided. Section 2. Removal of Officers. Any officer or agent may be removed by the Board of Directors whenever in the Board of Directors' judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. BL 9 Section 3. Resignation of Officers. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall lake effect at the time specified therein and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in the case of a vacancy occurring in an assistant office, the vacancy may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. Section 5. President. The President shall be the Chief Executive Officer of the Corporation. The President shall preside at meetings of the shareholders and of the Board Directors. The President shall present at each annual meeting of the shareholders and the Board of Directors a report of the condition of the business of the Corporation. The President shall cause to be called regular and special meetings of the shareholders and the Board of Directors in accordance with the requirements of the Illinois Business Corporation Act and these By-Laws. The President shall sign, with any other proper officer, certificates for shares of the Corporation. The President shall sign any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. The President shall cause all books, reports, statements, and certificates to be properly kept and filed as required by law. The President shall see that all orders and resolutions of the Board of Directors are carried into effect and enforce these By-Laws. The President shall have general and active management of the business of the Corporation; and perform all the duties incident to the office and which are required by law. Section 6. Vice President. In the absence of or inability of the President to act, the Vice President shall perform the duties and exercise the powers of the President and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 7. Secretary. The Secretary shall attend all meetings of the shareholders and all meetings of the Board of Directors. The Secretary shall keep the minutes of the meetings of the shareholders and the Board of Directors in appropriate books and record all votes. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors as required by law or these By-Laws. The Secretary shall be custodian of the records and seal of the Corporation and when authorized by the Board of Directors, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary. The Secretary shall have general charge of the share books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision the Secretary shall be. BL 10 The Secretary shall sign, with any other proper officer, certificates for shares of the Corporation. The Secretary shall respond to all correspondence and present to the Board of Directors at its meetings all official communications received by the Secretary. The Secretary shall perform all the duties incident to the office of Secretary of the Corporation. Section 8. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 9. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds and securities in the name and to the credit of the Corporation in such banks and/or safe deposit companies as the Board of Directors may designate. The Treasurer shall make, sign, and endorse in the name of the Corporation all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the President or the Board of Directors. The Treasurer shall keep accurate books of account of all the business and transactions of the Corporation and shall exhibit at all reasonable times the books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. The Treasurer shall render a report of the condition of the finances of the Corporation at each annual meeting of the Board of Directors and at such other times as shall be required of the Treasurer. The Treasurer shall make a full report at the annual meeting of shareholders. The Treasurer shall further do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Board of Directors from time to time. Section 10. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasurer perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 11. Bonding of Officers. If required by the Board of Directors, any or all of the officers and agents of the Corporation shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 12. Compensation of Officers. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. BL 11 Section 13. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event the officer authorized shall have full power and authority to attend and to act and to vote at any meeting of shareholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE V CERTIFICATES REPRESENTING STOCK Section 1. Shares of the Corporation Represented by Certificates. The issued shares of the Corporation shall be represented by certificates. Certificates shall be signed by the appropriate corporate officers and shall be sealed with the seal, or a facsimile of the seal, of the Corporation. In case the seal of the Corporation is changed after the certificate is sealed with the seal or a facsimile of the seal of the Corporation, but before it is issued, the certificate may be issued by the Corporation with the same effect as if the seal had not been changed. If a certificate is countersigned by a transfer agent or registrar, other than the Corporation itself or its employee, any other signatures or countersignature on the certificate may be facsimiles. In case any officer of the Corporation, or any officer or employee of the transfer agent or registrar who has signed or whose facsimile signature has been placed upon such certificate ceases to be an officer of the Corporation, or an officer or employee of the transfer agent or registrar before such certificate is issued, the certificate may be issued by the Corporation with the same effect as if the officer of the Corporation, or an officer or employee of the transfer agent or registrar had not ceased to be such at the date of its issue. Each certificate representing shares shall also state: (1) that the Corporation is organized under the laws, of the State of Illinois; (2) the name of the person to whom issued; (3) the number and class of shares, and the designation of series, if any, which such certificate represents. No certificate shall be issued for any share until such share is fully paid. Section 2. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost, stolen, or destroyed certificate, or his or her legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such BL 12 sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. Section 3. Transfer of Shares. The shares of the Corporation shall be assignable and transferable only on the books and records of the Corporation by the registered owner, or by his duly authorized attorney, upon surrender of the certificate duly and properly endorsed with proper evidence of authority to transfer. The Corporation shall issue a new certificate for the shares surrendered to the person or persons entitled thereto. All certificates for shares changed or returned to the Corporation for transfer shall be marked by the Secretary "Canceled", with the date of cancellation, and the transaction shall be immediately recorded in the certificate book opposite the memorandum of their issue. The returned certificate may be inserted in the certificate book. ARTICLE VI GENERAL PROVISIONS Section 1. Distributions to Shareholders. The Board of Directors of the Corporation may authorize, and the. Corporation may make, distributions to its shareholders, subject to any restriction in the Articles of Incorporation and subject also to the limitations set forth below. The record date for determining shareholders entitled to a distribution is the date as determined by Article II, Section 5 of these By-Laws. No distribution may be made if, after giving it effect: (1) the Corporation would be insolvent; or (2) the net assets of the Corporation would be less than zero or less than the maximum amount payable at the time of distribution to shareholders having preferential rights in liquidation if the Corporation were then to be liquidated. The Board of Directors may base a determination that a distribution may be made either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on fair valuation or other method that is reasonable in the circumstances. The effect of a distribution is measured as of the earlier of the date of its authorization if payment occurs within one hundred and twenty (120) days after the date of authorization or the date of payment if payment occurs more than one hundred and twenty (120) days after the date of authorization; or in the case of distributions by purchase, redemption or other acquisition of the Corporation's shares, the earlier of the date money or other property is transferred or debt incurred by the Corporation or the date shareholders cease to be shareholders. Section 2. Seal of the Corporation. The seal of the Corporation shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. The seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. BL 13 Section 3. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th day of September of each year. Section 4. Records of the Corporation. The Corporation shall keep correct and complete books and records of account and shall also keep minutes of the proceedings of its shareholders and Board of Directors and committees thereof; and shall keep at its registered office or principal place of business in the State of Illinois, or at the office of a transfer agent or registrar in this State, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each. Section 5. Checks, Bills, Notes, etc. of the Corporation. All bills payable, notes, checks, drafts, warrants or other negotiable instruments of the Corporation shall be made in the name of the Corporation and shall be signed by such officer or officers as the Board of Directors shall from time to time direct by resolution. No officer or agent of the Corporation, either singly or jointly with others, shall have the power to make any bill payable, note, check, draft, or warrant, or other negotiable instrument, or endorse the same in the name of the Corporation, or contract or cause to be contracted any debt or liability in the name and on behalf of the Corporation except as expressly prescribed and provided by resolution of the Board of Directors. Section 6. Examination of Corporate Records by Shareholders. Any person who is a shareholder of record shall have the right to examine, in person or by agent, at any reasonable time or times, the Corporation's books and records of account, minutes, voting trust agreements filed with the Corporation and record of shareholders, and to make extracts therefrom, but only for a proper purpose. In order to exercise this right, a shareholder must make written demand upon the Corporation, stating with particularity the records sought to be examined and the purpose therefore. Upon the written request of any shareholder of the Corporation, the Corporation shall mail to such shareholder within fourteen (14) days after receipt of such request a balance sheet as of the close of its latest fiscal year and a profit and loss statement for such fiscal year; provided that if such request is received by the Corporation before such financial statements are available, the Corporation shall mail such financial statements within fourteen (14) days after they become available, but in any event within one hundred and twenty (120) days after the close of its latest fiscal year. Section 7. Indemnification of Officers, Directors, Employees and Agents of the Corporation. Subject to the applicable laws of the State of Illinois, the Corporation may indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation, or who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and necessarily incurred by such person in connection with such action, suit or proceeding, BL 14 if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Such a determination of good faith shall be made by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion or by the shareholders. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his or her conduct was unlawful. Subject to the applicable laws of the State of Illinois, the Corporation may indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, provided that no indemnification shall be made with respect to any claim, issue, or matter as to which such person has been adjudged to have been liable to the Corporation, unless, and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper. Such a determination of good faith shall be made by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion or by the shareholders. To the extent that a Director, officer or employee or agent of the Corporation has been successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to in the above paragraphs, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorney's fees) actually and reasonable incurred by such person in connection therewith. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the BL 15 Director, officer, employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any capacity, or arising out of his or her status as such. ARTICLE VII AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended, repealed or added to by the affirmative vote of the holders of a majority of the shareholders entitled to vote in the election of any Director at an annual meeting or at a special meeting. The By-Laws may also be altered, amended, repealed or new By-Laws adopted by a majority of the entire Board of Directors at any annual, regular or special meeting of the Board of Directors. However, any By-Laws adopted by the Board of Directors may be altered, amended, or repealed by the shareholders. Dated: January 19, 1996 BL 16 EX-3.31 32 ex3-31_043004.txt ARTICLES OF INCORP. OF INTERACTIVE MEDIA (MO) SEAL OMITTED State of Missouri . . . Office of Secretary of State ROY D. BLUNT, Secretary of State Articles of Incorporation (To be submitted in duplicate by an attorney or an incorporator.) HONORABLE ROY D. BLUNT SECRETARY OF STATE STATE OF MISSOURI P.O. BOX 778 JEFFERSON CITY, MO 65102 The undersigned natural person(s) of the age of eighteen years or more for the purpose of forming a corporation under The General and Business Corporation Law of Missouri adopt the following Articles of Incorporation: ARTICLE ONE The name of the corporation is: INTERACTIVE MEDIA MO CORP. -------------------------------------------- ARTICLE TWO The address, including street and number, if any, of the corporation's initial registered office in this state is: 222 EAST DUNKLIN STREET, JEFFERSON CITY, --------------------------------------------- MISSOURI 65101 - -------------------------------------------------------------------------------- and the name of its initial agent at such address is: THE PRENTICE-HALL --------------------------- CORPORATION SYSTEM. INC. - -------------------------------------------------------------------------------- ARTICLE THREE The aggregate number, class and par value, if any, of shares which the corporation shall have authority is issue shall be: 30,000 NPV common The preferences, qualifications, limitations, restrictions, and the special or relative rights, including convertible rights, if any, in respect to the shares of each class are as follows: FILED AND CERTIFICATE OF INCORPORATION ISSUED DEC 11 1991 /s/ Roy D. Blunt ----------------------- ARTICLE FOUR The extent, if any, to which the preemptive right of a shareholder to acquire additional shares is limited or denied. NONE ARTICLE FIVE The name and place of residence of each incorporator is as follows: Name Street City JULIE ESPINOZA 500 CENTRAL AVENUE ALBANY, NY 12206 ARTICLE SIX (Designate which and complete the applicable paragraph.) |XX| The number of directors to constitute the first board of directors is 5. Thereafter the number of directors shall be fixed by, or in the manner provided in the bylaws. Any changes in the number will be reported to the Secretary of State within thirty calendar days of such change. OR | | The number of directors to constitute the board of directors is_________. (The number of directors to constitute the board of directors must be stated herein if there are to be less than three directors. The persons to constitute the first board of directors may, but need not, be named.) ARTICLE SEVEN The duration of the corporation is PERPETUAL ARTICLE EIGHT The corporation is formed for the following purposes: TO DEVELOP AND MARKET INTERACTIVE PRODUCTS AND SERVICES, INCLUDING BUT NOT LIMITED TO, PROMOTIONS OF PRODUCTS AND SERVICES USING INTERACTIVE VOICE RESPONSE SYSTEMS, AND VOICE MAIL ADVERTISING SERVICES. TO ORGANIZE, PROMOTE, DEVELOP, SELL, LEASE OR LOAN SUCH PRODUCTS AND SERVICES FOR COMMERCIAL, INDUSTRIAL, PROFESSIONAL, EDUCATIONAL, ACADEMIC, SCIENTIFIC OR GOVERNMENTAL USE. TO HIRE EMPLOYEES AND INDEPENDENT CONTRACTORS, AND PURCHASE GOODS AND SERVICES, NECESSARY OR CONVENIENT TO THE CONDUCT OF ITS BUSINESS. TO PURCHASE, LEASE, RECEIVE OR OTHERWISE ACQUIRE OR OBTAIN, HOLD, OPERATE, EMPLOY AND OTHERWISE USE, SELL, SURRENDER, TRANSFER OR OTHERWISE DISPOSE OF ANY OR ALL EQUIPMENT OR PROPERTY, BOTH REAL AND PERSONAL, NECESSARY OR CONVENIENT TO THE CONDUCT OF ITS BUSINESS. TO ACQUIRE, PURCHASE, RECEIVE, HOLD, USE, SELL, ASSIGN, LEASE, MORTGAGE OR OTHERWISE DISPOSE OF LETTERS PATENT OF THE UNITED STATES OR OF ANY OTHER COUNTRY, PATENTS, PATENT RIGHTS, COPYRIGHTS, LICENSES AND PRIVILEGES, INVENTIONS, IMPROVEMENTS IN PROCESSING, TRADEMARKS AND TRADE NAMES OR PENDING APPLICATIONS THEREOF RELATING TO OR USEFUL IN CONNECTION WITH ANY BUSINESS OF THE CORPORATION OR OF ANY COMPANY OR ASSOCIATION IN WHICH THE CORPORATION MAY HAVE AN INTEREST DIRECTLY OR INDIRECTLY. TO SELL, CONVEY, LEASE, EXCHANGE, TRANSFER OR OTHERWISE DISPOSE OF OR MORTGAGE, PLEDGE OR OTHERWISE ENCUMBER OR CREATE A SECURITY INTEREST IN, ANY OR ALL OF ITS PROPERTY, REAL OR PERSONAL, OR ANY INTEREST THEREIN, WHEREVER SITUATED. TO ENGAGE IN THE BUSINESS DESCRIBED IN PARAGRAPHS NUMBERED 1 THROUGH 6 OF THIS ARTICLE THROUGH SUBSIDIARIES OR AFFILIATES; TO FORM, CAUSE TO BE INCORPORATED, PURCHASE, RECEIVE OR OTHERWISE ACQUIRE, HOLD, SELL OR OTHERWISE DISPOSE OF SUCH SUBSIDIARIES. TO DO ALL AND EVERYTHING NECESSARY, SUITABLE OR PROPER FOR THE ACCOMPLISHMENT OF ANY OF THE PURPOSES, THE ATTAINMENT OF ANY OF THE OBJECTS, OR THE FURTHERANCE OF ANY OF THE POWERS HEREINBEFORE SET FORTH, EITHER ALONE OR IN CONNECTION WITH OTHER CORPORATIONS, FIRMS OR INDIVIDUALS, AND EITHER AS PRINICPALS OR AGENTS, AND TO DO EVERY OTHER ACT OR ACTS, THING OR THINGS, INCIDENTAL OR APPURTENANT TO OR GROWING OUT OF OR CONNECTED WITH THE AFORESAID OBJECTS, PURPOSES OR POWERS, OR ANY OF THEM. IN WITNESS WHEREOF, these Articles of Incorporation have been signed this 11TH day of DECEMBER, 1991 /s/ Julie Espinoza --------------------- JULIE ESPINOZA State of NEW YORK } } ss County of ALBANY } I, BARBARA LLOYD, a Notary Public, do hereby certify that on this 11TH day of DECEMBER, 1991, personally appeared before me, JULIE ESPINOZA (and _____________________________,) who being by me first duly sworn, (severally) declared that he is (they are) the person(s) who signed the foregoing document as incorporator(s), and that the statements therein contained are true. NOTARIAL SEAL /s/ Barbara A. Lloyd ----------------------------- Notary Public BARBARA A. LLOYD My commission expires ______________________ BARBARA A. LLOYD Notary Public, State of New York No. 4981917 Qualified in Albany County Commission Expires March 30, 1993 FILED AND CERTIFICATE OF INCORPORATION ISSUED DEC 11 1991 /s/ Roy D. Blunt EX-3.32 33 ex3-32_043004.txt BYLAWS OF INTERACTIVE MEDIA MO SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE MEDIA MO CORP. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by. the Board of Directors and shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of stockholders or at any special meeting called for such purpose. The Board shall elect a Chairman of.the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. President. DELETED. Section 17. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board and the Vice Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general responsibility for all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 18. Chief Technology Officer. DELETED Section 19. Chief People Officer. DELETED Section 20. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 22. Vice Chairman of the Board. The Vice Chairman of the Board is authorized to preside at meetings of the shareholders and the Board of Directors in the absence of the Chairman of the Board. Dated: February 28, 2000 139601 Schedule A February 28, 2000 Amendments BL 2 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA MO CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than one (1) nor more than fifteen (15) members who shall be elected by the stockholders. Directors need not be residents of the State of Missouri or stockholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Dated: October 20, 1999 130070 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE MEDIA MO CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporationn shall be managed and controlled by a Board of Directors composed of not less than one (1) nor more than nine (9) members who shall be elected by the stockholders. Directors need not be residents of the State of Missouri or stockholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Dated: July 29, 1999 130067 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE MEDIA MO CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than one (1) nor more than eight (8) members who shall be elected by the stockholders. Directors need not be residents of the State of Missouri or stockholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of President and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of stockholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Section 20. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the. President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Dated March 26, 1998 0104296.01 Schedule A March 26, 1998 Amendments BL 3 BY-LAWS OF INTERACTIVE MEDIA MO CORP. ARTICLE I OFFICES Section 1. Principal Office. The offices of the Corporation shall be located in the County of the State of Missouri designated in the Articles of Incorporation. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II STOCKHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of Missouri, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any time and any place, either within or without the State of Missouri, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. Section 2. Annual Meeting. Annual meetings of stockholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at which the stockholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the stockholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed. by law or by the Articles of Incorporation, may be called by the President, the Board of Directors or the holders of not less than a majority of all of the stock entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. Section 4. Notice. Written or printed notice off all meetings of stockholders stating the place, day and hour thereof, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than sixty (60) days prior to the date of the meeting to the stockholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is an annual meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. Section 5. Closing of Transfer Books and Fixinq of Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of stockholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of stockholders is to be taken, and the determination of stockholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of stock on the books of the Corporation after such record date. Section 6. List of Stockholders. The officer who as charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of the 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 a least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 7. Quorum. The holders of a majority of the stock entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote at such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement BL 2 at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. If the adjournment is for more than thirty (30) days, or if after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of the record entitled to vote at the meeting. Section 8. Orqanization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the stockholders. In his absence, the President or a Vice President shall preside. In the absence of all of these officers, any stockholder or the duly appointed proxy of any stockholder may call the meeting to order and a chairman shall be elected from among the stockholders present. The Secretary of the Corporation shall act as secretary at all meetings of stockholders. In his or her absence an Assistant Secretary shall so act and in the absence of all of these officers the presiding officer may appoint any person to act as secretary of the meeting. Section 9. Proxies. At any meeting of the stockholders, every stockholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by such stockholder or by his duly authorized attorney-in-fact. No proxy shall be. valid after three (3) years from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 10. Voting. Except as otherwise provided by law, the Articles of Incorporation or these By-laws, each stockholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the stock entitled to vote, present in person, or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Articles of Incorporation or of these By-laws the vote of a greater number is required, in which case the vote of such greater number shall govern and control the decision of such matter. Section 11. Voting of Stock by Certain Holders. Stock standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Stock held by an administrator, executor, guardian or conservator may be voted by him so long as such stock forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such stock into his name. Stock standing in the name of a trustee may be voted by BL 3 him, either in person or by proxy, but no trustee shall be entitled to vote stock held by him without a transfer of such stock into his name as trustee. Stock standing in the name of a receiver may be voted by such receiver, and stock held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A stockholder whose stock is pledged shall be entitled to vote such stock.until the stock have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the stock so transferred. Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time, Section 11. Action. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Articles of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 12. Election of Directors. At each election for Directors, each stockholder entitled to vote at such election shall, unless otherwise provided by the Articles of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Articles of Incorporation, no stockholder shall have the right or be permitted to cumulate his votes on any basis. Section 13. Action Without Meeting. Any action required by any provision of law or of the Articles of Incorporation or these By-laws to be taken at a meeting of the stockholders or any action which may be taken at a meeting of the stockholders may be taken without a meeting without prior written notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the stockholders entitled to vote with respect to the subject matter thereof holding the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. BL 4 ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than one (1) nor more than five (5) members who shall be elected by the stockholders. Directors need not be residents of the State of Missouri or stockholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the stockholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the stockholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. Section 3. Resiqnation. Any Director may resign at any time by giving written notice to the President or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the stockholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all stock outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the stockholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors though less than a quorum of the Board of Directors or by a sole remaining Director, and the Directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no Directors in office, then an election of Directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created Directorship, the Directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), any Court of competent jurisdiction may, upon application of any stockholder or stockholders holding at least ten (10%) percent of the total number of the shares at the time outstanding having the right to vote for such Directors, summarily order an election to be held to fill any such vacancies or newly created Directorships, or to replace the Directors chosen by the Directors then in office. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. BL 5 Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Articles of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of Missouri. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the stockholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the President on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the President or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings of the Board the presence of a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Articles of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with BL 6 the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the Directors of the Corporation. The board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence of disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the, Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the Stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the Stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation; and, unless the resolution or the Articles of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name and names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in BL 7 the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meetinq. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a President, a Vice President, a Secretary and a Treasurer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers, all of whom shall also be officers. Two or more offices may be held by the same person, except the offices of President and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of stockholders. The Board shall elect a President, Vice President, Treasurer, and Secretary, and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so elected BL 8 shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer may be removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the stockholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. President. The President shall be the chief executive officer of the Corporation; shall (in absence of the Chairman of the Board) preside at meetings of the stockholders and Directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. Section 9. Vice President. In the absence of or inability of the President to act, the Vice President shall perform the duties and exercise the powers of the President and shall perform such other functions as the Board of Directors may from time to time prescribe. BL 9 Section 10. Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He may sign, with any other proper officer, certificates for stock of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 12. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or stockholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of stockholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Board of Directors from time to time. Section 13. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasurer perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 14. Bonding. If required by the Board of Directors all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. BL 10 Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of stockholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE VI CERTIFICATES REPRESENTING STOCK Section 1. Form of Certificates. The certificates representing stock of the Corporation shall be in such form, not inconsistent with statutory provisions and the Articles of Incorporation, as shall be approved by the Board of Directors. The certificates shall be signed by the President of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the stock represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Stock. The Corporation shall be entitled to treat the holder of record of any share or as the owner of such stock with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Missouri. Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed BL 11 certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of the uncertified shares such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding stock in the manner and upon the terms and conditions provided by the Articles of Incorporation, the By-laws and the applicable laws of the State of Missouri. Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. Section 3. Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the. Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th day of September of each year. Section 5. Reports of Situation and Amount of Business. The Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the BL 12 outstanding voting stock of the Corporation, present written reports of the situation and amount of business of the Corporation and shall present a full and clear statement of the business and condition of the Corporation at every annual meeting. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of stockholders of the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of Missouri, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee. the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of stockholders, or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the stockholders or the Board of Directors shall be effective, valid BL 13 and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated: December 17, 1991 BL 14 EX-3.33 34 ex3-33_043004.txt ARTICLES OF INCORPORATION & AMENDMENT (CA) ARTICLES OF INCORPORATION OF INTERACTIVE VOICE MEDIA CORPORATION The undersigned, being a natural person of full age and acting as the incorporator for the purpose of forming the business corporation hereinafter named pursuant to the provisions of the Corporations Code of the State of California, does hereby adopt the following articles of incorporation. FIRST: The name of the corporation is INTERACTIVE VOICE MEDIA CORPORATION SECOND: The existence of the corporation is perpetual. THIRD: The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California, other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. FOURTH: The name and address of the corporation's initial agent for service of process within the State of California in accordance with the provisions of subdivision (b) of Section 1502 of the Corporations Code of the State of California is: The Prentice-Hall Corporation System, Inc. FIFTH: The total number of shares which the corporation is authorized to issue is 3,000 shares no par value, all of which are of one class and are common shares. CALIFORNIA-1990 PAGE 1 The Board of Directors of the corporation may issue any or all of the aforesaid authorized shares of the corporation from time to time for such consideration as it shall determine and may determine from time to time the amount of such consideration, if any, to be credited to paid-in surplus. SIXTH: In the interim between meetings of shareholders held for the election of directors or for the removal of one or more directors and the election of the replacement or replacements thereat, any vacancy which results by reason of the removal of a director or directors by the shareholders entitled to vote in an election of directors, and which has not been filled by said shareholders, may be filled by a majority of the directors then in office, whether or not less than a quorum, or by the sole remaining director, as the case may be. SEVENTH: The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. EIGHTH: The corporation is authorized to provide indemnification of agents (as defined in Section 317 of the Corporations Code) for breach of duty to the corporation and its stockholders through bylaw provisions or through agreements with the agents, or both, in excess of the indemnification otherwise permitted by Section 317 of the Corporations Code, subject to the limits on such excess indemnification set forth in Section 204 of the Corporations Code. CALIFORNIA-1990 PAGE 2 NINTH: Pursuant to the provisions of Section 406 of the Corporations Code of the State of California, each share of the corporation shall entitle the holder thereof, for a period of thirty days, to subscribe for or purchase authorized shares of the same class. Signed on October 22, 1991 /s/ Joan Terry ---------------------------------- Joan Terry, Incorporator CALIFORNIA-1990 PAGE 3 ARTICLES OF INCORPORATION OF INTERACTIVE VOICE MEDIA CORPORATION FILED BY: Infosearch, Inc. K1250-848703 500 Central Avenue Albany, N.Y. 12206 CALIFORNIA-1990 PAGE 4 CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF INTERACTIVE VOICE MEDIA CORPORATION ------------------------------------- Pursuant to Section 901 of the California General Corporation Law THE UNDERSIGNED, being the Sole Incorporator of Interactive Voice Media Corporation (the "Corporation") declares under penalty of perjury the following statements to be true of my own knowledge: 1. The undersigned is the Sole Incorporator of the Corporation, and therefore constitutes at least a majority of the incorporators. 2. The Corporation has issued no shares. 3. The undersigned adopts the amendments set forth herein. 4. No directors were named in the original Articles of Incorporation of the Corporation and no directors have been elected. 5. Article "First" of the Articles of Incorporation of the Corporation shall be amended to read as follows: "FIRST: The name of the Corporation is: INTERACTIVE VOICE MEDIA (CA) CORP." IN WITNESS WHEREOF, I have duly executed this Certificate of Amendment this 7th day of November, 1991 Albany, New York. /s/ Joan Terry ---------------------------------- Joan Terry, Incorporator EX-3.34 35 ex3-34_043004.txt BYLAWS OF INTERACTIVE VOICE MEDIA (CA) SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE VOICE MEDIA (CA) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property; business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of at least one (1) member who shall be elected, by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board or the Vice Chairman of the Board of Directors) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general management of all technological systems and related operations of the Corporation, including, but, not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall be have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties. as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. Schedule A February 28, 2000 Amendments BL 2 Section 18. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasure perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 19. President. DELETED Section 20. Chief Technology Officer. DELETED Section 21. Chief People Officer. DELETED Section 22. Vice Chairman of the Board. The Vice Chairman of the Board shall preside at all meetings of the shareholders and directors in the absence of the Chairman of the Board. In addition, the Vice Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Dated: February 28, 2000 139574 Schedule A February 28, 2000 Amendments BL 3 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE VOICE MEDIA (CA) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than ten (10) nor more than fifteen (15) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Dated: October 20, 1999 130052 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE VOICE MEDIA (CA) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of nine (9) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Dated: July 29, 1999 130049 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE VOICE MEDIA (CA) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of eight (8) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the shareholders and Directors; and shall have general and active management of the business of the Corporation; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 17. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 18. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Schedule A March 26, 1998 Amendments BL 2 Section 19. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 20. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Dated: March 26, 1998 0104268.01 Schedule A March 26, 1998 Amendments BL 3 BY-LAWS OF INTERACTIVE VOICE MEDIA (CA) CORP. ARTICLE I OFFICES Section 1. Principal Office. The offices of the Corporation shall be located in County of San Francisco in the State of California. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II SHAREHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of California, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any time and any place, either within or without the State of California, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. If there is a failure to hold the annual meeting for a period of sixty (60) days after the date designated therefor or, if no date has been designated, for a period of fifteen (15) months after the organization of the corporation or after its last annual meeting, the superior court of the proper county may summarily order a meeting to be held upon the application of any shareholder after notice to the corporation giving it an opportunity to be heard. The shares represented at such meeting, either in person or by proxy, and entitled to vote thereat shall constitute a quorum for the purpose of such meeting, notwithstanding any provision of the articles or by-laws or ss.600 of the California General Corporation Law to the contrary. The court may issue such orders as may be appropriate, including, without limitation, orders designating the time and place of such meeting, the record date for determination of shareholders entitled to vote and the form of notice of such meeting. Section 2. Annual Meeting. Annual meetings of shareholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on BL 1 the next secular day following at 10:00 a.m., at which the shareholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the shareholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by law or by the Certificate of Incorporation, may be called by the Chairman of the Board; the Board of Directors, the President or the holders of not less than one tenth (1/10) of all of the shares entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes. stated in the call. Section 4. Notice. Written or printed notice of all meetings of shareholders stating the place, day and hour thereof, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days or if sent by third-class mail, thirty (30) days nor more than sixty (60) days prior to the date of the meeting to the shareholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is a special meeting in which case, notice shall be delivered not less than thirty-five (35) days nor more than sixty (60) days prior to the date of the meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. Section 5. Closing of Transfer Books and Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken, and the determination of shareholders on such record date shall apply with BL 2 respect to the particular action requiring the same notwithstanding any transfer of shares on the books of the Corporation after such record date. Section 6. Quorum. The holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. If the adjournment is for more than forty-five (45) days, however, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Section 7. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders. In his absence, the President or a Vice President shall preside. In the absence of all of these officers, any shareholder or the duly appointed proxy of any shareholder may call the meeting to order and a chairman shall be elected from among the shareholders present. The Secretary of the Corporation shall act as secretary at all meetings of shareholders. In his or her absence an Assistant Secretary shall so act and in the absence of all of these officers the presiding officer may appoint any person to act as secretary of the meeting. Section 8. Proxies. At any meeting of the shareholders, every shareholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by such shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 9. Voting. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, each shareholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the shares entitled to vote, present in BL 3 person or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Certificate of Incorporation or of these By-laws the vote of a greater number is required, in which case the vote of such greater number shall govern and control the decision of such matter. Section 10. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him so long as such shares forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name as trustee. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time. Section 11. Election of Directors. At each election for Directors, each shareholder entitled to vote at such election shall, unless otherwise provided by the Certificate of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Certificate of Incorporation, no shareholder shall have the right or be permitted to cumulate his votes on any basis. BL 4 Section 12. Telephone Meetings. Shareholders may participate in and hold a meeting of the shareholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 13. Action Without Meeting. Any action required by any provision of law or of the Certificate of Incorporation or these By-laws to be taken at a meeting of the shareholders or any action which may be taken at a meeting of the shareholders may be taken without a meeting if a consent in. writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof, and such consent shall have the same force and effect as a unanimous vote of the shareholders. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of five (5) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the shareholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the shareholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. BL 5 Section 3. Resignation. Any Director may resign at any time by giving written notice to the President or Secretary. Such resignation. shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the shareholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all shares outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the shareholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors though less than a quorum of the Board of Directors; provided, however, any Directorship to be filled by reason of an increase in the number of Directors shall be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the shareholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of California. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the shareholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of shareholders. The Board of BL 6 Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the President on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the President or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings of the Board the presence of a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Certificate of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at thee meeting until a quorum shall be present. Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution adopted by a majority of the entire Board, designate from among its members an executive committee and other committees, each consisting of three or more directors and each of which shall have all the authority of the Board except to the extent provided in the resolution, the Certificate of Incorporation, these By-laws or the law of the State of California. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any BL 7 regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these Bylaws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. BL 8 ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a President, a Vice President, a Secretary and a Treasurer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers, all of whom shall also be officers. Two or more offices may be held by the same person, except the offices of President and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders. The Board shall elect a President, Vice President, Treasurer, and Secretary, and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer maybe removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. BL 9 Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. President. The President shall be the chief executive officer of the Corporation; shall (in absence of the Chairman of the Board) preside at meetings of the Shareholders and Directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. Section 9. Vice President. In the absence of or inability of the President to act, the Vice President shall perform the duties and exercise the powers of the President and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 10. The Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the Shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the Shareholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He may sign, with any other proper officer, certificates for shares of the Corporation and shall keep in safe custody the seal of the Corporation; and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties, and exercise the powers of the Secretary and shall perform such other duties. as may be prescribed by the Board of Directors or the President. Section 12. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the BL 10 [GRAPHIC OMITTED] BL 11 credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Board of Directors from time to time. Section 13. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasurer perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board Of directors or the President. Section 14. Bonding. If required by the Board of Directors all or certain of the officers shall give the. Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of shareholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. BL 11 ARTICLE VI CERTIFICATES REPRESENTING SHARES Section 1. Form of Certificates. The certificates representing shares of the Corporation shall be in such form, not inconsistent with statutory provisions and the Certificate of incorporation, as shall be approved by the Board of Directors. The certificates shall be signed by the President of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares as the owner of such shares with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of California. Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by the Certificate of incorporation, the By-laws and the applicable laws of the State of California. BL 12 Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. Section 3, Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th day of September of each year. Section 5. Reports of Situation and Amount of Business. The Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the outstanding voting shares of the Corporation, present written reports of the situation and amount of business of the Corporation. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of shareholders of the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of California, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in BL 13 which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of shareholders, or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the shareholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the shareholders or by the Board of Directors, at any regular meeting of the shareholders or of the Board of Directors or at any special meeting of the shareholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated: December 20, 1991 BL 14 EX-3.35 36 ex3-35_043004.txt CERTIFICATE OF INCORPORATION (MN) ARTICLES OF INCORPORATION -OF- INTERACTIVE VOICE MEDIA (MN) CORP. Under Chapter 302 A of the Business Corporation Law I, the undersigned incorporator, am an individual 18 years of age or older and I adopt the following Articles of Incorporation to form a For-Profit Business Corporation (Chapter 302A). ARTICLE I The name of the Corporation is INTERACTIVE VOICE MEDIA (MN) CORP. ARTICLE II The registered office address of the Corporation in the State of Minnesota is to be located at Multifoods Tower, 33 South Sixth Street, Minneapolis, Minnesota 55402 The registered agent at the above address is The Prentice-Hall Corporation System Inc.. ARTICLE III The Corporation is authorized to issue a total of 200 shares, all of one class without par value. ARTICLE IV I, the undersigned incorporator certify that I am authorized to execute these Articles and that the information in these Articles is true and correct. I also understand that if any of this information is intentionally or knowingly misstated that criminal penalties will apply as if I had signed these Articles under oath. Name Address ---- ------- Candace Lynn Bell 120 Delaware Avenue Buffalo, New York 14202 The Standard Industrial Classification Code (SIC) that most accurately describes the nature of the business of this Corporation is 89. /s/ Candace Lynn Bell -------------------------------- Candace Lynn Bell, Incorporator Kavinoky & Cook 120 Delaware Avenue Buffalo, New York 14202 (716) 845-6000 STATE OF MINNESOTA DEPARTMENT OF STATE FILED SEPT. 5 1994 John Anderson Stowe Secretary of State EX-3.36 37 ex3-36_043004.txt BYLAWS OF INTERACTIVE VOICE MEDIA (MN) SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE VOICE MEDIA (MN) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of one (1) member who shall be elected by the shareholders. Directors need not be residents of the State of Minnesota or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, a Vice Chairman, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Vice Chairman, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board and the Vice Chairman of the Board) preside at meetings of the stockholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general responsibility for all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. Section 18. Assistant Treasurers. DELETED Section 19. President. DELETED Section 20. Chief Technology Officer. DELETED Schedule A February 28, 2000 Amendments BL 2 Section 21. Chief People Officer. DELETED Section 22. Vice Chairman of the Board. The Vice Chairman of the Board is authorized to preside at meetings of the shareholders and the Board of Directors in the absence of the Chairman of the Board. Dated: February 28, 2000 Schedule A February 28, 2000 Amendments BL 3 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE VOICE MEDIA (MN) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of no less than ten (10) and no more than fifteen (15) members who shall be elected by the shareholders. Directors need not be residents of the State of Minnesota or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Dated: October 20, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE VOICE MEDIA (MN) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of nine (9) members who shall be elected by the shareholders. Directors need not be residents of the State of Minnesota or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Dated: July 29, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE VOICE MEDIA (MN) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of eight (8) members who shall be elected by the shareholders. Directors need not be residents of the State of Minnesota or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Operating Officer or Board of Directors from time to time. Section 18. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasure perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Operating Officer. Section 19. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the shareholders and Directors; and shall have general and active management of the business of the Corporation; and shall be Schedule A March 26, 1998 Amendments BL 2 responsible to the Chief Executive Officer. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 20. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any. upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 21. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Dated: March 26, 1998 Schedule A March 26, 1998 Amendments BL 3 MINUTES and BY-LAWS of INTERACTIVE VOICE MEDIA (MN) CORP. INCORPORATED UNDER THE LAWS OF MINNESOTA BY-LAWS OF INTERACTIVE VOICE MEDIA (MN) CORP. ARTICLE I OFFICES Section 1. Registered Office. The registered offices of the Corporation shall be located in the County of the State of Minnesota designated in the Articles of Incorporation. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II SHAREHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of Minnesota, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any time and any place; either within or without the State of Minnesota, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. Section 2. Annual Meeting. Annual meetings of shareholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00, a.m. at which the shareholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the shareholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by law or by the Articles of Incorporation, may be called by the Chief Executive Officer, the Board of. Directors or the holders of not less than a majority of all of the stock entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. Section 4. Notice. Written or printed notice of all meetings of shareholders stating the place, day and hour thereof, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than sixty (60) days prior to the date of the meeting to the shareholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is an annual meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. Section 5. Closing of Transfer Books and Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken, and the determination of shareholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of stock on the books of the Corporation after such record date. Section 6. List of Shareholders. The officer who as charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of the shareholders, a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder. Such list shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of a least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not 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 shareholder who is present. Section 7. Quorum. The holders of a majority of the stock entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present or represented. At such BL 2 adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. If the adjournment is for more than thirty (30) days, or if after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of the record entitled to vote at the meeting. Section 8. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders. In his absence, the Chief Executive Officer or a Vice President shall preside. In the absence of all of these officers, any shareholder or the duly appointed proxy of any shareholder may call the meeting to order and a chairman shall be elected from among the shareholders present. The Secretary of the Corporation shall act as secretary at all meetings of shareholders. In his or her absence an Assistant Secretary shall so act and in the absence of all of these officers the presiding officer may appoint any person to act as secretary of the meeting. Section 9. Proxies. At any meeting of the shareholders, every shareholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by. such shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after three (3) years from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable :unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 10. Voting. Except as otherwise provided by law, the Articles of Incorporation or these By-laws, each shareholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the stock entitled to vote, present in person or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Articles of Incorporation or of these By-laws the vote of a greater number is required, in which case the vote of such greater number shall govern and control the decision of such matter. Section 11. Voting of Stock by Certain Holders. Stock standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Stock held by an administrator, executor, guardian or conservator may be voted by him so long as such stock forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such stock into his name. Stock standing in the name of a trustee may be voted by BL 3 him, either in person or by proxy, but no trustee shall be entitled to vote stock held by him without a transfer of such stock into his name as trustee. Stock standing in the name of a receiver may be voted by such receiver, and stock held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose stock is pledged shall be entitled to vote such stock until the stock have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the stock so transferred. Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time. Section 11. Action. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Articles of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 12. Election of Directors. At each election for Directors, each shareholder entitled to vote at such election shall, unless otherwise provided by the Articles of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Articles of Incorporation, no shareholder shall have thee right or be permitted to cumulate his votes on any basis. Section 13. Action Without Meeting. Any action required by any provision of law or of the Articles of Incorporation or these By-laws to be taken at a meeting of the shareholders or any action which may be taken at a meeting of the shareholders may be taken without a meeting without prior written notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the shareholders entitled to vote with respect to the subject matter thereof holding the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who have not consented in writing. BL 4 ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than one (1) nor more than five (5) members who shall be elected by the shareholders. Directors need not be residents of the State of Minnesota or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the shareholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the shareholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. Section 3. Resignation. Any Director may resign at any time by giving written notice to the Chief Executive Officer or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the shareholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all stock outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the shareholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors though less than a quorum of the Board of Directors or by a sole remaining Director, and the Directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no Directors in office, then an election of Directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created Directorship, the Directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), any Court of competent jurisdiction may, upon application of any shareholder or shareholders holding at least ten (10%) percent of the total number of the shares at the time outstanding having the right to vote for such Directors, summarily order an election to be held to fill any such vacancies or newly created Directorships, or to replace the Directors chosen by the Directors then in office. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. BL 5 Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Articles of Incorporation or by these By-laws directed or required to be exercised or done by the shareholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of Minnesota. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the shareholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the Chief Executive Officer on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the Chief Executive Officer or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings of the Board the presence of a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Articles of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in BL 6 the minutes of the meeting or unless he shall file his written dissent to such action with the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the Directors of the Corporation. The board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence of disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seat of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the Shareholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the Shareholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation; and, unless the resolution or the Articles of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize thee issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name and names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall BL 7 constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chief Executive Officer, a Vice President, a Secretary and a Chief Financial Officer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Chief Financial Officers, all of whom shall also be officers. Two or more offices may be held by the same person, except the offices of Chief Executive Officer and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders. The Board shall elect a Chief Executive Officer, Vice BL 8 President, Chief Financial Officer, and Secretary, and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so. elected shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer may be removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the Chief Executive Officer of the Corporation; shall (in absence of the Chairman of the Board) preside at meetings of the shareholders and Directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. BL 9 Section 9. Vice President. In the absence of or inability of the Chief Executive Officer to act, the Vice President shall perform the duties and exercise the powers of the Chief Executive Officer and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 10. Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or Chief Executive Officer, under whose supervision he shall be. He may sign, with any other proper officer, certificates for stock of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 12. Chief Financial Officer. The Chief Financial Officer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Chief Financial Officer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. Section 13. Assistant Chief Financial Officers. Any Assistant Chief Financial Officer shall, in the absence or disability of the Chief Financial Officer perform the duties and exercise the powers of the Chief Financial Officer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 14. Bonding. If required by the Board of Directors all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of BL 10 the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of shareholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE VI CERTIFICATES REPRESENTING STOCK Section 1. Form of Certificates. The certificates representing stock of the Corporation shall be in such form, not inconsistent with statutory provisions and the Articles of Incorporation, as shall be approved by the Board of Directors. The certificates shall be signed by the Chief Executive Officer of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the stock represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Stock. The Corporation shall be entitled to treat the holder of record of any share or as the owner of such stock with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Minnesota. BL 11 Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of the uncertified shares such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding stock in the manner and upon the terms and conditions provided by the Articles of Incorporation, the By-laws and the applicable laws of the State of Minnesota. Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. Section 3. Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. BL 12 Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th day of September of each year. Section 5. Reports of Situation and Amount of Business. The Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the outstanding voting stock of the Corporation, present written reports of the situation and amount of business of the Corporation and shall present a full and clear statement of the business and condition of the Corporation at every annual meeting. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of shareholders of the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of Minnesota, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of shareholders, or otherwise. BL 13 ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the shareholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the shareholders or by the Board of Directors, at any regular meeting of the shareholders or of the Board of Directors or at any special meeting of the shareholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated: September 24, 1994 BL 14 EX-3.37 38 ex3-37_043004.txt CERTIFICATE OF INCORP. AND AMEND. BARNES HOLDING CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF INTERACTIVE MEDIA (N.Y.) CORP. Under Section 805 of the Business Corporation Law THE UNDERSIGNED, being the President and the Secretary of INTERACTIVE MEDIA (N.Y.) CORP., a corporation organized under and by virtue of the Business Corporation Law of the State of New York, DO HEREBY CERTIFY: 1. The name of the corporation is: INTERACTIVE MEDIA (N.Y.) CORP. ("the Corporation"). 2. The Certificate of Incorporation of the Corporation was filed with the New York State Department of State on December 24, 1991. 3. The Certificate of Incorporation of the Corporation is hereby amended to change the name of the Corporation Paragraph 1 is amended to read as follows: "1. The name of the Corporation is BARNES HOLDING CORPORATION." 4. This amendment was duly adopted in accordance with the provisions of Section 803(a) of the New York Business Corporation Law by the Unanimous Written Consent of the Board of Directors of the Corporation and Unanimous Written Consent of the Shareholders of the Corporation. IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of Incorporation has been subscribed to this 10th day of March, 1995 by the undersigned, who affirm that the statements made herein are true under penalties of perjury. s/ DAVID CHAMANDY --------------------------------- David Chamandy, President s/ NICHOLAS PAINE --------------------------------- Nicholas Paine, Secretary CERTIFICATE OF INCORPORATION OF INTERACTIVE MEDIA (NY) CORP. Under Section 402 of the Business Corporation Law IT IS HEREBY CERTIFIED: 1. The name of the Corporation is Interactive Media (NY) Corp. 2. The purposes for which it is formed are: To engage in any lawful act or activity for which corporations may be organized under the Business Corporation Law; provided, however, that the corporation is not formed to engage in any activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained. 3. The number of shares which the Corporation shall have the authority to issue is 200, all of one class without par value. 4. The principal office of the Corporation is to be located in the County of Erie and State of New York. 5. The Secretary of State is designated as agent of the Corporation upon whom process against it may be served. The post office address to which the Secretary of State shall mail a copy of any process against the Corporation served upon him is: The Corporation c/o Teleclassifieds 181 Carlaw Avenue, Suite 309 Toronto, Ontario, Canada M4M 2S1 IN WITNESS WHEREOF, this Certificate has been subscribed to this 20th day of December, 1991 by the undersigned, who affirms that the statements made herein are true under the penalties of perjury. /s/ Candace Lynn Bell ---------------------------- Candace Lynn Bell Sole Incorporator 120 Delaware Avenue Buffalo, NY 14202 -2- CERTIFICATE OF INCORPORATION -OF- INTERACTIVE MEDIA (NY) CORP. Filed by: Kavinoky & Cook 120 Delaware Avenue Buffalo, New York 14202 EX-3.38 39 ex3-38_043004.txt BYLAWS OF BARNES HOLDING BY-LAWS OF INTERACTIVE MEDIA (NY) CORP. ARTICLE I OFFICES Section 1. Principal Office. The offices of the Corporation shall be located in the County of the State of New York designated in the Certificate of Incorporation. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II STOCKHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of New York, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any time and any place, either within or without the State of New York, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. Section 2. Annual Meeting. Annual meetings of stockholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at which the stockholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the Stockholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by law BL 1 or by the Certificate of Incorporation, may be called by the President of the Board of Directors or the holders of not less than a majority of all of the stock entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. Section 4. Notice. Written or printed notice of all meetings of shareholders stating the place, day and hour thereof, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than fifty (50) days prior to the date of the meeting to the shareholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is an annual meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. Section 5. Closing of Transfer Books and Fixing of Record Date. For the Purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty (50) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty (50) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken, and the determination of shareholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of shares on the books of the Corporation after such record date. Section 6. Quorum. The holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at BL 2 such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. Section 7. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders. In his absence, the President or a Vice President shall preside. In the absence of all of these officers, any shareholder or the duly appointed proxy of any shareholder may call the meeting to order and a chairman shall be elected from among the shareholders present. The Secretary of the Corporation shall act as secretary at all meetings of shareholders. In his or her absence an Assistant Secretary shall so act and in the absence of all of these officers the presiding officer may appoint any person to act as secretary of the meeting. Section 8. Proxies. At any meeting of the shareholders, every shareholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by such shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 9. Voting. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, each shareholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Certificate of Incorporation or of these By-laws the vote of a greater number is required, in which case the vote of such greater number shall govern and control the decision of such matter. Section 10. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize BL 3 or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him so long as such shares forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name as trustee. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledge shall be entitled to vote the shares so transferred. Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time. Section 11. Election of Directors. At each election for Directors, each shareholder entitled to vote at such election shall, unless otherwise provided by the Certificate of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Certificate of Incorporation, no shareholder shall have the right or be permitted to cumulate his votes on any basis. Section 12. Telephone Meetings. Shareholders may participate in and hold a meeting of the shareholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of BL 4 objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 13. Action Without Meeting. Any action required by any provision of law or of the Certificate of Incorporation or these By-laws to be taken at a meeting of the shareholders or any action which may be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof, and such consent shall have the same force and effect as a unanimous vote of the shareholders. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than one (1) nor more than five (5) members who shall be elected by the shareholders. Directors need not be residents of the State of New York or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution adopted by a majority of the Board of Directors. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the shareholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the shareholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. Section 3. Resignation. Any Director may resign at any time by giving written notice to the President or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the shareholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be BL 5 elected to serve for the remainder of his or their term by a vote of the holders of a majority of all shares outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the shareholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors though less than a quorum of the Board of Directors; provided, however, any Directorship to be filled by reason of an increase in the number of Directors shall be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the shareholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of New York. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the shareholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the President on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the President or Secretary in like BL 6 manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings of the Board the presence of a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Certificate of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution adopted by a majority of the entire Board, designate from among its members an executive committee and other committees, each consisting of three or more directors and each of which shall have all the authority of the Board except to the extent provided in the resolution, the Certificate of Incorporation, these By-laws or the law of New York State. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. BL 7 Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. BL 8 ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a President, a Vice President, a Secretary and a Treasurer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers, all of whom shall also be officers. Two or more offices may be held by the same person, except the offices of President and Secretary. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders. The Board shall elect a President, Vice President, Treasurer, and Secretary, and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer may be removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy BL 9 may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. President. The President shall be the chief executive officer of the Corporation; shall (in absence of the Chairman of the Board) preside at meetings of the Shareholders and Directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. Section 9. Vice President. In the absence of or inability of the President to act, the Vice President shall perform the duties and exercise the powers of the President and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 10. The Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the Shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the Shareholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He may sign, with any other proper officer, certificates for shares of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such BL 10 other duties as may be prescribed by the Board of Directors or the President. Section 12. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the President or Board of Directors from time to time. Section 13. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasurer perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 14. Bonding. If required by the Board of Directors all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and BL 11 authority to attend and to act and to vote at any meeting of shareholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE VI CERTIFICATES REPRESENTING SHARES Section 1. Form of Certificates. The certificates representing shares of the Corporation shall be in such form, not inconsistent with statutory provisions and the Certificate of Incorporation, as shall be approved by the Board of Directors. The certificates shall be signed by the President of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares as the owner of such shares with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of New York. Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made BL 12 against the Corporation with respect to the certificate alleged to have been lost or destroyed. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by the Certificate of Incorporation, the By-laws and the applicable laws of the State of New York. Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. Section 3. Corporate Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th day of September of each year. Section 5. Reports of Situation and Amount of Business. The Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the outstanding voting shares of the Corporation, present written reports of the situation and amount of business of the Corporation. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. BL 13 Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of shareholders of the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of New York, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of shareholders, or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the shareholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. BL 14 ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated: March 1, 1993 BL 15 EX-3.39 40 ex3-39_043004.txt ARTICLES OF INCORPORATION (SACRAMENTO) ENDORSED - FILED In the office of the Secretary of State of the State of Calfornia AUG 25 1995 BILL JONES, Secretary of Slate ARTICLES OF INCORPORATION OF INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. The undersigned, being a natural person of full age and acting as the incorporator for the purpose of forming the business corporation hereinafter named pursuant to the provisions of the California General Corporation Law, does hereby adopt the following Articles of Incorporation. FIRST: The name of the corporation is INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. (the "Corporation"). SECOND: The existence of this Corporation is perpetual. THIRD: The purpose of this Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California, other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California General Corporation Law. FOURTH: The name of this Corporation's initial agent for service of process within the State of California in accordance with the provisions of subdivision (b) of Section 1502 of the California General Corporation Law is as follows: The Prentice-Hall Corporation System, Inc. FIFTH: The total number of shares which the Corporation is authorized to issue is 3,000 shares no par value, all of which are of one class and are common shares. The Board of Directors of this Corporation may issue any and all of the aforesaid authorized shares of the Corporation from time to time for such consideration as it shall determine and may determine from time to time the amount of such consideration, if any, to be credited to paid-in surplus. SIXTH: In the interim between meetings of shareholders held for the election of directors or for the removal of one or more directors and the election of the replacement or replacements thereat, any vacancy which results by reason of the removal of a director or directors by the shareholders entitled to vote in an election of directors, and which has not been filled by said shareholders, may be filed by a majority of the directors then in office, whether or not less than a quorum, or by the sole remaining director, as the case may be. SEVENTH: The liability of the directors of the Corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. EIGHTH: This Corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California General Corporation Law) for breach of duty to the Corporation and its stockholders through bylaw provisions or through agreements with the agents, or both, in excess of the indemnification otherwise permitted by Section 317 of the California General Corporation Law, subject to the limits on such excess indemnification set forth in Section 204 of the California General Corporation Law. NINTH: Pursuant to the provisions of Section 406 of the California General Corporation Law, each share of the Corporation shall entitle the holder thereof, for a period of thirty days, to subscribe for or purchase authorized shares of the same class. Signed on August 22, 1995 /s/ Candace Lynn Bell -------------------------------- Candace Lynn Bell, Incorporator EX-3.40 41 ex3-40_043004.txt BYLAWS OF INTERACTIVE VOICE MEDIA (SACRAMENTO) SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of at least one (1) member who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board or the Vice Chairman of the Board of Directors) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general management of all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall be have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. Schedule A February 28, 2000 Amendments BL 2 Section 18. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasure perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 19. President. DELETED Section 20. Chief Technology Officer. DELETED Section 21. Chief People Officer. DELETED Section 22. Vice Chairman of the Board. The Vice Chairman of the Board shall preside at all meetings of the shareholders and directors in the absence of the Chairman of the Board. In addition, the Vice Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Dated: February 28, 2000 Schedule A February 28, 2000 Amendments BL 3 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than ten (10) nor more than fifteen (15) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against thee resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Dated: October 20, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of nine (9) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Dated: July 29, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of eight (8) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Operating Officer or Board of Directors from time to time. Schedule A March 26, 1998 Amendments BL 2 Section 18. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasure perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Operating Officer. Section 19. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the shareholders and Directors; and shall have general and active management of the business of the Corporation; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 20. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 21. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Dated: March 26, 1998 Schedule A March 26, 1998 Amendments BL 3 BY-LAWS OF INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. ARTICLE I OFFICES Section 1. Principal Office. The offices of the Corporation shall be located at such places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II SHAREHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of California, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any time and any place, either within or without the State of California, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 a.m. If there is a failure to hold the annual meeting for a period of (60) days after the date designated therefor or, if no date has been designated, for a period of fifteen (15) months after the organization of the corporation or after its last annual meeting, the superior court of the proper county may summarily order a meeting to be held upon the application of any shareholder after notice to the corporation giving it an opportunity to be heard. The shares represented at such meeting, either in person or by proxy, and entitled to vote thereat shall constitute a quorum for the purpose of such meeting, notwithstanding any provision of the Articles or By-Laws or ss.600 of the California General Corporation Law to the contrary. The court may issue such orders as may be appropriate, including, without limitation, orders designating the time and place of such meeting, the record date for determination of shareholders entitled to vote and the form of notice of such meeting. Section 2. Annual Meeting. Annual meetings of shareholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at which the shareholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the shareholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by law or by the Articles of Incorporation, may be called by the Chairman of the Board, the Board of Directors, the Chief Executive Officer or the holders of not less than ten percent (10%) of all of the shares entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. Section 4. Notice. Written or printed notice of all meetings of shareholders stating the place, day and hour thereof, and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days (or if sent by third-class mail, thirty (30) days) nor more than sixty (60) days prior to the date of the meeting to the shareholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is a special meeting in which case, notice shall be delivered not less than thirty-five (35) days nor more than sixty (60) days prior to the date of the meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. If notice is not given within twenty (20) days after receipt of the request, the persons entitled to call the meeting may give the notice or the superior court of the proper county shall summarily order the giving of the notice, after notice to the corporation giving it an opportunity to be heard. Section 5. Closing of Transfer Books and Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken, and the determination of shareholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of shares on the books of the Corporation after such record date. BL 2 Section 6. Quorum. The holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. If the adjournment is for more than forty-five (45) days, however, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Section 7. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders. In his absence, the Chief Executive Officer or the Vice President shall preside. In the absence of all of these officers, any shareholder or the duly appointed proxy of any shareholder may call the meeting to order and a chairman shall be elected from among the shareholders present. The Secretary of the Corporation shall act as secretary at all meetings of shareholders. In his or her absence, an Assistant Secretary shall so act and in the absence of all of these officers, the presiding officer may appoint any person to act as secretary of the meeting. Section 8. Proxies. At any meeting of the shareholders, every shareholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by such shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 9. Voting. Except as otherwise provided by law, the Articles of Incorporation or these By-laws, each shareholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Articles of Incorporation or of these By-laws the vote of a greater number is required, in which case the vote of such greater number shall govern and control the decision of such matter. BL 3 Section 10. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him so long as such shares forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name as trustee. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time. Section 11. Election of Directors. At each election for Directors, each shareholder entitled to vote at such election shall, unless otherwise provided by the Articles of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Articles of Incorporation, no shareholder shall have the right or be permitted to cumulate his votes on any basis. Section 12. Action Without Meeting. Any action required by any provision of law or of the Articles of Incorporation or these By-laws to be taken at a meeting of the shareholders or any action which may be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken; shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof, and such consent shall have the same force and effect as a unanimous vote of the shareholders. BL 4 ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of four (4) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than four, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the shareholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the shareholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. Section 3. Resignation. Any Director may resign at any time by giving written notice to the Chief Executive Officer or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the shareholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all shares outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the shareholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors though less than a quorum of the Board of Directors; provided, however, any Directorship to be filled by reason of an increase in the number of Directors shall be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. BL 5 Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Articles of Incorporation or by these By-laws directed or required to be exercised or done by the shareholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of California. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the shareholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the Chief Executive Officer on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the Chief Executive Officer or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings, of the Board, the presence of a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Articles of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with BL 6 the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution adopted by a majority of the entire Board, designate from among its members an executive committee and other committees, each consisting of three or more directors and each of which shall have all the authority of the Board except to the extent provided in the resolution, the Articles of Incorporation, these By-laws or the law of the State of California. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. BL 7 Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chief Executive Officer, a Vice President, a Secretary and a Chief Financial Officer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Chief Financial Officers, all of whom shall also be officers. Two or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders. The Board shall elect a Chief Executive Officer, Vice President, Chief Financial Officer, and Secretary, and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer may be removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy BL 8 may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. Chief Executive Officer. The Chief Executive Officer of the Corporation shall (in absence of the Chairman of the Board) preside at meetings of the shareholders and directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. Section 9. Vice President. In the absence of or inability of the Chief Executive Officer to act, the Vice President shall perform the duties and exercise the powers of the Chief Executive Officer and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 10. Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the Shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the Shareholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer, under whose supervision he shall be. He may sign, with any other proper officer, certificates for shares of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 12. Chief Financial Officer. The Chief Financial Officer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He BL9 shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Chief Financial Officer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. Section 13. Assistant Chief Financial Officers. Any Assistant Chief Financial Officer shall, in the absence or disability of the Chief Financial Officer perform the duties and exercise the powers of the Chief Financial Officer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 14. Bonding. If required by the Board of Directors all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of shareholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE VI CERTIFICATES REPRESENTING SHARES Section 1. Form of Certificates. The certificates representing shares of the Corporation shall be in such form, not inconsistent with statutory provisions and the BL 10 Articles of Incorporation, as shall, be approved by the Board of Directors. The certificates shall be signed by the Chief Executive Officer and Secretary of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares as the owner of such shares with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of California. Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by the Articles of Incorporation, the By-laws and the applicable laws of the State of California. Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. BL 11 Section 3. Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th of September each calendar year. Section 5. Reports of Situation and Amount of Business. The Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the outstanding voting shares of the Corporation, present written reports of the situation and amount of business of the Corporation. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of shareholders off the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of California, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with, any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification BL 12 and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of shareholders, or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the shareholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the shareholders or by the Board of Directors, at any regular meeting of the shareholders or of the Board of Directors or at any special meeting of the shareholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated: August 28, 1995 BL 13 EX-3.41 42 ex3-41_043004.txt ARTICLES OF INCORPORATION INTERACTIVE SJ MEDIA ARTICLES OF INCORPORATION OF INTERACTIVE S.J. VOICE MEDIA CORP. The undersigned, being a natural person of full age and acting as the incorporator for the purpose of forming the business corporation hereinafter named pursuant to the provisions of the California General Corporation Law, does hereby adopt the following Articles of Incorporation. FIRST: The name of the corporation is INTERACTIVE S.J. VOICE MEDIA CORP. SECOND: The existence of this corporation is perpetual. THIRD: The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California, other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the Califomia General Corporation Law. FOURTH: The name of this corporation's initial agent for service of process within the State of California in accordance with the provisions of subdivision (b) of Section 1502 of the California General Corporation Law is as follows: The Prentice-Hall Corporation System, Inc. FIFTH: The total number of shares which the corporation is authorized to issue is 3,000 shares no par value, all of which are of one class and are common shares. The Board of Directors of this corporation may issue any and all of the aforesaid authorized shares of the corporation from time to time for such consideration as it shall determine and may determine from time to time the amount of such consideration, if any, to be credited to paid-in surplus. SIXTH: In the interim between meetings of shareholders held for the election of directors or for the removal of one or more directors and the election of the replacement or replacements thereat, any vacancy which results by reason of the removal of a director or directors by the shareholders entitled to vote in an election of directors, and which has not been filled by said shareholders, may be filed by a majority of the directors then in office, whether or not less than a quorum, or by the sole remaining director, as the case may be. SEVENTH: The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. EIGHTH: This corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California General Corporation Law) for breach of duty to the corporation and its stockholders through bylaw provisions or through agreements with the agents, or both, in excess of the indemnification otherwise permitted by Section 317 of the California General Corporation Law, subject to the limits on such excess indemnification set forth in Section 204 of the California General Corporation Law. NINTH: Pursuant to the provisions of Section 406 of the California General Corporation Law, each share of the corporation shall entitle the holder thereof, for a period of thirty days, to subscribe for or purchase authorized shares of the same class. Signed on December 9, 1994 /s/ Candace Lynn Bell ------------------------------- Candace Lynn Bell, Incorporator. EX-3.42 43 ex3-42_043004.txt BYLAWS OF INTERACTIVE SJ MEDIA SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE S.J. VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of at least one (1) member who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board or the Vice Chairman of the Board of Directors) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have general and active management of the business of the Corporation. He shall have general management of all technological systems and related operations of the Corporation, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall be have active management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors and the Chief Executive Officer for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors and the Chief Executive Officer. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. Schedule A February 28, 2000 Amendments BL 2 Section 18. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasure perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 19. President. DELETED Section 20. Chief Technology Officer. DELETED Section 21. Chief People Officer. DELETED Section 22. Vice Chairman of the Board. The Vice Chairman of the Board shall preside at all meetings of the shareholders and directors in the absence of the Chairman of the Board. In addition, the Vice Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Dated: February 28, 2000 Schedule A February 28, 2000 Amendments BL 3 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE S.J. VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of not less than ten (10) nor more than fifteen (15) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Dated: October 20, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED SECTIONS OF INTERACTIVE S.J. VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of nine (9) members who shall be elected by the shareholders. Directors heed not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Dated: July 29, 1999 SCHEDULE A AMENDED BY-LAWS SUBSTITUTED AND ADDITIONAL SECTIONS OF INTERACTIVE S.J. VOICE MEDIA CORP. ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of eight (8) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially, and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chairman of the Board, Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer. Other officers, assistant officers, and agents as may be deemed necessary by the Board of Directors may be elected by the Board of Directors in the same manner as the titled officers named above and will be officers of the Corporation. Two (2) or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders or at any special meeting called for such purpose. The Board shall elect a Chairman of the Board, a Chief Executive Officer, a President and Chief Operating Officer, a Chief Technology Officer, a Chief People Officer, a Chief Financial Officer, a Secretary and a Treasurer, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or resignation or removal in the manner hereinafter provided. Section 8. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation; shall (in the absence of the Chairman of the Board) preside at meetings of the shareholders and Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the Chief Executive Officer shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. Section 12. Chief Financial Officer. The Chief Financial Officer shall be an executive officer of the Corporation. The Chief Financial Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all financial control and internal audit of the Corporation. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 13. Assistant Chief Financial Officer. DELETED Section 17. Treasurer. The Treasurer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Treasurer as may be prescribed by the Chief Operating Officer or Board of Directors from time to time. Schedule A March 26, 1998 Amendments BL 2 Section 18. Assistant Treasurers. Any Assistant Treasurer shall, in the absence or disability of the Treasure perform the duties and exercise the powers of the Treasurer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Operating Officer. Section 19. President. The President shall be an executive officer of the Corporation; shall (in the absence of both the Chairman of the Board and the Chief Executive Officer) preside at meetings of the shareholders and Directors; and shall have general and active management of the business of the Corporation; and shall be responsible to the Chief Executive Officer. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-Laws, to some other officer or agent of the Corporation. In addition, the President shall perform whatever duties and shall exercise whatever powers as may be prescribed from time to time by the Board of Directors. The President shall also be known as the Chief Operating Officer of the Corporation. Section 20. Chief Technology Officer. The Chief Technology Officer shall be an executive officer of the Corporation. The Chief Technology Officer shall be responsible to the Board of Directors, the Chief Executive Officer and the President for all technological systems and related operations, including, but not limited to telecommunications business systems and Internet based business systems and implementation of any upgrades, new services, repairs or changes to the same. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Section 21. Chief People Officer. The Chief People Officer shall be an executive officer of the Corporation. The Chief People Officer shall be responsible to the Board of Directors, the Chief Executive Officer and President for the management of all personnel of the Corporation, including but not limited to marketing, business development, business units and customer service. He shall perform such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Dated: March 26 1998 Schedule A March 26, 1998 Amendments BL 3 BY-LAWS OF INTERACTIVE S.J. VOICE MEDIA CORP. ARTICLE I OFFICES Section 1. Principal Office. The offices of the Corporation shall be located in County of Los Angeles in the State of California. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine. ARTICLE II SHAREHOLDERS Section 1. Time and Place of Meetings. The Board of Directors may designate any time and any place, either within or without the State of California, as the time and place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any time and any place, either within or without the State of California, as the time and place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the time and place of the meeting shall be the principal office of the Corporation at 10:00 am. If there is a failure to hold the annual meeting for a period of (60) days after the date designated therefor or, if no date has been designated, for a period of fifteen (15) months after the organization of the corporation or after its last annual meeting, the superior court of the proper county may summarily order a meeting to be held upon the application of any shareholder after notice to the corporation giving it an opportunity to be heard. The shares represented at such meeting, either in person or by proxy, and entitled to vote thereat shall constitute a quorum for the purpose of such meeting, notwithstanding any provision of the Articles or By-Laws or ss.600 of the California General Corporation Law to the contrary. The court may issue such orders as may be appropriate, including, without limitation, orders designating the time and place of such meeting, the record date for determination of shareholders entitled to vote and the form of notice of such meeting. Section 2. Annual Meeting. Annual meetings of shareholders shall be held on the second Friday of the fourth month of each fiscal year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 a.m., at which the shareholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. The annual meeting of the shareholders may be held on a date different than that given above if the Board so determines and so states in the notice of the meeting or in a duly executed waiver thereof. Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by law or by the Articles of Incorporation, may be called by the Chairman of the Board, the Board of Directors, the Chief Executive Officer or the holders of not less than ten percent (10%) of all of the shares entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the call. Section 4. Notice. Written or printed notice of all meetings of shareholders stating the place, day and hour thereof, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days (or if sent by third-class mail, thirty (30) days) nor more than sixty (60) days prior to the date of the meeting to the shareholders of record entitled to vote at such meeting either personally or by mail, by or at the direction of the person or persons calling the meeting, unless it is a special meeting in which case, notice shall be delivered not less than thirty-five (35) days nor more than sixty (60) days prior to the date of the meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at the address that appears on the stock transfer books of the Corporation. If notice is not given within twenty (20) days after receipt of the request, the persons entitled to call the meeting may give the notice or the superior court of the proper county shall summarily order the giving of the notice, after notice to the corporation giving it an opportunity to be heard. Section 5. Closing of Transfer Books and Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken, and the determination of shareholders on such record date shall apply with respect to the particular action requiring the same notwithstanding any transfer of shares on the books of the Corporation after such record date. BL 2 Section 6. Quorum. The holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation or by these By-laws. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at such meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally convened. If the adjournment is for more than forty-five (45) days, however, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Section 7. Organization. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders. In his absence, the Chief Executive Officer or the Vice President shall preside. In the absence of all of these officers, any shareholder or the duly appointed proxy of any shareholder may call the meeting to order and a chairman shall be elected from among the shareholders present. The Secretary of the Corporation shall act as secretary at all meetings of shareholders. In his or her absence, an Assistant Secretary shall so act and in the absence of all of these officers, the presiding officer may appoint any person to act as secretary of the meeting. Section 8. Proxies. At any meeting of the shareholders, every shareholder entitled to vote at such meeting shall be entitled to vote in person or by proxy executed in writing by such shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution unless such proxy otherwise provides. A proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 9. Voting. Except as otherwise provided by law, the Articles of Incorporation or these By-laws, each shareholder shall have one (1) vote for each share having rights registered in his name on the books of the Corporation at the time of the closing of the stock transfer books (or at the record date) for such meeting. When a quorum is present at any meeting the vote of holders of a majority of the shares entitled to vote, present in person or represented by proxy, shall decide any matter submitted to such meeting, unless the matter is one upon which by law or by express provision of the Articles of Incorporation or of these By-laws the vote of a greater number is required, in which case the vote of such greater number shall govern and control the decision of such matter. BL 3 Section 10. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the By-laws of such corporation may authorize or, in the absence of such authorization, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him so long as such shares forming a part of an estate are in the possession and form a part of the estate being served by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name as trustee. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to the Corporation, shares of its own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of its own stock held by the Corporation in a fiduciary capacity shall not be voted, directly, or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding stock at any given time. Section 11. Election of Directors. At each election for Directors, each shareholder entitled to vote at such election shall, unless otherwise provided by the Articles of Incorporation or by applicable law, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless otherwise provided by the Articles of Incorporation, no shareholder shall have the right or be permitted to cumulate his votes on any basis. Section 12. Action Without Meeting. Any action required by any provision of law or of the Articles of Incorporation or these By-laws to be taken at a meeting of the shareholders or any action which may be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof, and such consent shall have the same force and effect as a unanimous vote of the shareholders. BL 4 ARTICLE III DIRECTORS Section 1. Number of Directors. The property, business and affairs of the Corporation shall be managed and controlled by a Board of Directors composed of four (4) members who shall be elected by the shareholders. Directors need not be residents of the State of California or shareholders of the Corporation. The number of Directors may be increased or decreased by resolution approved by the outstanding shares, unless the resolution proposes a reduction in the fixed number or minimum number of directors to a number less than five, then, if the votes cast against the resolutions or share not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares, entitled to vote, the resolution cannot be adopted. The number of Directors shall be not less than three (3) unless all of the outstanding shares are owned beneficially and of record by less than three (3) shareholders, in which event the number of directors shall be not less than the number of shareholders. Section 2. Election and Term of Office. The Directors shall be elected at the annual meeting of the shareholders (except as provided in Section 5 of this Article). Each Director elected shall hold office until his successor shall be elected at an appropriate annual meeting of the shareholders and shall qualify, or until his death, his resignation or his removal in the manner hereinafter provided. Section 3. Resignation. Any Director may resign at any time by giving written notice to the Chief Executive Officer or Secretary. Such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 4. Removal. At any special meeting of the shareholders called expressly for that purpose, any Director or Directors, including the entire Board of Directors, may be removed, either with or without cause, and another person or persons may be elected to serve for the remainder of his or their term by a vote of the holders of a majority of all shares outstanding and entitled to vote at an election of directors. In case any vacancy so created shall not be filled by the shareholders at such meeting, such vacancy may be filled by the Directors as provided in Section 5 of this Article. Section 5. Vacancies. If any vacancy shall occur in the Board of Directors, such vacancy may, subject to the provisions of Section 4 of this Article, be filled by the affirmative vote of the remaining Directors though less than a quorum of the Board of Directors; provided, however, any Directorship to be filled by reason of an increase in the number of Directors shall be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. BL 5 Section 6. General Powers. In addition to the powers and authorities expressly conferred upon them by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Articles of Incorporation or by these By-laws directed or required to be exercised or done by the shareholders. Section 7. Place of Meetings. The Directors of the Corporation may hold their meetings, both regular and special, either within or without the State of California. Section 8. Annual Meeting. The first meeting of each newly elected Board shall be held immediately following the adjournment of the annual meeting of the shareholders and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such time and place as shall be fixed by the consent in writing of all of the Directors. Section 9. Regular Meetings. Regular meetings of the Board may be held with or without notice immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 10. Special Meetings. Special meetings of the Board may be called by the Chief Executive Officer on two (2) days' notice to each Director given either personally, by mail or by telegram. Special meetings shall be called by the Chief Executive Officer or Secretary in like manner and like notice on the written request of any Director. The purpose of or the business to be transacted at any special meeting of the Board of Directors shall be specified in the notice of such meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 11. Quorum and Action. At all meetings, of the Board, the presence of a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors at any meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, the Articles of Incorporation or these By-laws. If a quorum shall not be present at any meeting of Directors, the Directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 12. Presumption of Assent to Action. A Director who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with BL 6 the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 13. Committees. The Board of Directors may, by resolution adopted by a majority of the entire Board, designate from among its members an executive committee and other committees, each consisting of three or more directors and each of which shall have all the authority of the Board except to the extent provided in the resolution, the Articles of Incorporation, these By-laws or the law of the State of California. Section 14. Compensation. Directors may receive a stated salary for their services in an amount unanimously agreed by the Board of Directors. By resolution of the Board a fixed sum for expenses of attendance, if any, may be allowed for attendance at any regular or special meeting of the Board provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 15. Telephone Meetings. Directors may participate in and hold a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 16. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 1. Form of Notice. Whenever under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, notice is required to be given to any director or shareholder, and no provision is made as to how such notice shall be given, it shall not be construed to mean personal notice exclusively, but any such notice maybe given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the Corporation. Any notice required or permitted to be given by mail shall be deemed to be given three (3) days after the time when the same be thus deposited, postage prepaid, in the United States mail as aforesaid. BL 7 Section 2. Waiver. Whenever any notice is required to be given to any director or shareholder of the Corporation, under the provisions of any applicable statute, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. ARTICLE V OFFICERS Section 1. General. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chief Executive Officer, a Vice President, a Secretary and a Chief Financial Officer. The Board of Directors may also, if it chooses to do so, elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Chief Financial Officers, all of whom shall also be officers. Two or more offices may be held by the same person. Section 2. Election, Term of Office and Qualification. The officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of shareholders. The Board shall elect a Chief Executive Officer, Vice President, Chief Financial Officer, and Secretary, and any Assistant Officers the Board has determined are needed, none of whom need to be a member of the Board. Each officer so elected shall hold office until his successor has been duly chosen and has qualified or until his death or his resignation or removal in the manner hereinafter provided. Section 3. Subordinate Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any such subordinate officer or agent. Section 4. Resignation. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. Removal. Any officer elected or appointed by the Board of Directors may be removed by the Board at any time with or without cause. Any other officer may be removed with or without cause, by the person or persons who appointed the officer or by the Board. Section 6. Vacancies. A vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors, but in case of a vacancy occurring in an office filled in accordance with the provisions of section 3 of this Article, such vacancy BL 8 may be filled by the superior officer upon whom such power may be conferred by the Board of Directors. Section 7. Chairman. The Chairman of the Board, if one shall be elected, shall preside at all meetings of the shareholders and directors. In addition, the Chairman of the Board shall perform whatever duties and shall exercise all powers that are given to him by the Board of Directors. Section 8. Chief Executive Officer. The Chief Executive Officer of the Corporation shall (in absence of the Chairman of the Board) preside at meetings of the shareholders, and directors; shall have general and active management of the business of the Corporation; and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other proper officer, certificates for shares of the Corporation and any deeds, bonds, mortgages, contracts and other documents which the Board of Directors has authorized to be executed, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors or these By-laws, to some other officer or agent of the Corporation. Section 9. Vice President. In the absence of or inability of the Chief Executive Officer to act, the Vice President shall perform the duties and exercise the powers of the Chief Executive Officer and shall perform such other functions as the Board of Directors may from time to time prescribe. Section 10. Secretary. The Secretary, when available, shall attend all meetings of the Board of Directors and all meetings of the Shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the Shareholders and special meetings of the Board of Directors as required by law or these By-laws, be custodian of the Corporate records and have general charge of the stock books of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer, under whose supervision he shall be. He may sign, with any other proper officer, certificates for shares of the Corporation and shall keep in safe custody the seal of the Corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature. Section 11. Assistant Secretaries. Any Assistant Secretary shall, in the absence or disability of the Secretary perform the duties and exercise the powers of the Secretary and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 12. Chief Financial Officer. The Chief Financial Officer shall have the care and custody of and be responsible for all of the funds and securities of the Corporation and shall deposit such funds in the name and to the credit of the Corporation in such a bank and safe deposit vaults as the Directors may designate. He BL 9 shall exhibit at all reasonable times his books and accounts to any Director or shareholder of the Corporation upon application at the office of the Corporation during business hours. He shall render a statement of the condition of the finances of the Corporation at each stated meeting of the Board of Directors if called upon to do so, and a full report at the annual meeting of shareholders. He shall keep at the office of the Corporation correct books of account of all of its business and transactions and such books of account as the Board of Directors may require. He shall do and perform all other duties incident to the office of Chief Financial Officer as may be prescribed by the Chief Executive Officer or Board of Directors from time to time. Section 13. Assistant Chief Financial Officers. Any Assistant Chief Financial Officer shall, in the absence or disability of the Chief Financial Officer perform the duties and exercise the powers of the Chief Financial Officer and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer. Section 14. Bonding. If required by the Board of Directors all or certain of the officers shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation. Section 15. Salaries. The salary or other compensation of officers shall be fixed from time to time by the Board of Directors. The Board of Directors may delegate to any officer the power to fix from time to time the salary or other compensation of officers and agents appointed in accordance with the provisions of Section 3 of this Article. Section 16. Voting Upon Shares Held by The Corporation. The Board of Directors may authorize any officer to act on behalf of the Corporation in regard to shares of other corporations owned by this Corporation in which event he shall have full power and authority to attend and to act and to vote at any meeting of shareholders of any corporation in which this Corporation may hold shares and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such shares which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE VI CERTIFICATES REPRESENTING SHARES Section 1. Form of Certificates. The certificates representing shares of the Corporation shall be in such form, not inconsistent with statutory provisions and the BL 10 Articles of Incorporation, as shall be approved by the Board of Directors. The certificates shall be signed by the Chief Executive Officer and Secretary of the Corporation and sealed with the corporate seal or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of its issuance. All certificates shall be consecutively numbered and the name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the Corporation's books. Section 2. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares as the owner of such shares with all of the rights of ownership and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of California. Section 3. Lost Certificates. The Corporation may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of the lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such form, in such sum, and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by the Articles of Incorporation, the By-laws and the applicable laws of the State of California. Section 2. Reserves. There may be created by resolution of the Board of Directors out of the earned surplus of the Corporation such reserve or reserves as the Board of Directors from time to time, in its discretion, deems proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other proper purpose as the Board shall deem beneficial to the Corporation, and the Board may modify or abolish any reserve in the same manner in which it was created. BL 11 Section 3. Seal. If one be adopted, the corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved by the Board of Directors. Said seal may be used by causing it or a facsimile of it to be impressed or affixed or in any manner reproduced. Any officer of the Corporation shall have authority to affix the seal to any document requiring it. Section 4. Fiscal Year. Unless another fiscal year shall be fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the 1st day of October and terminate on the 30th of September each calendar year. Section 5. Reports of Situation and Amount of Business. The. Board of Directors shall, when requested by the holders of at least one-tenth (1/10) of the outstanding voting shares of the Corporation, present written reports of the situation and amount of business of the Corporation. Section 6. Checks, Notes, etc. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7. Examination of Books and Records. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least ten percent (10%) of all the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the books and records of account, minutes, and record of shareholders of the Corporation, and shall be entitled to make extracts therefrom. Section 8. Indemnification of Directors. Subject to the applicable laws of the State of California, the Corporation shall indemnify any director, officer, or employee, or former director, officer, or employee of the Corporation, or any person who may have served at its request as a director, officer, or employee of another corporation in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The Corporation may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the Board of the Directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the Corporation that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct. Such rights of indemnification BL 12 and reimbursement shall not be deemed exclusive of any other rights to which such director, officer, or employee may be entitled by law or under any By-law, agreement, vote of shareholders, or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. Compliance With By-Laws. Any action taken or determination made in good faith by the shareholders or the Board of Directors shall be effective, valid and binding although the same may not have been taken or made in strict compliance with the By-laws of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the shareholders or by the Board of Directors, at any regular meeting of the shareholders or of the Board of Directors or at any special meeting of the shareholders or of the Board of Directors if notice of such alteration, amendment repeal or adoption of new By-Laws be contained in the notice of such special meeting. Dated: December 13, 1994 BL 13 EX-3.43 44 ex3-43_043004.txt ARTICLES OF INCORPORATION COVERDELL & CO. CERTIFICATE OF MERGER OF MW ACQUISITION CORP. WITH AND INTO COVERDELL & COMPANY, INC. The undersigned domestic corporations, pursuant to Section 14-2-1105 of the Georgia Business Corporation Code, hereby execute and adopt this Certificate of Merger and set forth: 1. The names of the corporations participating in the merger herein certified (the "Merger") and the states under the laws of which the corporations are organized are as follows: Name of Corporation State of Incorporation COVERDELL & COMPANY, INC. ("Coverdell" or the "Surviving Corporation") Georgia MW ACQUISITION CORP. ("Newco") Georgia 2. The Articles of Incorporation of the Surviving Corporation shall be amended and restated in their entirety to read as follows: FIRST: The name of the corporation is Coverdell & Company, Inc. SECOND: The registered office of the corporation is located at c/o United Corporate Services, Inc., 4228 First Avenue, in the City of Tucker County of DeKalb, State of Georgia 30084. The name of its registered agent at that address is United Corporate Services, Inc. The principal office of the corporation is located at 1718 Peachtree Street, Suite 276, Atlanta, Georgia 30309. THIRD: The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the Georgia Business Corporation Code. FOURTH: The duration of the Corporation is perpetual. FIFTH: The corporation shall be authorized to issue 1,000 shares of Common Stock par value $0.01 per share. SIXTH: A director of the corporation shall not 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 appropriation, in violation of his duties, of any business opportunity of the Corporation, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the director derived an improper personal benefit; or (iv) under Section 14-2-154 of the Georgia Business Corporation Code, as amended or supplanted from time to time. If the Georgia Business Corporation Code is amended after approval by the shareholder of this Article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Georgia Business Corporation Code, as so amended. Any repeal or modification of this Article by the shareholder of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. 3. The executed Plan of Merger (the "Plan of Merger") between the constituent corporations is on file at the principal place of business of the Surviving Corporation, the address of which is as follows: Coverdell & Company, Inc. 1718 Peachtree Street, NW Suite 276 Atlanta, Georgia 30309 4. A copy of the Plan of Merger will be furnished by the Surviving Corporation or request and without cost, to any shareholder of either of the constituent corporations. 5. The Plan of Merger was duly approved by the shareholders of Coverdell on March 28, 1998 and by the sole shareholder of Newco on March 27, 1998. 6. Pursuant to the Plan of Merger, the Merger shall become effective as of the date and time of filing of this Certificate of Merger. 7. Coverdell hereby certifies that a Notice of Merger and a publishing fee of $40.00 have been mailed or delivered to an authorized newspaper, as required by law. Dated: April 2, 1998 COVERDELL & COMPANY, INC., the surviving corporation /s/ --------------------------------- By: Michael L. Owens Its: President MW ACQUISITION CORP. /s/ --------------------------------- By: Its: 2 ARTICLES OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF COVERDELL & COMPANY, INC. Pursuant to Section 14-2-602(d) of the Georgia Business Corporation Code (the "Code"), Coverdell & Company, Inc., a Georgia corporation, hereby submits these Articles of Amendment: I. The name of the corporation is Coverdell & Company, Inc. (the "Corporation"). II. Article V(c) of the Amended and Restated Articles of Incorporation of the Corporation is hereby amended (the "Amendment") by adding the following as a new subparagraph (1): "(1) The Corporation shall have the authority to issue Four Hundred Thousand (400,000) shares of Series A $1.00 par value Preferred Stock ("Series A Preferred Stock"). Each share of Series A Preferred Stock shall have the same rights, powers and preferences as each share of Class A Common Stock, except as follows: (A) Series A Preferred Stock shall have no voting rights except as granted by the Georgia Business Corporation Code. (B) In the event of any liquidation, dissolution, or winding up of the Corporation, before any payment or distribution of the assets of the Corporation shall be made to or set apart for the holders of any class of Common Stock, the holders of Series A Preferred Stock shall be entitled to receive the par value of the Series A Preferred Stock, plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of the final distribution to such holders. (C) Each share of Series A Preferred Stock shall bear a preferred dividend of 409 basis points over the U.S. Treasury Note - 3.5 years maturity determined as of January 23, 1995. The quarterly dividend for the Preferred Stock shall be paid quarterly on January 2, April 1, July 1, and October 1 of each year. (D) Beginning December 15 1995 and continuing for four (4) successive twelve month periods, the Series A Preferred Stock shall he redeemed, at par value as follows: Redemption Date Number of Shares Redeemed December 15, 1995 100,000 shares December 15, 1996 100,000 shares December 15, 1997 100,000 shares December 15, 1998 50,000 shares December 15, 1999 50,000 shares III. The Amendment was duly adopted on January 23, 1995. IV. The Amendment was duly adopted by the Board of Directors of the Corporation in accordance with the provisions of Code Section 14-2-602. IN WITNESS WHEREOF, Coverdell & Company, Inc. has caused these Articles of Amendment to be executed by its duly authorized officer this 23rd day of January, 1995. COVERDELL & COMPANY, INC. By: /s/ Michael L. Owens ----------------------------- Michael L. Owens Title: President 2 ARTICLES OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF COVERDELL & COMPANY, INC. Pursuant to Section 14-2-1002 of the Georgia Business Corporation Code (the "Code"), Coverdell & company, Inc., a Georgia corporation, hereby submits these Articles of Amendment: I. The name of the corporation is Coverdell & Company, Inc. (the "Corporation"). II. The Amended and Restated Articles of Incorporation of the Corporation are hereby amended (the "Amendment") by adding the following as a new subsection (c) to the present Article "V." "(c) The Corporation shall have the authority to issue Five Million (5,000,000) shares of $1.00 par value Preferred Stock ("Preferred Stock"). The Board of Directors of the Corporation shall have the authority (i) to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, (ii) to determine and take necessary proceedings fully to effect the issuance and redemption of any such Preferred Stock, and (iii) with respect to each class or series of the Preferred Stock, to fix and state, by the resolution or resolutions from time to time adopted providing for the issuance thereof, the preferences, limitations and relative rights of each such class or series to be issued." III. The Amendment was duly adopted on November 18, 1994, by unanimous written consent of the Board of Directors of the Corporation and on November 28, 1994, by majority written consent of the shareholders of the Corporation (the "Shareholders"). IV. The Amendment was duly approved by the Shareholders in accordance with the provisions of Code Section 14-2-1003. IN WITNESS WHEREOF, Coverdell & Company, Inc. has caused these Articles of Amendment to be executed by its duly authorized officer this 23rd day of December, 1994. COVERDELL & COMPANY, INC. By: /s/ Michael L. Owens ----------------------------- Michael L. Owens Title: President 2 CERTIFICATE OF RESTATEMENT OF Coverdell & Company, Inc. Pursuant to Section 14-2-1007 of the Georgia Business Corporation Code (the "Code") Coverdell & Company, Inc., a Georgia corporation (the "Corporation"), hereby certifies that: 1. The name of the Corporation is Coverdell & Company, Inc. 2. The Amended and Restated Articles of Incorporation of the corporation (the "Articles of Restatement") contain amendments to the Articles of Incorporation of the Corporation (the "Articles of Incorporation") which require shareholder approval. 3. Pursuant to Code Sections 14-2-1001 and 14-2-1003, the Amended and Restated Articles of Incorporation of the Corporation were adopted or March 23, 1992 by a majority of the Corporation's stockholders entitled to vote thereon. The stockholder vote required to adopt the amendment is a majority of the issued and outstanding stock. The number of shares of class A common stock issued and outstanding and entitled to vote upon said amendment was 568,954 shares. There are no issued and outstanding shares of class B common stock of the Corporation. Holders of 578,954 shares of the Corporation's class A common stock, representing 98.3% of the issued and outstanding shares of the Corporation's class A common stock, voted in favor of the amendment, in person or by proxy. The vote was held at a shareholder's meeting of the Corporation duly called and held on March 23, 1992. 4. The existing Articles of Incorporation have been amended by adding the following new Article V: V. The Corporation shall have the authority to issue such shares of stock as shall be provided for herein: (a) The Corporation shall have the authority to issue Ten million (10,000,000) shares of $.01 par value Class A Common Stock ("Class A Stock"). Each share of Class A Stock shall have the same rights, powers and preferences, including without limitation voting and dividend rights. All of the rights, powers and preferences of the shareholders of the Corporation shall belong to the shareholders of the Class A Stock, except as otherwise provided in this Article V. (b) The Corporation shall have the authority to issue Two (2) shares of $1.00 par value Class B Common Stock ("Class B Stock") upon the following terms and conditions and with the rights, powers and preferences as follows: (1) The Class B Stock may only be issued to E.P. Coverdell and/or Paul D. Coverdell and may only be issued at such time as the Class A Stock owned by E.P. Coverdell, Paul D. Coverdell, their spouses, lineal descendents, trusts for any of the foregoing persons and their legal representatives ("Coverdell Family Group") constitutes less than 50.1% of the issued and outstanding Class A Stock of the Corporation. (2) The Class B Stock shall have the right to vote on all issues which are submitted to the shareholders of the Class A Stock. The aggregate vote of the shareholders of Class B Stock shall be equal to 50.1% of the voting power of all of the issued and outstanding Class A Stock of the Corporation, minus the voting power of the Class A Stock owned by the Coverdell Family Group. 2 (3) In the event the Class B Stock owned by the Coverdell Family Group is reduced below 50.1% of the total number of issued and outstanding shares of Class A Stock of the Corporation by gift(s), bequest(s), redemption(s), sale(s), exchange(s) (other than for some other class of the Corporation's stock), or any combination of the foregoing prior to the issuance of the Class B Stock, then neither E. P. Coverdell, Paul D. Coverdell, nor any other party shall have the right to acquire any shares of Class B Stock. (4) If at any time after the Class B Stock has been issued, the Class A Stock owned by the Coverdell Family Group is reduced by a gift, bequest, redemption, sale or exchange (other than for some other class of the Corporation's stock), then the issued and outstanding Class B Stock shall be redeemed by the Corporation at par value ($1.00 per share) and shall not thereafter be reissued. (5) In the event of any liquidation or dissolution of the Corporation, the holders of the Class B Stock shall only be entitled to receive the par value ($1.00) per share of the Class A Stock. (6) Other than the right to vote and to receive the par value of the Class B Stock as set forth above, the holders of the Class B Stock shall not be entitled to any other rights as a stockholder such as dividends or any distributions of cash, securities or any other consideration upon a sale, exchange or merger of the Corporation. 6. The Articles of Restatement supersede the original Articles of Incorporation and all amendments thereto. IN WITNESS WHEREOF, Coverdell & Company, Inc. has caused this Certificate of Restatement to be executed by its duly authorized officer this 23rd day of March, 1992. Coverdell & Company, Inc. By: /s/ Michael L. Owens ----------------------------- Title: President 3 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF COVERDELL & COMPANY, INC. Pursuant to the provisions of Sections 14-2-1006 and 14-2-1007 of the Georgia Business Corporation Code (the "Code"), Coverdell & Company, Inc., a Georgia corporation (the "Corporation") hereby submits these Amended and Restated Articles of Incorporation (the "Amended and Restated Articles"): FIRST: The name of the Corporation is: Coverdell & Company, Inc. SECOND: The Corporation's original charter was granted by the Secretary of State of Georgia on December 28, 1984. THIRD: The Amended and Restated Articles shall be as follows: "I. The name of the corporation is: Coverdell & Company, Inc. II. The Corporation is organized pursuant to the provisions of the Georgia Business Corporation Code. III. The period of duration of the Corporation is perpetual. IV. The nature of the business and the purpose to be conducted and promoted are as follows: To design, provide, and furnish insurance, marketing, and administrative services of all forms and types to any person or entity; and To engage in any lawful act or activity for which corporations may be incorporated under the Georgia Business Corporation Code, and to exercise all the rights, privileges, immunities, and authority granted to or exercised by business corporations under the laws of the State of Georgia now in effect or that will become effective during the existence of this Corporation. V. The Corporation shall have the authority to issue such shares of stock as shall be provided for herein: (a) The Corporation shall have the authority to issue Ten million (10,000,000) shares of $.01 par value Class A Common Stock ("Class A Stock"). Each share of Class A Stock shall have the same rights, powers and preferences, including without limitation voting and dividend rights. All of the rights, powers and preferences of the shareholders of the Corporation shall belong to the shareholders of the Class A Stock, except as otherwise provided in this Article V. (b) The Corporation shall have the authority to issue Two (2) shares of $1.00 par value Class B Common Stock ("Class B Stock") upon the following terms and conditions and with the rights, powers and preferences as follows: (1) The Class B Stock may only be issued to E.P. Coverdell and/or Paul D. Coverdell and may only be issued at such time as the Class A Stock owned by E.P. Coverdell, Paul D. Coverdell, their spouses, lineal descendants, trusts for any of the foregoing persons and their legal representatives ("Coverdell Family Group") constitutes less than 50.1% of the issued and outstanding Class A Stock of the Corporation. 2 (2) The Class B Stock shall have the right to vote on all issues which are submitted to the shareholders of the Class A Stock. The aggregate vote of the shareholders of Class B Stock shall be equal to 50.1% of the voting power of all of the issued and outstanding Class A Stock of the Corporation, minus the voting power of the Class A Stock owned by the Coverdell Family Group. (3) In the event the Class A Stock owned by the Coverdell Family Group is reduced below 50.1% of the total number of issued and outstanding shares of Class A Stock of the Corporation by gift(s), bequest(s), redemption(s), sale(s), exchange(s) (other than for some other class of the Corporation's stock), or any combination of the foregoing prior to the issuance of the Class B Stock, then neither E. P. Coverdell, Paul D. Coverdell, nor any other party shall have the right to acquire any shares of Class B Stock. (4) If at any time after the Class B Stock has been issued, the Class A Stock owned by the Coverdell Family Group is reduced by a gift, bequest, redemption, sale or exchange (other than for some other class of the Corporation's stock), then the issued and outstanding Class B Stock shall be redeemed by the Corporation at par value ($1.00 per share) and shall not thereafter be reissued. (5) In the event of any liquidation or dissolution of the Corporation, the holders of the Class B Stock shall only be entitled to receive the par value ($1.00) per share of the Class B Stock. (6) Other than the right to vote and to receive the par value of the Class B Stock as set forth above, the holders of the Class B Stock shall not be entitled to any other rights as a stockholder such as dividends or any distributions of cash, securities or any other consideration upon a sale, exchange or merger of the Corporation. VI. Except as specifically set forth in these Amended and Restated Articles of Incorporation, no holder of shares of the Corporation of any class now or hereafter authorized shall have any preferential or pre-emptive right to subscribe for, 3 purchase or receive any shares of the Corporation of any class now or hereafter authorized, or any options or warrants for such shares, or any securities convertible into or exchangeable for such shares, which may at any time be issued, sold or offered for sale by the Corporation. VII. A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of duty of care or other duty as a director, except for liability (i) for any appropriation, in violation of his duties, of any business opportunity of the Corporation, (ii) for acts or not in good faith or which involve intentional misconduct knowing violation of law, or (iii) for any transaction from which the director derived an improper personal benefit. If the Georgia Business Corporation Code is amended after approval by the shareholders of this Article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Georgia Business Corporation Code, as so amended. Any repeal or modification of this Article by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. 4 VIII. Any action required to be taken at a meeting of the shareholders of the Corporation or any action which may be taken at a meeting of the shareholders may be taken without a meeting if written consent, setting forth the action so taken, shall be signed by persons who would be entitled to vote at a meeting those shares having voting power to cast not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote were present and voted. Notice shall be given within ten (10) days of the taking of corporate action without a meeting by less than unanimous written consent to those shareholders on the record date whose shares were not represented on the written consent. For purposes of written consent by the shareholders, the record date shall be the date when the consent is first executed and action shall be deemed taken when executed by the last necessary signature. A written consent executed pursuant to this Article shall have the same force and effect as a vote at a meeting of the shares represented on the executed consent and may be stated as such in any articles or document filed with the Secretary of state, provided that such articles or document shall also state that any notice or other information required by the Georgia Business Corporation Code has been given. 5 No consent shall be effective as approval of a plan of merger or plan of consolidation unless: (1) Prior to the execution of the consent, the shareholders shall have been given: (A) If such shareholders would be entitled to exercise rights pursuant to Georgia Business Corporation Code Sections 14-2-1301 et. seq., a clear and concise statement that, if the plan of merger and consolidation is effected, the shareholders dissenting therefrom are entitled, if they file a written objection to such plan before the vote of the shareholders is taken thereon and comply with the further provisions of Code Sections 14-2-1321, 14-2-1332, and 14-2-1323 regarding the rights of dissenting shareholders, to be paid the fair value of their shares; (B) A copy of the plan of merger or consolidation or an outline of the material features of the plan; and (C) A copy of the most recent annual balance sheet and annual profit and loss statement of each of the merging or consolidating corporations and of each other corporation, securities of which are to be delivered pursuant to the plan of merger or consolidation; or (2) The written consent itself conspicuously and specifically states that waiver of the right to receive such information is expressly made. FOURTH: Upon acceptance of these Amended and Restated Articles of Incorporation of the Corporation by the Secretary of State of Georgia, each share of the $.01 par value class A common stock of the Corporation which is currently issued and outstanding shall automatically and without further action convert into one (1) share of the Corporation's Class A Stock. Each holder of the Corporation's $.01 par value class A common stock may, but shall not be required to, surrender his share 6 certificate(s) representing such shares of stock to an agent or agents designated by the Corporation whereupon such surrendered certificate(s) shall be cancelled and each such holder shall be issued a new certificate representing the number of shares of the Corporation's Class A Stock to which he is entitled. FIFTH: These Amended and Restated Articles of Incorporation of the Corporation were adopted on March 23, 1992 by a majority of the Corporation's stockholders entitled to vote thereon pursuant to the provisions of Section 14-2-1003 of the Georgia Business Corporation Code. The stockholder vote required to adopt the amendment is a majority of the issued and outstanding stock. The number of shares of class A common stock issued and outstanding and entitled to vote upon said amendment was 588,954 shares. There are no issued and outstanding shares of class B common stock of the Corporation. Holders of 578,954 shares of the Corporation's class A common stock, representing 98.3% of the issued and outstanding shares of the Corporation's class A common stock, voted in favor of the amendment, in person or by proxy. The vote was held at a shareholder's meeting of the Corporation duly called and held on March 23, 1992. SIXTH: These Amended and Restated Articles of Incorporation supersede the original Articles of Incorporation and all amendments thereto. 7 IN WITNESS WHEREOF, the undersigned officers of the Corporation have executed these Articles of Amendment of the Articles of Incorporation of Coverdell & Company, Inc. on March 23, 1992. COVERDELL & COMPANY, INC. a Georgia corporation By: /s/ Michael L. Owens ----------------------------- Its: President Attest:_____________________________ Secretary (CORPORATE SEAL) 8 ARTICLES OF MERGER OF EPC NEWCO, INC. (A Georgia Corporation) INTO COVERDELL & COMPANY, INC. (A Georgia Corporation) ARTICLE I The Plan of Merger attached hereto and by reference made a part hereof (hereinafter the "Plan") was duly approved by the Board of Directors of COVERDELL & COMPANY, INC., a Georgia corporation ("COVERDELL"), and the Board of Directors of EPC NEWCO, INC., a Georgia corporation ("NEWCO"). ARTICLE II There were 592,162 shares of Class A common stock of COVERDELL outstanding entitled to vote on the Plan. No other class of stock was issued or outstanding. An affirmative vote of 296,082 shares of Class A common stock was required to the Plan. The Plan was adopted pursuant to Section 14-2 of the Georgia Business Corporation Code by written consent of the Shareholders of COVERDELL upon execution of a consent by a holder of 422,289 shares of Class A common stock of COVERDELL. The Articles of Incorporation of COVERDELL permit such action, and the notice and other requirements of Section 14-2-112(d) were complied with. ARTICLE III There were 500 shares of common stock of NEWCO outstanding and entitled to vote on the Plan. No other class of stock was issued or outstanding. The affirmative vote of the holders of 251 share of the common stock of EPC NEWCO, INC. outstanding was required to adopt the Plan. The Plan was adopted pursuant to Section 14-2-112(d) of the Georgia Business Corporation Code by the unanimous written consent of the holder of all 500 shares of common stock. ARTICLE IV The merger herein contemplated shall be effective on December 29, 1988 (the "Effective Date"). ARTICLE V The laws of the State of Georgia, under which these corporations are organized, permit this merger, and all provisions of such laws applicable to such merger have been complied with. The name of the surviving corporation is COVERDELL & COMPANY, INC., a Georgia corporation, and it shall be governed by the laws of the State of Georgia. ARTICLE VI This document may be executed in any number of counterparts, each of which shall be deemed an original, and with the same effect as if all parties hereto had signed the same document. All counterparts shall be construed together 2 and shall constitute one and the same document which may be sufficiently evidenced by one counterpart. IN WITNESS WHEREOF, the undersigned have executed these Articles of Merger the day and year indicated above. COVERDELL & COMPANY, INC. By: /s/ Paul D. Coverdell ----------------------------- President ATTEST: /s/ - -------------------------- Secretary (CORPORATE SEAL) EPC NEWCO, INC. By: /s/ Paul D. Coverdell ----------------------------- President ATTEST: /s/ - -------------------------- Secretary (CORPORATE SEAL) 3 PLAN AND AGREEMENT OF MERGER OF EPC NEWCO, INC. INTO COVERDELL & COMPANY, INC. PLAN AND AGREEMENT OP MERGER dated as of December , 1988 by and between COVERDELL & COMPANY, INC., a Georgia corporation ("COVERDELL") and EPC NEWCO, INC., a Georgia corporation ("NEWCO") (both of said corporations being referred to collectively herein as the "Constituent Corporations"). WHEREAS, COVERDELL and NEWCO desire to merge in accordance with the terms hereinafter provided; NOW THEREFORE, in consideration of the premises and the mutual agreements, covenants and provisions herein contained, the parties agree as follows: 1. Authorized and Outstanding Shares. (a) The authorized capital stock of COVERDELL (the "COVERDELL stock") consists of 592,162 shares of Class A common stock, of which 592,162 shares are issued and outstanding on the date hereof; and 592,162 shares of Class B common stock of which no shares have been issued. (b) The authorized capital stock of NEWCO consists of 500 shares of common stock (the "NEWCO stock"), of which 500 shares are issued and outstanding on the date hereof. 2. The Merger. (a) On the Effective Date (as such term is hereinafter defined in Section 2(b) hereof), COVERDELL and NEWCO shall be merged into a single corporation, to wit, COVERDELL, which shall be the surviving corporation and which is sometimes hereinafter referred to as the "surviving corporation," and which shall continue to exist as said surviving corporation pursuant to the provisions of the Georgia Business Corporation Code. The separate existence of NEWCO, which is sometimes hereinafter referred to as the "terminating corporation," shall cease upon (the Effective Date in accordance with the provisions of the Georgia Business Corporation Code. (b) The term "Effective Date" as used herein shall mean December 29, 1988. 3. Articles of Incorporation; Bylaws; Directors; Officers. (a) The Articles of Incorporation of COVERDELL as in force and effect upon the Effective Date shall be the Articles of Incorporation of the surviving corporation and shall continue in full force and effect until changed, altered or amended in the manner prescribed by the provisions of the Georgia Business Corporation Code. (b) The Bylaws of COVERDELL as in force and effect upon the Effective Date shall be the Bylaws of said surviving corporation and will continue in full force and effect until changed, altered, or amended as therein provided and in the manner prescribed by the provisions of the Georgia Business Corporation Code. (c) The directors and officers in office of COVERDELL as of the Effective Date shall continue to be the directors and officers of the surviving corporation, each of whom shall hold his or her directorship and office until the election and qualification of his or her respective successor or until his or her tenure is otherwise terminated in accordance with the provisions of the bylaws of the surviving corporation. 4. Conversion of and Payments for Shares. (a) The manner and basis of converting the shares of each of the Constituent Corporations into shares or other securities or obligations of the surviving corporation shall be as follows: (i) Each share of NEWCO stock issued and outstanding immediately prior to the Effective Date shall, by virtue of the Merger, be converted into and exchanged for the right to receive $1.00 in cash, to be paid pursuant to Section 4(b) hereof. (ii) Subject to Section 4(a)(iii) hereof, each share of COVERDELL stock issued and outstanding immediately prior to the Effective Date shall not be converted in any manner and each such Share shall continue to represent one issued share of the surviving corporation. (iii) With regard to any owner of shares of COVERDELL stock who, on the date immediately prior to 2 the Effective Date, is the holder of record of less than 3,000 shares of COVERDELL stock, each share of such an owner shall be converted into the right to receive $2.10. (b) After the Effective Date, each holder of NEWCO stock and any holder of COVERDELL stock described in Section 4(a)(iii) hereof (such shares of stock are referred to in this Section 4(b) as "Redeemed Stock") shall be entitled, upon surrender to the Secretary of COVERDELL of such certificate for cancellation, to receive the amount of cash in exchange for shares represented by the certificate so surrendered to which the holder is entitled in accordance with Sections 4.1(a)(i) or (ii) hereof. Until so surrendered and exchanged, each outstanding certificate of shares of Surrendered Stock shall be deemed after the Effective Date for all purposes to represent only the right to receive cash in accordance with this Section 4(b). After the Effective Date, no transfer of the shares of Redeemed Stock outstanding immediately prior to the Effective Date shall be entered on the shareholder records of COVERDELL or NEWCO. No interest shall accrue or be payable with respect to any funds held by the surviving corporation for the benefit of holders of Redeemed Stock. (c) If the holder of any shares of COVERDELL stock issued and outstanding immediately prior to the Effective Date shall, in accordance with the applicable provisions of Sections 14-2-250 and 14-2-251 of the Georgia Business Corporation Code become entitled to receive payment for the fair value of such shares, such payment shall be made by the surviving corporation. 5. Conditions of Merger. This Agreement shall be submitted to a vote of the stockholders of COVERDELL and NEWCO. The Merger shall not be consummated unless the holders of a majority of the issued and outstanding shares entitled to vote of COVERDELL stock and the holders of a majority of the issued and outstanding shares entitled to vote of NEWCO stock both approve the Merger. 6. Abandonment of Agreement. At any time prior to the Effective Date, the Board of Directors of COVERDELL or the Board of Directors of NEWCO may terminate and abandon the Merger, notwithstanding favorable action on the Merger by the shareholders of either such corporation or earlier approval of the Boards of Directors of such corporations. 7. Authorization to Effect Merger. The Board of Directors and the proper officers of COVERDELL and NEWCO, 3 respectively, are hereby authorized, empowered and directed to do any and all acts and things, and to make, execute, deliver, file, and/or record any and all instruments, paper and documents which shall be or become necessary, proper or convenient to carry out or put into effect any of the provisions of this Agreement or of the Merger. 8. Expenses. All expenses relating to the Merger, whether or not it is ultimately consumated, shall be borne entirely by COVERDELL. 9. Governing Law. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of Georgia. IN WITNESS WHEREOF, the undersigned have executed this Plan and Agreement of Merger the day and year indicated above. COVERDELL & COMPANY, INC. By: /s/ Paul D. Coverdell ----------------------------- President ATTEST: /s/ - -------------------------- Secretary (CORPORATE SEAL) EPC NEWCO, INC. By: /s/ Paul D. Coverdell ----------------------------- President ATTEST: /s/ - -------------------------- Secretary (CORPORATE SEAL) ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF COVERDELL & COMPANY, INC. Pursuant to the provisions of the Georgia Business Corporation Code, Coverdell & Company, Inc., a Georgia corporation (the "Corporation"), hereby submits these Articles of Amendment of the Articles of Incorporation of the Corporation. I. The name of the Corporation is Coverdell & Company, Inc. II. Article V of the Articles of Incorporation of the Corporation is hereby amended by striking it in its entirety and substituting the following in lieu thereof: "The aggregate number of shares of stock which the Corporation shall have authority to issue shall be 592,162 shares of $.01 par value Class A Common Stock and 592,162 shares of $.01 par value Class B Common Stock. Each Class of Common Stock shall have the same rights, powers and preferences, including without limitation voting and dividend rights, except as otherwise set forth below. In the event of the liquidation, dissolution, consolidation or merger of the Corporation, each share of Class A Common Stock will entitle its holder to receive, on a pro rata basis before any distribution or payment is made upon any shares of the Corporation's Class B Common Stock, an amount equal to $4.50 per share. Any and all shares of the Corporation's Class A Common Stock issued as provided in Article III below and subsequently purchased, redeemed or otherwise reacquired by the Corporation shall be cancelled upon the reacquisition of such shares by the Corporation and shall not thereafter be reissued by the Corporation. Upon the cancellation of any shares of the Class A Common Stock in accordance with the requirements hereof, a statement of cancellation shall be executed and delivered to the Secretary of State of the State of Georgia in accordance with the provisions of Section 14-2-94(d) or the Georgia Business Corporation Code. III. Upon acceptance of these Articles of Amendment to the Articles of Incorporation of the Corporation by the Secretary of State of the State of Georgia, each share of the $.01 par value Common Stock of the Corporation which is currently issued and outstanding shall automatically and without further action -2- convert into one (1) share of the Corporation's Class A Common Stock. Each holder of the Corporation's $.01 par value Common Stock may, but shall not be required to, surrender his share certificate(s) representing such shares of Common Stock to an agent or agents designated by the Corporation whereupon such surrendered certificate(s) shall be cancelled and each such holder shall be issued a new certificate representing the number of shares of the Corporation's Class A Common stock to which he to entitled. IV. The amendment to the Corporation's Articles of Incorporation was adopted by a majority of the Corporation's stockholders entitled to vote thereon by Consent pursuant to the provisions of Section 14-2-112(d) of the Georgia Business Corporation Code. The stockholder vote required to adopt the amendment is a majority of the issued and outstanding stock. The number of shares of stock issued and outstanding and entitled to vote upon said amendment was 592,162 shares. The actual vote for the amendment was 494,252 shares, being 83.47(%) percent of the issued and outstanding shares. Notice to the shareholders on the record date whose shares were not represented on the written consents was given within ten (10) days of the taking of corporate action as required by said Section 14-2-112(d). -3- IN WITNESS WHEREOF, the undersigned officers of the Corporation have executed these Articles of Amendment of the Articles of Incorporation of Coverdell & Company, Inc. as of the 14th day of Oct., 1988. COVERDELL & COMPANY, INC. a Georgia corporation By: /s/ Paul D. Coverdell ---------------------------- Paul D. Coverdell, President Attest: /s/ Molly Dye -------------------- Molly Dye, Secretary [CORPORATE SEAL] -4- ARTICLES OF CONSOLIDATION OF RURAL AMERICA MARKETING CORPORATION, A Delaware Corporation, and COVERDELL and COMPANY, A Georgia Corporation To Form COVERDELL & COMPANY, INC., A Georgia Corporation Pursuant to the provisions of the Georgia Business Corporation Code and the Delaware Corporation Law, the corporations hereinafter named do hereby adopt these Articles of Consolidation as follows: I. The names of the consolidating, corporations are: Rural America Marketing Corporation, a Delaware corporation ("RAM"), and Coverdell and Company, a Georgia corporation ("C&C"). II. RAM and C&C shall consolidate to form a new corporation under the laws of the State of Georgia to be named "Coverdell & Company, Inc." (the "New Company"). III. Annexed hereto and made a part hereof is the Agreement and Plan of Consolidation for consolidating RAM and C&C, executed December 4, 1984, as approved by resolutions adopted by the Board of Directors of each of said consolidating corporations. IV. The number of the issued and outstanding shares of common stock of RAM as of December 27, 1984, was 479,880. Of that amount, shares, constituting a majority of the shares then issued and outstanding, was required to approve the Agreement and Plan of Consolidation. The Agreement and Plan of Consolidation was adopted and approved by the vote of holders of 395,790 shares of the common stock of RAM. V. The number of the issued and outstanding shares of common stock of C&C as of December 27, 1984, was one hundred (100). Of that amount, one hundred (100) shares, constituting a majority of the shares then issued and outstanding, was required to approve the Agreement and Plan of Consolidation. The Agreement and Plan of Consolidation was adopted and approved by vote of the holders of one hundred (100) shares of the common stock of C&C. VI. The effective time and date of the Consolidation shall be December 31, 1984. -2- IN WITNESS WHEREOF, the duly authorized officers of RAM and C&C have caused these Articles of Consolidation to be executed on this 31st day of December, 1984. RURAL AMERICA MARKETING CORPORATION By: /s/ Paul D. Coverdell President [Corporate Seal] /s/ Attest: Secretary COVERDELL AND COMPANY By: /s/ Paul D. Coverdell President [Corporate Seal] /s/ Attest: Secretary -3- EXHIBIT "A" ARTICLES OF INCORPORATION OF COVERDELL & COMPANY, INC. I. The name of the Corporation is: Coverdell & Company, Inc. II. The Corporation is organized pursuant to the provisions of the Georgia Business Corporation Code. III. The period of duration of the Corporation is perpetual. IV. The nature of the business and the purpose to be conducted and are as follows: To design, provide, and furnish insurance services of all forms and types to any person or entity; and To engage in any lawful act or activity for which corporations may be incorporated under the Georgia Business Corporation Code, and to exercise all the rights, privileges, immunities, and authority granted to or exercised by business corporations under the laws of the State of Georgia now in effect or that will become effective during the existence of this Corporation. V. The aggregate number of shares of stock which the Corporation shall have authority to issue is 1,000,000, all of the par value of $.01. All such shares are one class and are designated as common stock. VI. No holder of shares of the Corporation of any class now or hereafter authorized shall have any preferential or pre-emptive right to subscribe for, purchase or receive any shares of the Corporation of any class now or hereafter authorized, or any options or warrants for such shares, or any securities convertible into or exchangeable for such shares, which may at any time be issued, sold or offered for sale by the Corporation. VII. The Corporation will not commence business until consideration of at least $500.00 has been received by the Corporation for the issuance of its shares. VIII. The address of the registered office of the Corporation shall be: 2015 Peachtree Road, NE, Atlanta, Georgia 30309, and the name of the initial registered agent at such address is Paul D. Coverdell. IX. The number of directors constituting the initial board of directors of the Corporation shall be seven and the names and addresses of the persons who are to serve as the directors of the initial board of directors are as follows: Name Address Eldon P. Coverdell 2015 Peachtree Road, NE Atlanta, Georgia 30309 Paul D. Coverdell 2015 Peachtree Road, NE Atlanta, Georgia 30309 John R. Browne 1506 Drury Street Oklahoma City, Oklahoma 73112 Sexias G. Milner North Gate Office Park 3610 Interstate 85 Suite 104 Atlanta, Georgia 30340 Dr. John Mauldin 315 Boulevard, N.E. Suite 528 Atlanta, Georgia 30312 Kenneth Stern Mounted Route 2058 Roaring Spring, Pennsylvania 16673 S. Jarvin Levison 55 Park Place, Suite 400 Atlanta, Georgia 30335 X. The name and address of the incorporator is as follows: Donald I. Hackney, Jr., 55 Park Place, Suite 400, Atlanta, Georgia 30335. /s/ Donald I. Hackney, Jr. ------------------------- Donald I. Hackney, Jr. Incorporator -2- AGREEMENT AND PLAN OF CONSOLIDATION OF RURAL AMERICA MARKETING CORPORATION AND COVERDELL AND COMPANY This Agreement and Plan of Consolidation made and entered into as of this 3rd day of December, 1984, by and between Rural America Marketing Corporation, a corporation of the State of Delaware ("RAM") and Coverdell and Company, a corporation of the State of Georgia ("C&C"), is approved by resolutions adopted by the Board of Directors of each such corporation; WHEREAS, RAM is a corporation of the State of Delaware with its registered office therein located at 1209 Orange St., Wilmington, Delaware 19801; and WHEREAS, the total number of shares of stock which RAM has authority to vote is 2,000,000, all of which are of one class and of a par value of $0.01, and 520,654 of which are issued; and WHEREAS, C&C is a corporation of the State of Georgia with its registered office therein located at 2015 Peachtree Road, NE, Atlanta, Georgia 30309, County of ; and, WHEREAS, the total number of shares of stock which C&C has authority is 1000 all of which are of one class and of a par value of $100, and 100 of which are issued; and WHEREAS, the laws of the State of Georgia permit the consolidation of a corporation of that jurisdiction and a corporation of another jurisdiction; and WHEREAS, RAM and C&C and the respective boards of directors thereof deem it advisable and to the advantage, welfare and best interests of said corporations and their respective stockholders to consolidate RAM and C&C, forming a new Georgia corporation under the name of "Coverdell & Company, Inc.," pursuant to the provisions of the General Corporation Law of the State of Delaware and of the Georgia Business Corporation Code, upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and of the mutual agreement between the parties hereto, being thereunto duly approved by resolutions adopted by the boards of directors of RAM and C&C, in accordance with the provisions of the laws of their respective states, the Agreement of Consolidation and the terms and conditions thereof and the mode of carrying the same into effect, together with any provisions required or permitted to set forth therein, are hereby determined and agreed upon for submission to the stockholders of RAM and of C&C as required by the General Corporation Law of the State of Delaware and by the Georgia Business Corporation Code, as hereinafter in this Agreement set forth. 1. RAM, which is herein sometimes referred to as one of the "Terminating Corporations", is hereby consolidated with C&C, to form a new corporation, under the name of "Coverdell & Company, Inc.," which shall be governed by the laws of the State of Georgia, and which is hereinafter sometimes referred to as the "New Company." 2. The Articles of Incorporation for the New Company shall be as set forth in Exhibit "A" attached hereto and incorporated by reference. 3. The present bylaws of RAM will be the bylaws of the New Company and will continue in full force and effect until as therein provided under the authority of the laws of the State of Georgia. The directors and officers of RAM, as of the Effective Date, shall become the directors and officers of the New Company, subject to the bylaws of the New Company and the Georgia Business Corporation Code. 4. (A) Each issued share of stock of RAM, shall, upon the effective date of this consolidation, be converted into one share of the common stock of the New Company. (B) The issued stock of C&C shall, upon the effective date of this consolidation, be converted into an aggregate of 140,000 shares of stock of the New Company. (C) As soon as practicable after the Effective Date, the New Company shall mail written notice of the consummation of the consolidation. The written notice will instruct the shareholders of RAM and C&C to deliver their shares in either RAM or C&C to the offices of the New Company at 2015 Peachtree Road, N.E., Atlanta Georgia 30309. Upon receipt of the stock certificates in RAM or C&C, the New Company shall, as soon as reasonably practicable, issue new certificates of the common stock of the New Company in the appropriate amounts and enter said issuance of shares in the stock record book of the New Company. -2- 5. The Agreement of Consolidation herein made and entered into shall be submitted to the stockholders entitled to vote of the terminating corporations for their adoption or rejection in the manner prescribed by the General Corporation Law of the State of Delaware or by the Georgia Business Corporation Code, as the case may be. 6. The New Company hereby agrees that it may be served with process in the State of Delaware in any proceeding for enforcement of any obligation of the terminating corporation, as well as for enforcement of any obligation of the said New Company arising from the consolidation herein provided for, including any suit or other proceeding to enforce the right, if any, of any stockholder as determined in appraisal proceedings pursuant to the provisions of Section 262 of the General Corporation Law of the State of Delaware; hereby irrevocably appoints the Secretary of State of Delaware as its agent to accept service of process in any such suit or other proceedings; and hereby specifies the following as the address to which a copy of such process shall be mailed by the Secretary of State of the State of Delaware: 2015 Peachtree Road, NE, Atlanta, Georgia 30309 (attention: Paul D. Coverdell). 7. In the event that this Agreement of Consolidation shall have been adopted by the stockholders entitled to vote of each of the terminating corporations in accordance with the provisions of the General Corporation Law of the State of Delaware and in accordance with the provisions of the Georgia Business Corporation Code, the terminating corporations agree that they will cause to be executed and filed and recorded any document or documents prescribed by the laws of the State of Georgia or by the laws of the State of Delaware and that they will cause to be performed all necessary acts within the State of Delaware and within the State of Georgia, and elsewhere to effectuate the consolidation, subject, however, to any provision contained herein for terminating the consolidation before or after the adoption of the Agreement of Consolidation by the stockholders entitled to vote of the terminating corporations. 8. The board of directors and the proper officers of the constituent corporations are hereby authorized, empowered and directed to do any and all acts and things, and to make, execute, and deliver, file, and record any and all instruments, papers and documents which shall be or become necessary, proper or convenient to carry out or put into effect any of the provisions of this Agreement or of the consolidation herein provided for. -3- 9. This Agreement may be terminated for any reason at any time on or prior to the effective date by the board of directors of either RAM or C&C. The boards of directors of the consolidating corporations may amend this Agreement at any time prior to the filing of the Agreement (or a certificate in lieu thereof) with the Georgia or Delaware Secretary of State, provided that an amendment made subsequent to the adoption of the Agreement by the stockholders of either consolidating corporation shall not (1) alter or change the amount or kind of shares, securities, cash, property and/or rights to be received in exchange for or on conversion of all or any of the shares of any class or series thereof of any consolidating corporation, (2) alter or change any term of the certificate of incorporation of the New Company, or (3) alter or change any of the terms or conditions of the Agreement if such alteration or change would adversely affect the holders of any class of such consolidating corporation. 10. The effective date of the Agreement of Consolidation, and the date upon which the consolidation therein agreed upon shall become effective shall be December 31, 1984. 11. As of the Effective Date, the separate existence of RAM and C&C shall cease; the New Company shall have all of the rights, privileges, immunities, and powers and shall be subject to all of the duties end liabilities of a corporation organized under the Georgia Business Corporation Code; the New Company shall thereupon and thereafter possess all the rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of the consolidating corporations, and all property, real, personal, and mixed and all debts due on whatever account, including subscriptions to shares, and all other choses in action, and each and every other interest of or belonging to or due to each of the consolidated corporations shall be taken and deemed to be transferred or invested in the New Company without further act or deed, and the title to any real estate, or any interest therein, vested in any of such corporations shall not revert or be in any way impaired by reason of such consolidation; and the New Company shall thenceforth be responsible and liable for all liabilities and obligations of each of the consolidated corporations, and any claim existing or action or proceeding pending by or against any of such corporations may be prosecuted as if the consolidation had not taken place, or the New Company may be substituted in its place. Neither the rights of creditors nor -4- any liens upon the property of any such corporation shall be impaired by the consolidation. Executed in Atlanta, Georgia, on December 4, 1984. RURAL AMERICA MARKETING CORPORATION By: /s/ Title: Attest: (CORPORATE SEAL) /s/ Secretary COVERDELL AND COMPANY By: /s/ TITLE: Attest: (CORPORATE SEAL) /s/ Secretary -5- ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION COVERDELL & COMPANY, INC. COVERDELL & COMPANY, Inc. (hereinafter called the "Corporation"), a corporation organized and existing under and by virtue of the Georgia Business Corporation Code, does hereby execute and deliver to the Secretary of State of Georgia for filing the Articles of Amendment of the Corporation as follows: I. The name of the Corporation is COVERDELL & COMPANY, Inc. II. Newly proposed Article XI is adopted in its entirety as follows: "XI. A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of duty of care or other duty as a director, except for liability (i) for any appropriation, in violation of his duties, of any business opportunity of the Corporation, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 14-2-154 of the Georgia Business Corporation Code, or (iv) for any transaction from which the director derived an improper personal benefit. If the Georgia Business Corporation Code is amended after approval by the shareholders of this Article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Georgia Business Corporation Code, as so amended. Any repeal or modification of this Article by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification." III. The addition of Article XI to the Arrticles of Incorporation of the Corporation was adopted by the Shareholders of the Corporation on the 6th day of June, 1987. IV. Of the Shareholders' Six Hundred Nineteen Thousand Six Hundred Sixty Two (619,662) shares of Common Stock of the Corporation outstanding and entitled to adopt Article XI of the Articles of Incorporation of the Corporation, 617,162 shares were voted in favor of the Amendment to the Articles of Incorporation and 2,500 shares were voted against the Amendment. V. Newly proposed Article XII is adopted in its entirety as follows: "XII. Any action required to be taken at a meeting of the shareholders of the Corporation or any action which may be taken at a meeting of the shareholders may be taken without a meeting if written consent, setting forth the action so taken, shall be signed by persons who would be entitled to vote at a meeting those shares having voting power to cast not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote were present and voted. Notice shall be given within ten (10) days of the taking of corporate action without a meeting by less than unanimous written consent to those shareholders on the record date whose shares were not represented on the written consent. For purposes of written -2- consent by the shareholders, the record date shall be the date when the consent is first executed and action shall be deemed taken when executed by the last necessary signature. A written consent executed pursuant to this Article shall have the same force and effect as a vote at a meeting of the shares represented on the executed consent and may be stated as such in any articles or document filed with the Secretary of State, provided that such articles or document shall also state that any notice or other information required by the Georgia Business Corporation Code has been given. No consent shall be effective as approval of a plan of merger or plan of consolidation unless: (1) Prior to the execution of the consent, the shareholders shall have been given: (A) If such shareholders would be entitled to exercise rights pursuant to Georgia Business Corporation Code Sections 14-2-250 and 14-2-251, a clear and concise statement that, if the plan of merger and consolidation is effected, the shareholders dissenting therefrom are entitled, if they file a written objection to such plan before the vote of the shareholders is taken thereon and comply with the further provisions of Code Section 14-2-251 regarding the rights of dissenting shareholders, to be paid the fair value of their shares; (B) A copy of the plan of merger or consolidation or an outline of the material features of the plan; and (C) A copy of the most recent annual balance sheet and annual profit and loss statement of each of the merging or consolidating corporations and of each other corporation, securities of which are to be delivered pursuant to the plan of merger or consolidation; or -3- (2) The written consent itself conspicuously and specifically states that waiver of the right to receive such information is expressly made." VI. The addition of Article XII to the Articles of Incorporation was adopted by the shareholders of the Corporation on the 6th day of June, 1987. VII. Of the Shareholders' Six Hundred Nineteen Thousand Six Hundred Sixty Two (619,662) shares of Common Stock of the Corporation outstanding and entitled to adopt Article XII of the Articles of Incorporation of the Corporation, 617,162 shares were voted in favor of the Amendment to the Articles of Incorporation and 2,500 shares were voted against the Amendment. Executed this 23 day of July, 1987. COVERDELL & COMPANY, INC.: /s/ Paul D. Coverdell --------------------- Paul D. Coverdell President ATTEST: [CORPORATE SEAL] /s/ Molly Dye - --------------------------- Molly Dye Secretary -4- EX-3.44 45 ex3-44_043004.txt BYLAWS OF COVERDELL & COMPANY BY-LAWS OF MW ACQUISITION CORP. ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE - The registered office shall be established and maintained at c/o United Corporate Services Inc., 4228 First Avenue, Tucker, Georgia 30084. SECTION 2. OTHER OFFICES. - The corporation may have other offices either within or without the State of Georgia, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. - Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Georgia, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of meeting. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors, and they may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. OTHER MEETINGS. - Meetings of stockholders for any purpose other than the election of directors may be held at such time and place, within or without the State of Georgia, as shall be stated in the notice of the meeting. SECTION 3. VOTING. - Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting, shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the law of the State of Georgia. A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present SECTION 4. QUORUM - Except as otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote the meeting. SECTION 5. SPECIAL MEETINGS - Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, or by resolution of the directors. SECTION 6. NOTICE OF MEETINGS - Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than ten nor more than sixty days before the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat. SECTION 7. ACTION WITHOUT MEETING - Unless otherwise provided by the Certificate of Incorporation, 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, may be 2 taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to these stockholders who have not consented in writing. ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM - The number of directors shall be not less than one and no more than nine. The directors shall be elected at the annual meeting of the stockholders, and each director shall be elected to serve until his successor shall be elected and shall qualify. A director need not be a stockholder. SECTION 2. RESIGNATIONS - Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 3. VACANCIES - If the office of any director, member of a committee or other officer becomes vacant, the remaining directors in office, though less than a quorum, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. SECTION 4. REMOVAL - Any director or directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote. SECTION 5. INCREASE OF NUMBER - The number of directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify. SECTION 6. POWERS - The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation or by these By-Laws conferred upon or reserved to the stockholders. 3 SECTION 7. COMMITTEES - The Board of Directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member or such committee or committees, the member or members thereof present at any such meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-Laws shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power of authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the By-Laws of the corporation; and unless the resolution, these By-Laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. SECTION 8. MEETINGS - The newly elected Board of Directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent, in writing, of all the directors. Unless restricted by the incorporation document or elsewhere in these By-laws, members of the Board of Directors or any committee designated by such Board may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such meeting. Regular meetings of the Board of Directors may be scheduled by a resolution adopted by the Board. The Chairman of the Board or the President or Secretary may call, and if requested by any two directors, must call a special meeting of the Board and give five days notice by mail, or two days notice personally or by telegraph or cable to each director. The Board of Directors may hold an annual meeting, without notice, immediately after the annual meeting of shareholders. SECTION 9. QUORUM - A majority of the directors shall constitute a quorum for the transaction of business If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting 4 which shall be so adjourned. SECTION 10. COMPENSATION - Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. SECTION 11. ACTION WITHOUT MEETING - Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee. ARTICLE IV OFFICERS SECTION 1. OFFICERS - The officers of the corporation shall be a President, a Treasurer, and a Secretary, all of whom shall be selected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman, one or more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be directors. The officers shall be selected at the first meeting of the Board of Directors after each annual meeting More than two offices may be held by the same person. SECTION 2. OTHER OFFICERS AND AGENTS - The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. SECTION 3. CHAIRMAN - The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors, and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. PRESIDENT - The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, 5 direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or Assistant Secretary or an Assistant Treasurer. SECTION 5. VICE-PRESIDENT - Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the directors SECTION 6. TREASURER - The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositaries as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the corporation - If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the board shall prescribe. SECTION 7. SECRETARY - The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by the law or by these By-Laws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person there unto directed by the President, or by the directors, or stockholders upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation and of the directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest to the same. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES - Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the directors. ARTICLE V MISCELLANEOUS SECTION 1. CERTIFICATES OF STOCK - A certificate of stock, signed by the Chairman or Vice-Chairman of the Board of Directors, if they be elected, President or Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him or it in the 6 corporation. When such certificates are countersigned (1) by a transfer agent other than the corporation or its employee, or, (2) by a registrar other than the corporation or its employee, the signatures of such officers may be facsimiles. SECTION 2. LOST CERTIFICATES - A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificates, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificates. SECTION 3. TRANSFER OF SHARES - The shares of stock of that corporation shall be transferrable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representative, and upon such transfer the old certificate shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be canceled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 4. STOCKHOLDERS RECORD DATE - (a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. (b) 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 proceed the date upon which the resolution fixing the record is adopted by the board of directors. (c) 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, 7 which record date shall not precede the date upon which the resolution fixing the record date is adopted. SECTION 5. DIVIDENDS - Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare; dividend upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation. SECTION 6. SEAL - The Corporate seal shall be circular in form and shall contain the name of the corporation, the year of its formation and the words "Corporate Seal, 1998". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. SECTION 7. FISCAL YEAR - The fiscal year of the corporation shall be determined by resolution of the Board of Directors. SECTION 8. CHECKS - All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. SECTION 9. NOTICE AND WAIVER OF NOTICE - Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage, prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be de med to have been given on the day of such mailing. Stockholders not untitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute. Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent there. ARTICLE VI AMENDMENTS These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal of By-Law or By-Laws to be made be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote 8 thereat, or by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal of By-Law or By-Laws to be made, be contained in the notice of such special meeting. ARTICLE VII INDEMNIFICATION No director shall be liable to the corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except with respect to (1) a breach of the directors duty of loyalty to the corporation or its stockholders, (2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) liability which may be specifically defined by law or (4) a transaction from which the director derived an improper personal benefit, it being the intention of the foregoing provision to eliminate the liability of the corporation's directors to the corporation or its stockholders to the fullest extent permitted by law. The corporation shall indemnify to the fullest extent permitted by law each person that such law grants the corporation the power to indemnify. /s/ Brian O'Connor ------------------------------ Brian O'Connor Incorporator 9 EX-3.45 46 ex3-45_043004.txt ARTICLES OF ORGANIZATION
Form LLC-5.5 Illinois This space for use by January 1995 Limited Liability Company Act Secretary of State George H. Ryan Articles of Organization Secretary of State FILED Department of Business Services Filing Fee $500. Limited Liability Company Division SUBMIT IN DUPLICATE May 1 1995 Room 359, Howlett Building Must be typewritten Springfield, IL 62756 ----------------------- LIMITED LIABILITY CO. DIV This space for use by Secretary of State GEORGE H. RYAN Payment must be made by certified SECRETARY OF STATE check, cashier's check, Illinois Date 5-1-95 attorney's check, Illinois C.P.A.'s Assigned File# 0003-033-3 check or money order, payable to Filing Fee $500.00 "Secretary of State." Approved: - -----------------------------------------------------------------------------------------------------------------
1. Limited Liability Company Name: DISCOUNT DEVELOPMENT SERVICES L.L.C. (The LLC name must contain the words limited liability company or L.L.C. and cannot contain the terms corporation, corp., incorporated, inc., co., limited partnership, or L.P.) 2. Transacting business under an assumed name: / / Yes /X/ No. (if YES, a Form LLC-1.20 is required to be completed and attached to these Articles.) 3. The address, including county, of its principal place of business: (Post office box alone and c/o unacceptable.) 185 N. York Road, Elmhurst, IL 60126-2790 DuPage County 4. Federal Employer Identification Number (F.E.I.N.): 36-4016489 5. The Articles of Organization are effective on: (Check one) a) X the filing date, or b) another date later than but not more than 60 days subsequent to the filing date: (month, day, year) 6. The registered agent's name and registered office address is: Registered agent: ANTHONY J. POPE ---------------------------------------------------- First Name Middle Initial Last Name Registered Office: 185 N. York Road (P.O. Box alone ---------------------------------------------------- and c/o are Number Street Suite # unacceptable) Elmhurst 60126-2790 DuPage ---------------------------------------------------- City Zip Code County 7. Purpose or purposes for which the LLC is organized: Include the business code # (from IRS Form 10, (If not sufficient space to cover this point, add one or more sheets of this size.) The transaction of any or all lawful businesses for which an Illinois Limited Liability Company may be organized under this Act. IRS Business Code #8098 8. The latest date the company is to dissolve 12/31/2045 --------------------- (month, day, year) And other events of dissolution enumerated on an attachment. (Optional) LLC-5.5 9. Other provisions for the regulation of the internal affairs of the LLC per Section 5-5 (a) (8) included as attachments / / Yes /X/ No If yes, state the provisions(s) and the statutory cite(s) from the ILLCA. 10. a) Management is vested, in whole or in part, in managers: /X/ Yes / / No If yes, list their names and business addresses. Vincent DiBenedetto c/o Anthony Joseph Pope, Attorney 185 N. York Road Elmhurst, IL 60126-2790 b) Management is retained, in whole or in part, by the members: / / Yes /X/ No If yes, list their names and addresses. If no, the company has 2 or more members pursuant to S. 5-1 of the ILLCA. 11. The undersigned affirms, under penalties of perjury, having authority to sign hereto, that these articles of organization are to the best of my knowledge and belief, true, correct and complete. Dated 4/28 1995 ----------- ----- Signature(s) and Name(s) of Organzier(s) Business Address(es) 1. /s/ Anthony Pope 1. 185 N. York Road -------------------------------------- ------------------------------ Signature Number Street Anthony Pope, Attorney Elmhurst -------------------------------------- ------------------------------ (Type or print name and title) City/Town IL 60126-2790 -------------------------------------- ------------------------------ (Name if a coporation or other entity) State Zip Code 2.-------------------------------------- 2.------------------------------ Signature Number Street -------------------------------------- ------------------------------ (Type or print name and title) City/Town -------------------------------------- ------------------------------ (Name if a coporation or other entity) State Zip Code 3.-------------------------------------- 3.------------------------------ Signature Number Street -------------------------------------- ------------------------------ (Type or print name and title) City/Town -------------------------------------- ------------------------------ (Name if a coporation or other entity) State Zip Code (Signatures must be in ink on an original document. Carbon copy, photocopy or rubber stamp signatures may only be 1 on conformed copies.)
Form LLC-5.25 Illinois This space for use by January 2000 Limited Liability Company Act Secretary of State Jesse White Articles of Amendment Secretary of State FILED Department of Business Services Filing Fee (see instructions). Limited Liability Company Division SUBMIT IN DUPLICATE MAR 29 2002 Room 351, Howlett Building Must be typewritten Springfield, IL 62756 ----------------------- http://www.sos.state.il.us This space for use by Secretary of State JESSE WHITE Payment may be made by business SECRETARY OF STATE firm check payable to Secretary Date 03.29.2002 of State. (If check is returned Assigned File # 0003033-3 for any reason this filing will Filing Fee $100.00 be void.) Approved: - -----------------------------------------------------------------------------------------------------------------
1. Limited-Liability Company name DISCOUNT DEVELOPMENT SERVICES, L.L.C. 2. File number assigned by the Secretary of State: 0003033-3 3. These Articles of Amendment are effective on /X/ the file date or a later date being not to exceed 30 days after the file date. -------------------- 4. The Articles of Organization are amended as follows: (Attach a copy of the text of each amendment adopted.) X a) Admission of a new member (give name and address below) - - b) Admission of a new manager (give name and address below) - - c) Withdrawal of a member (give name below) X d) Withdrawal of a manager (give name below) - - e) Change in the address of the office at which the records required by Section 1-40 of the Act are kept (give new address, including county below) - - f) Change of registered agent and/or registered agent's office (give new name and address, including county below) (Address change of P.O. Box and c/o are unacceptable) - - g) Change in the limited liability company's name (list below) - - h) Change in date of dissolution or other events of dissolution enumerated in item 8 of the Articles of Organization X i) Other (give information below) a) Best Benefits, Inc. a Delaware corporation (Sole Member) 9 W. Broad St. Stamford, CT 60902 d) Vincent DiBenedetto i) Change in management from Manager managed to Member managed. LLC-5.25 5. This amendment was adopted by the managers. S. 5-25(3) / / Yes / / No a) Not less than minimum number of managers so approved. / / Yes / / No b) Member action was not required. / / Yes / / No 6. This amendment was adopted by the members. S. 5-25(4) /X/ Yes / / No Not less than minimum number of members so approved. 7. I affirm, under penalties of perjury, having authority to sign hereto, that this articles of amendment is to the best of my knowledge and belief, true, correct and complete. Dated February 25, 2002 ---------------- ------ (Month & Day) (Year) /s/ Vincent DiBenedetto ---------------------------------------- (Signature) Vincent DiBenedetto, President ---------------------------------------- (Type or print Name and Title) Best Benefits, Inc. a Delaware corporation (Sole Member) ---------------------------------------- (If applicant is a company or other entity, state name of company and indicate whether it is a member or manager of the LLC.) INSTRUCTIONS: * If the only change reported is a change in the registered agent and/or registered office, the filing fee is $25. If other changes are reported, the filing fee is $100. EX-3.46 47 ex3-46_043004.txt LLC OPERATING AGREEMENT DISCOUNT DEVELOPMENT LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF DISCOUNT DEVELOPMENT SERVICES, L.L.C. (An Illinois Limited Liability Company) Dated as of October 12, 2000 LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF DISCOUNT DEVELOPMENT SERVICES, L.L.C. (An Illinois Limited Liability Company) This Limited Liability Company Operating Agreement (this "Agreement") of Discount Development Services, L.L.C. (the "Company"), dated as of October 12, 2000, is adopted and agreed to by Best Benefits, Inc., a Delaware corporation, as the sole member of the Company (the "Member") as the limited liability operating agreement of the Company in accordance with the provisions of the Illinois Limited Liability Company Act (the "Act"). ARTICLE I DEFINITIONS 1.1. Definitions. The following terms used in this Agreement shall have the following meanings: "Act" has the meaning set forth in the introductory paragraph. "Agreement" has the meaning set forth in the introductory paragraph. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Company" has the meaning set forth in the introductory paragraph. "Liquidating Agent" has the meaning set forth in Section 8.2 of this Agreement. "Member" shall mean Best Benefits, Inc., as well as any other person or entity hereafter admitted as a member of the Company in accordance with Article VII of this Agreement. ARTICLE II ORGANIZATIONAL MATTERS 2.1. Formation. The Company has been formed as a limited liability company pursuant to the provisions of the Act by the filing of the Articles of Organization with the Secretary of State of the State of Illinois. The Member hereby adopts, confirms and ratifies the Articles of Organization and all acts taken in connection therewith. 2.2. Name. The name of the Company is "Discount Development Services, L.L.C." The Member may change the name of the Company or adopt such trade or fictitious names as he may determine. The Member shall file, or shall cause to be filed, any trade or fictitious name certificates and similar filings, and amendments thereto, that the Member considers appropriate or advisable. 2.3. Term. The term of the Company shall commence on the date hereof and shall continue in perpetuity or until terminated in accordance with this Agreement. The existence of the Company as a separate legal entity shall continue until the filing of the Articles of Dissolution as provided in Section 8.5 of this Agreement and the Act. 2.4. Purpose. The purpose of the Company shall be to carry on any lawful business, purpose or activity for which limited liability companies may be formed under the Act and engaging in any and all activities necessary, advisable, convenient and/or incidental thereto. 2.5. Registered Office/Agent. The registered office of the Company in the State of Illinois is located at 8420 West Bryn Mawr, Suite 860, Chicago, IL 60631. The name and address of the registered agent of the Company for service of process on the Company in the State of Illinois is Anthony J. Pope, 185 N. York Road, Elmhurst, Illinois 60126-2790. The Company may, upon compliance with the applicable provisions of the Act, change its registered office or registered agent from time to time in the discretion of the Member. 2.6. Principal Office. The principal office of the Company shall be located in Chicago, Illinois. The Company may, upon compliance with the applicable provisions of the Act, change the location of its principal office from time to time in the discretion of the Member. ARTICLE III RIGHTS AND DUTIES OF THE MEMBER 3.1. Management of the Business of the Company. 3.1.1 The business and affairs of the Company shall be conducted and managed solely by the Member. 3.1.2 The Member shall have full power and authority to execute, on behalf of the Company, any and all documents necessary or desirable in connection with the business of the Company, including, without limitation, (a) contracts and commitments of every kind and nature, (b) checks or other instruments for the payment of Company funds and (c) notes, mortgages or other evidences of indebtedness of the Company. 3.1.3 Third parties may rely upon a certificate of the Member as to the due authorization of any act performed or any instrument executed on behalf of the Company. 3.1.4 The Member may engage agents, officers, employees or independent contractors to act on behalf of the Company and may delegate authority to such persons. 2 3.2. Exculpation and Indemnification. Neither the Member nor any officer or authorized agent of the Company (each an "Indemnified Person" and collectively the "Indemnified Persons") shall be liable to the Company, or any other person or entity who has an interest in the Company, for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Agreement, except that such Indemnified Person shall be liable to the extent of any such loss, damage or claim incurred solely by reason of the willful misfeasance or bad faith of such Indemnified Person. In the event that an Indemnified Person becomes involved, in any capacity, in any threatened, pending or completed action, suit proceeding or investigation in connection with any matter arising out of or relating to the business or affairs of the Company, to the fullest extent permitted by applicable law, any legal and other expenses (including the cost of any investigation and preparation) incurred by such Indemnified Person in connection therewith shall, from time to time, be advanced by the Company prior to the final disposition of such action, suit, proceeding or investigation upon receipt by the Company of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall ultimately be determined that such Indemnified Person is not entitled to be indemnified by the Company in connection with such action, suit, proceeding or investigation as provided in the exception contained in the next sentence. To the fullest extent permitted by law, the Company also shall indemnify and hold harmless an Indemnified Person against any losses, claims, damages, liabilities, obligations, penalties, actions, judgments, suits, proceedings, costs, expenses (including without limitation attorney fees and expenses) and disbursements of any kind or nature whatsoever (collectively "Costs") to which such Indemnified Person may become subject in connection with any matter arising out of or in connection with the business or affairs of the Company, except to the extent that any such Costs result solely from the willful misfeasance or bad faith of such Indemnified Person. If for any reason (other than the willful misfeasance or bad faith of such Indemnified Person) the foregoing indemnification is unavailable to an Indemnified Person, or insufficient to hold him or her harmless, then the Company shall contribute to the amount paid or payable by such Indemnified Person as a result of such Costs in such proportion as is appropriate to reflect not only the relative benefits received by the Company on the one hand and such Indemnified Person on the other hand but also the relative fault of the Company and such Indemnified Person, as well as any relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Company under this paragraph shall be in addition to any liability that the Company may otherwise have to any Indemnified Person and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of any Indemnified Person. The reimbursement, indemnity and contribution obligations of the Company under this paragraph shall be limited to the assets of the Company, and Member shall not have any personal liability on account thereof. The foregoing provisions shall survive any termination of this Agreement. 3 ARTICLE IV CAPITAL CONTRIBUTIONS 4.1. Capital Contributions. The Member shall make an initial capital contribution to the Company as set forth on Schedule I to this Agreement. The Member may, but shall not be required to, make further capital contributions from time to time as it may determine. ARTICLE V COMPANY ALLOCATIONS 5.1. Adjustments to Capital Accounts. A capital account shall be maintained for the Member, and shall initially be credited with the value of the initial capital contribution made by the Member as set forth on Schedule I of this Agreement. The capital account of the Member shall be adjusted from time to time by crediting to such account all (i) additional capital contributions by the Member, and (ii) profit (including income exempt from taxation), all as hereinafter allocated to such Member, and shall be debited with (a) distributions made to the Member, (b) loss, and (c) expenditures described in Section 705(a)(2)(B) of the Code, all as allocated to the Member. 5.2. Allocations and Distributions. All profit or loss and each item comprising the same shall be allocated to the Member. The Company shall make distributions of available cash to the Member from time to time as the Member may determine after maintaining such reserves, as the Member deems appropriate. ARTICLE VI ACCOUNTING PROVISIONS 6.1. Fiscal Year. The fiscal year of the Company shall end on the last day of December of each year. 6.2. Books and Accounts. Complete and accurate books and accounts shall be maintained for the Company at the principal place of business of the Company. 6.3. Tax Reporting. The Member shall cause the results of operations of the Company to be included on the Federal, state and local income tax returns of the Member, as though all assets of the Company were owned, and all such results of operations were realized, directly by the Member and not by the Company, to the extent such reporting is permitted by applicable law. To the extent such reporting is not permitted, the Member shall cause to be prepared and shall file any Federal, state and local tax returns required to be filed by the Company. 6.4. Tax Status. 6.4.1 The Company shall take appropriate steps to cause the Company to be disregarded as an entity separate from the Member for purposes of Federal, state and local taxation while 4 continuing to be respected as an entity separate from the Member for all purposes of Federal, state and local law other than taxation. 6.4.2 Consistent with Section 6.4.1, any election made by the Member for tax purposes in connection with the Member's tax returns, which include the results of operations of the Company, or its assets shall be deemed made by, and shall bind, the Company to the extent applicable to the Company's assets or results of operations. ARTICLE VII ADMISSION OF MEMBERS; ASSIGNMENT BY MEMBER; WITHDRAWAL OF MEMBER 7.1. Admission; Withdrawal. The Member may transfer, assign or otherwise dispose of all or any portion of his interest in the Company and admit new members to the Company on such terms as he may determine. ARTICLE VIII DISSOLUTION AND LIQUIDATION OF THE COMPANY 8.1. Events of Dissolution. 8.1.1 The Company shall be dissolved upon the earlier of any of the following events: (a) The determination of the Member; or (b) As required by the Act. 8.2. General. Upon the dissolution of the Company, the Company shall be dissolved and liquidated in accordance with this Article VIII. The dissolution and liquidation shall be conducted and supervised by the Member or the Member's successor-in-interest (the Member or such other person, as the case may be, being herein called the "Liquidating Agent"). The Liquidating Agent shall have all of the rights and powers with respect to the assets and liabilities of the Company, in connection with the liquidation and dissolution of the Company, which the Member had with respect to the assets and liabilities of the Company during the term of the Company, and the Liquidating Agent is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the dissolution and liquidation of the Company and the transfer of any property of the Company. 8.3. Priority on Liquidation. The Liquidating Agent shall, to the extent feasible, liquidate the assets of the Company as promptly as practicable. The proceeds of such liquidation shall be applied in the following order of priority: (a) First, to the payment of matured debts and liabilities of the Company and the costs and expenses of the dissolution and liquidation; 5 (b) Second, to the setting up of any reserves which the Liquidating Agent may deem reasonably necessary for any contingent or unforeseen liabilities of the Company; and (c) Third, to the Member or his successor-in-interest. 8.4. Orderly Liquidation. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to minimize the losses normally attendant upon a liquidation. 8.5. Statements on Liquidation. The Liquidating Agent shall cause to be prepared a statement, which shall set forth the assets and liabilities of the Company as of the date of complete liquidation. The Member's share of the Company's net assets shall be one hundred percent (100%). Upon compliance with the foregoing distribution plan, the Liquidating Agent shall execute, acknowledge and cause to be filed Articles of Dissolution of the Company in accordance with the Act. ARTICLE IX MISCELLANEOUS PROVISIONS 9.1. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without regard to principles of conflicts of law thereof. 9.2. Section Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement. 9.3. Amendment. Any amendment of, or supplement to or other modification of this Agreement must be in a written instrument executed by the Member and the Company. 9.4. Notices. Any notice or other communication under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served or sent by telecopy; on the business day after notice is delivered to a courier or mailed by express mail, if sent by courier delivery service or express mail for next day delivery; and on the third day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid. 9.5. Severability; Binding Effect. Any provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or unenforceability of any of the terms and provisions of this Agreement in any other jurisdiction. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. 9.6. Effective Date. This Agreement shall be effective as of the date first above written. [Remainder of this page intentionally left blank.] 6 IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the date first above written. COMPANY: DISCOUNT DEVELOPMENT SERVICES, L.L.C. By: BEST BENEFITS, INC. Its Member By: /s/ James B. Duffy -------------------------------- Name: James B. Duffy Title: President and Secretary MEMBER: BEST BENEFITS, INC. By: /s/ James B. Duffy -------------------------------- Name: James B. Duffy Title: President and Secretary 7 SCHEDULE I - ------------------------------------- ------------------------------------- Name Initial Capital Contribution - ------------------------------------- ------------------------------------- - ------------------------------------- ------------------------------------- 8 EX-3.47 48 ex3-47_043004.txt CERTIFICATE OF FORMATION OF MEMBERWORKS CANADA CERTIFICATE OF FORMATION OF MEMBERWORKS CANADA LLC 1. The name of the limited liability company is MEMBERWORKS CANADA LLC 2. The address of its registered office in the State of Delaware is c/o United Corporate Services, Inc., 15 East North Street, in the City of Dover, County of Kent, State of Delaware 19901. The name of its registered agent at that address is United Corporate Services, Inc. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of MEMBERWORKS CANADA LLC this twenty-sixth day of April, 1999. /s/ STEVEN H. LEVENHERZ -------------------------------- Steven H. Levenherz, Organizer STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 04/27/1999 991164912 - 3035166 EX-3.48 49 ex3-48_043004.txt LLC OPERATING AGREE. OF MEMBERWORKS CANADA LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF MEMBERWORKS CANADA LLC (A Delaware Limited Liability Company) Dated as of April 30, 1999 LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF MEMBERWORKS CANADA LLC (A Delaware Limited Liability Company) This Limited Liability Company Operating Agreement (this "Agreement") of MemberWorks Canada LLC (the "Company"), dated as of April 30, 1999, is adopted and agreed to by MemberWorks Incorporated, a Delaware corporation, as the sole member of the Company (the "Member") as the limited liability operating agreement of the Company in accordance with the provisions of the Delaware Limited Liability Company Act (the "Act"). ARTICLE I DEFINITIONS ----------- 1.1. Definitions. The following terms used in this Agreement shall have the following meanings: "Act" has the meaning set forth in the introductory paragraph. "Agreement" has the meaning set forth in the introductory paragraph. "Code" shall mean the Internal Revenue Code of 1986,.as amended from time to time. "Company" has the meaning set forth in the introductory paragraph. "Liquidating Agent" has the meaning set forth in Section 8.2 of this Agreement. "Member" shall mean MemberWorks Incorporated, as well as any other person or entity hereafter admitted as a member of the Company in accordance with Article VII of this Agreement. ARTICLE II ORGANIZATIONAL MATTERS ---------------------- 2.1. Formation. The Company has been formed as a limited liability company pursuant to the provisions of the Act by the filing of the Articles of Organization with the Secretary of State of the State of Delaware. The Member hereby adopts, confirms and ratifies the Articles of Organization and all acts taken in connection therewith. 2.2. Name. The name of the Company is "MemberWorks Canada LLC" The Member may change the name of the Company or adopt such trade or fictitious names as he may determine. The Member shall file, or shall cause to be filed, any trade or fictitious name certificates and similar filings, and amendments thereto, that the Member considers appropriate or advisable. 2.3. Term. The term of the Company shall commence on the date hereof and shall continue in perpetuity or until terminated in accordance with this Agreement. The existence of the Company as a separate legal entity shall continue until the filing of the Articles of Dissolution as provided in Section 8.5 of this Agreement and the Act. 2.4. Purpose. The purpose of the Company shall be to carry on any lawful business, purpose or activity for which limited liability companies may be formed under the Act and engaging in any and all activities necessary, advisable, convenient and/or incidental thereto. 2.5. Registered Office/Agent. The registered office of the Company in the State of Delaware is located at 15 East North Street, Dover, Delaware. The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is United Corporate Services, 15 East North Street, Dover, Delaware The Company may, upon compliance with the applicable provisions of the Act, change its registered office or registered agent from time to time in the discretion of the Member. 2.6. Principal Office. The principal office of the Company shall be located in Stamford, Connecticut. The Company may, upon compliance with the applicable provisions of the Act, change the location of its principal office from time to time in the discretion of the Member. ARTICLE III RIGHTS AND DUTIES OF THE MEMBER ------------------------------- 3.1. Management of the Business of the Company. 3.1.1 The business and affairs of the Company shall be conducted and managed solely by the Member. 3.1.2 The Member shall have full power and authority to execute, on behalf of the Company, any and all documents necessary or desirable in connection with the business of the Company, including, without limitation, (a) contracts and commitments of every kind and nature, (b) checks or other instruments for the payment of Company funds and (c) notes, mortgages or other evidences of indebtedness of the Company. 3.1.3 Third parties may rely upon a certificate of the Member as to the due authorization of any act performed or any instrument executed on behalf of the Company. 3.1.4 The Member may engage agents, officers, employees or independent contractors to act on behalf of the Company and may delegate authority to such persons. 2 3.2. Exculpation and Indemnification. Neither the Member nor any officer or authorized agent of the Company (each an "Indemnified Person" and collectively the "Indemnified Persons") shall be liable to the Company, or any other person or entity who has an interest in the Company, for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Agreement, except that such Indemnified Person shall be liable to the extent of any such loss, damage or claim incurred solely by reason of the willful misfeasance or bad faith of such Indemnified Person. In the event that an Indemnified Person becomes involved, in any capacity, in any threatened, pending or completed action, suit proceeding or investigation in connection with any matter arising out of or relating to the business or affairs of the Company, to the fullest extent permitted by applicable law, any legal and other expenses (including the cost of any investigation and preparation) incurred by such Indemnified Person in connection therewith shall, from time to time, be advanced by the Company prior to the final disposition of such action, suit, proceeding or investigation upon receipt by the Company of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall ultimately be determined that such Indemnified Person is not entitled to be indemnified by the Company in connection with such action, suit, proceeding or investigation as provided in the exception contained in the next sentence. To the fullest extent permitted by law, the Company also shall indemnify and hold harmless an Indemnified Person against any losses, claims, damages, liabilities, obligations, penalties, actions, judgments, suits, proceedings, costs, expenses (including without limitation attorney fees and expenses) and disbursements of any kind or nature whatsoever (collectively "Costs") to which such Indemnified Person may become subject in connection with any matter arising out of or in connection with the business or affairs of the Company, except to the extent that any such Costs result solely from the willful misfeasance or bad faith of such Indemnified Person. If for any reason (other than the willful misfeasance or bad faith of such Indemnified Person) the foregoing indemnification is unavailable to an Indemnified Person, or insufficient to hold him or her harmless, then the Company shall contribute to the amount paid or payable by such Indemnified Person as a result of such Costs in such proportion as is appropriate to reflect not only the relative benefits received by the Company on the one hand and such Indemnified Person on the other hand but also the relative fault of the Company and such Indemnified Person, as well as any relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Company under this paragraph shall be in addition to any liability that the Company may otherwise have to any Indemnified Person and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of any Indemnified Person. The reimbursement, indemnity and contribution obligations of the Company under this paragraph shall be limited to the assets of the Company, and Member shall not have any personal liability on account thereof. The foregoing provisions shall survive any termination of this Agreement. 3 ARTICLE IV CAPITAL CONTRIBUTIONS --------------------- 4.1. Capital Contributions. The Member shall make an initial capital contribution to the Company as set forth on Schedule I to this Agreement. The Member may, but shall not be required to, make further capital contributions from time to time as it may determine. ARTICLE V COMPANY ALLOCATIONS ------------------- 5.1. Adjustments to Capital Accounts. A capital account shall be maintained for the Member, and shall initially be credited with the value of the initial capital contribution made by the Member as set forth on Schedule I of this Agreement. The capital account of the Member shall be adjusted from time to time by crediting to such account all (i) additional capital contributions by the Member, and (ii) profit (including income exempt from taxation), all as hereinafter allocated to such Member, and shall be debited with (a) distributions made to the Member, (b) loss, and (c) expenditures described in Section 705(a)(2)(B) of the Code, all as allocated to the Member. 5.2. Allocations and Distributions. All profit or loss and each item comprising the same shall be allocated to the Member. The Company shall make distributions of available cash to the Member from time to time as the Member may determine after maintaining such reserves, as the Member deems appropriate. ARTICLE VI ACCOUNTING PROVISIONS --------------------- 6.1. Fiscal Year. The fiscal year of the Company shall end on the last day of December of each year. 6.2. Books and Accounts. Complete and accurate books and accounts shall be maintained for the Company at the principal place of business of the Company. 6.3. Tax Reporting. The Member shall cause the results of operations of the Company to be included on the Federal, state and local income tax returns of the Member, as though all assets of the Company were owned, and all such results of operations were realized, directly by the Member and not by the Company, to the extent such reporting is permitted by applicable law. To the extent such reporting is not permitted, the Member shall cause to be prepared and shall file any Federal, state and local tax returns required to be filed by the Company. 6.4. Tax Status. 6.4.1 The Company shall take appropriate steps to cause the Company to be disregarded as an entity separate from the Member for purposes of Federal, state and local taxation while 4 continuing to be respected as an entity separate from the Member for all purposes of Federal, state and local law other than taxation. 6.4.2 Consistent with Section 6.4.1, any election made by the Member for tax purposes in connection with the Member's tax returns, which include the results of operations of the Company, or its assets shall be deemed made by, and shall bind, the Company to the extent applicable to the Company's assets or results of operations. ARTICLE VII ADMISSION OF MEMBERS; ASSIGNMENT BY MEMBER; ------------------------------------------- WITHDRAWAL OF MEMBER -------------------- 7.1. Admission; Withdrawal. The Member may transfer, assign or otherwise dispose of all or any portion of his interest in the Company and admit new members to the Company on such terms as he may determine. ARTICLE VIII DISSOLUTION AND LIQUIDATION OF THE COMPANY ------------------------------------------ 8.1. Events of Dissolution. 8.1.1 The Company shall be dissolved upon the earlier of any of the following events: (a) The determination of the Member; or (b) As required by the Act. 8.2. General. Upon the dissolution of the Company, the Company shall be dissolved and liquidated in accordance with this Article VIII. The dissolution and liquidation shall be conducted and supervised by the Member or the Member's successor-in-interest (the Member or such other person, as the case may be, being herein called the "Liquidating Agent"). The Liquidating Agent shall have all of the rights and powers with respect to the assets and liabilities of the Company, in connection with the liquidation and dissolution of the Company, which the Member had with respect to the assets and liabilities of the Company during the term of the Company, and the Liquidating Agent is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the dissolution and liquidation of the Company and the transfer of any property of the Company. 8.3. Priority on Liquidation. The Liquidating Agent shall, to the extent feasible, liquidate the assets of the Company as promptly as practicable. The proceeds of such liquidation shall be applied in the following order of priority: (a) First, to the payment of matured debts and liabilities of the Company and the costs and expenses of the dissolution and liquidation; 5 (b) Second, to the setting up of any reserves which the Liquidating Agent may deem reasonably necessary for any contingent or unforeseen liabilities of the Company; and (c) Third, to the Member or his successor-in-interest. 8.4. Orderly Liquidation. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to minimize the losses normally attendant upon a liquidation. 8.5. Statements on Liquidation. The Liquidating Agent shall cause to be prepared a statement, which shall set forth the assets and liabilities of the Company as of the date of complete liquidation. The Member's share of the Company's net assets shall be one hundred percent (100%). Upon compliance with the foregoing distribution plan, the Liquidating Agent shall execute, acknowledge and cause to be filed Articles of Dissolution of the Company in accordance with the Act. ARTICLE IX MISCELLANEOUS PROVISIONS ------------------------ 9.1. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without regard to principles of conflicts of law thereof. 9.2. Section Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement. 9.3. Amendment. Any amendment of, or supplement to or other modification of this Agreement must be in a written instrument executed by the Member and the Company. 9.4. Notices. Any notice or other communication under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served or sent by telecopy; on the business day after notice is delivered to a courier or mailed by express mail, if sent by courier delivery service or express mail for next day delivery; and on the third day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid. 9.5. Severability; Binding Effect. Any provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or unenforceability of any of the terms and provisions of this Agreement in any other jurisdiction. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. 9.6. Effective Date. This Agreement shall be effective as of the date first above written. [Remainder of this page intentionally left blank.] 6 IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the date first above written. COMPANY: MEMBERWORKS CANADA LLC By: MEMBERWORKS INCORPORATED Its Sole Member By: /s/ James B. Duffy ------------------------------------------ Name: James B. Duffy Title: Executive Vice President, Chief Financial Officer and Secretary MEMBER: MEMBERWORKS INCORPORATED By: /s/ James B. Duffy ------------------------------------------ Name: James B. Duffy Title: Executive Vice President, Chief Financial Officer and Secretary 7 SCHEDULE I - -------------------------------------------------------------------------------- Name Initial Capital Contribution - ---- ---------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8 EX-3.49 50 ex3-49_043004.txt CERTIFICATE OF INCORPORATION OF IMPAQ MARKETING CERTIFICATE OF INCORPORATION OF IMPAQ MARKETING CORPORATION The undersigned, a natural person, for the purpose of organizing a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified, and referred to as the "General Corporation Law of the State of Delaware"), hereby certifies that FIRST: The name of the corporation (hereinafter called the "Corporation") is Impaq Marketing Corporation. SECOND: The address, including street, number, city and county, of the registered office of the Corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, County of Kent; and the name of the registered agent of the Corporation in the State of Delaware at such address is The Prentice-Hall Corporation System, Inc. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is one thousand (1,000), all of which are without par value. All such shares are of one class and are shares of Common Stock. FIFTH: The name and the mailing address of the incorporator are as follows: Name Mailing Address Robert C. Greif c/o Diserio Martin O'Connor & Castiglioni One Atlantic Street Stamford, CT 06901 SIXTH: The corporation is to have perpetual existence. SEVENTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under 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 creditors, and/or of the stockholders or class of creditors, and/or the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. EIGHTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation, and regulation of the powers of the Corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided: 1. The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the Bylaws. The phrase "whole Board" and the phrase "total number of directors" shall be deemed to have the same meaning, to wit, the total number of directors which the Corporation would have if there were no vacancies. No election of directors need be by written ballot. 2. After the original or other Bylaws of the Corporation have been adopted, amended, or repealed, as the case may be, in accordance with the provisions of Section 109 of the General Corporation Law of the State of Delaware, and, after the Corporation has received any payment for any of its stock, the power to adopt, amend, or repeal the Bylaws of the Corporation may be exercised by the Board of Directors of the Corporation; provided, however, that any provision for the classification of directors of the Corporation for staggered terms pursuant to the provisions of subsection (d) of Section 141 of the General Corporation Law of the State of Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by the stockholders entitled to vote of the Corporation unless provisions for such classification shall be set forth in this Certificate of Incorporation. 3. Whenever the corporation shall be authorized to issue only one class of stock, each outstanding share shall entitle the holder thereof to notice of, and the right to vote at, any meeting of stockholders. Whenever the Corporation shall be authorized to issue more than one class of stock, no outstanding share of any class of stock which is denied voting power under the provisions of the Certificate of Incorporation shall entitle the holder thereof to the right to vote at any meeting of stockholders except as the provisions of paragraph (2) of subsection (b) of Section 242 of the General Corporation Law of the State of Delaware shall otherwise require; provided, that no share of any such class which is otherwise denied voting power shall entitle the holder thereof to vote upon the increase or decrease in the number of authorized shares of said class. NINTH: The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented. TENTH: The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. ELEVENTH: From time to time any of the provisions of this Certificate of Incorporation may be amended, altered, or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article ELEVENTH. Signed on April 28, 1992. By /s/ Robert C. Greif ----------------------------------- Robert C. Greif impaqcoi Incorporator CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE AND REGISTERED AGENT OF IMPAQ MARKETING CORPORATION The undersigned corporation hereby certifies as follows FIRST: The name of the corporation is IMPAQ MARKETING CORPORATION SECOND: The address of the new registered office shall be 15 East North Street, in the City of Dover, County of Kent, State of Delaware 19901. THIRD: The name of the new registered agent is United Corporate Services, Inc. FOURTH: The aforesaid changes were duly authorized by appropriate resolutions adopted by the Board of Directors at a meeting thereof. IN WITNESS WHEREOF, I have hereunto signed my name and affirm that the statements made herein are true under the penalties of perjury, this third day of April, 1997. IMPAQ MARKETING CORPORATION /s/ Steven H. Levenherz ---------------------------------------- Steven H. Levenherz, Assistant Secretary EX-3.50 51 ex3-50_043004.txt BYLAWS OF IMPAQ MARKETING BYLAWS OF IMPAQ MARKETING CORPORATION (a Delaware corporation) ARTICLE I STOCKHOLDERS 1. Certificates Representing Stock. Certificates representing stock in the Corporation shall be signed by, or in the name of, the Corporation by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation. Any or all of the signatures on any such certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Whenever the Corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, and whenever the Corporation shall issue any shares of its stock as partly paid stock, the certificates representing shares of any such class or series or of any such partly paid stock shall set forth thereon the statements prescribed by the General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares. The Corporation may issue a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate or uncertificated shares. 2. Uncertificated Shares. Subject to any conditions imposed by the General Corporation Law, the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Within a reasonable time after the issuance or transfer of any uncertificated shares, the corporation shall send to the registered owner thereof any written notice prescribed by the General Corporation Law. 3. Fractional Share Interests. The Corporation may, but shall not be required to, issue fractions of a share. If the Corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered form (either represented by a certificate or uncertificated) or bearer form (represented by a certificate) which shall entitle the holder to receive a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share or an uncertificated fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the Corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the condition that they shall become void if not exchanged for certificates representing the full shares or uncertificated full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the Corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board of Directors may impose. 4. Stock Transfers. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the Corporation shall be made only on the stock ledger of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation or with a transfer agent or a registrar, if any, and, in the case of shares represented by certificates, on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon. 5. Record Date for Stockholders. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand or certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders of any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. 6. Meaning of Certain Terms. As used herein in respect to the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the Corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class upon which or upon whom the Certificate of Incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the Certificate of Incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder; provided, however, that no such right shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the Certificate of Incorporation, except as any provision of law may otherwise require. 7. Stockholder Meetings. Time. The annual meeting shall be held on the date and at the time fixed, from time to time, by the directors, provided, that the first annual meeting shall be held on a date within thirteen months after the organization of the Corporation, and each successive annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date and at the time fixed by the directors. Place. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the directors may, from time to time, fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the registered office of the corporation in the State of Delaware. Call. Annual meetings and special meetings may be called by the directors or by any officer instructed by the directors to call the meeting. Notice or Waiver of Notice. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the Corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called. The notice of any meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Law. Except as otherwise provided by the General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than sixty days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, and directed to each stockholder at his record address or at such other address which he may have furnished by request in writing to the Secretary of the Corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States Mail. If a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Notice need not be given to any stockholder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. Stockholder List. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the Corporation, or to vote at any meeting of stockholders. Conduct of Meetinq. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. Inspectors. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspectors at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots, or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question, or matter determined by him or them and execute a certificate of any fact found by him or them. Quorum. The holders of a majority of the outstanding shares of stock shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum. Votinq. Each share of stock shall entitle the holders thereof to one vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting power, and except as may be otherwise prescribed by the provisions of the certificate of incorporation and these Bylaws. In the election of directors, and for any other action, voting need not be by ballot. 8. Stockholder Action Without Meetings. Any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Action taken pursuant to this paragraph shall be subject to the provisions of Section 228 of the General Corporation Law. ARTICLE II DIRECTORS 1. Functions and Definition. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors of the Corporation. The Board of Directors shall have the authority to fix the compensation of the members thereof. The use of the phrase "whole board" herein refers to the total number of directors which the Corporation would have if there were no vacancies. 2. Qualifications and Number. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The initial Board of Directors shall consist of three persons. Thereafter, the number of directors constituting the whole board shall be at least one. Subject to the foregoing limitation and except for the first Board of Directors, such number may be fixed from time to time by action of the stockholders or of the directors, or, if the number is not fixed, the number shall be three. The number of directors may be increased or decreased by action of the stockholders of the Corporation. 3. Election and Term. The first Board of Directors, unless the members thereof shall have been named in the certificate of incorporation, shall be elected by the incorporator or incorporators and shall hold office until the first annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon written notice to the Corporation. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Except as the General Corporation Law may otherwise require, in the interim between annual meetings of stockholders or of special meetings of stockholders called for the election of directors and/or for the removal of one or more directors and for the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause or without cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. 4. Meetings. Time. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. Place. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the Board. Call. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, or the President, or of a majority of the directors in the office. Notice or Actual or Constructive Waiver. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice. Quorum and Action. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of the directors is present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as herein otherwise provided, and except as otherwise provided by the General Corporation Law, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law and these Bylaws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board or action of disinterested directors. Any member or members of the Board of Directors or of any committee designated by the Board, may participate in a meeting of the Board, or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Chairman of the Meetinq. The Chairman of the Board, if any, and if present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the Board, if any, and if present and acting, or the President, if present and acting, or any other director chosen by the Board, shall preside. 5. Removal of Directors. Except as may otherwise be provided by the General Corporation Law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. 6. Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation with the exception of any authority the delegation of which is prohibited by Section 141 of the General Corporation Law, and may authorize the seal of the Corporation to be affixed to all papers which may require it. 7. Written Action. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. ARTICLE III OFFICERS The officers of the Corporation shall consist of a President, a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive Vice-President, one or more other Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolution of the Board of Directors choosing them shall designate. Except as may otherwise be provided in the resolution of the Board of Directors choosing him, no officer other than the Chairman or Vice-Chairman of the Board, if any, need be a director. Any number of offices may be held by the same person, as the directors may determine. Unless otherwise provided in the resolution choosing him, each officer shall be chosen for a term which shall continue until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor shall have been chosen and qualified. All officers of the Corporation shall have such authority and perform such duties in the management and operation of the Corporation as shall be prescribed in the resolutions of the Board of Directors designating and choosing such officers and prescribing their authority and duties, and shall have such additional authority and duties as are incident to their office except to the extent that such resolutions may be inconsistent therewith. The Secretary or an Assistant Secretary of the Corporation shall record all of the proceedings of all meetings and actions in writing of stockholders, directors, and committees of directors, and shall exercise such additional authority and perform such additional duties as the Board shall assign to him. Any officer may be removed, with or without cause, by the Board of Directors. Any vacancy in any office may be filled by the Board of Directors. ARTICLE IV CORPORATE SEAL The corporate seal shall be in such form as the Board of Directors shall prescribe. ARTICLE V FISCAL YEAR The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE VI CONTROL OVER BYLAWS Subject to the provisions of the certificate of incorporation and the provisions of the General Corporation Law, the power to amend, alter, or repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors or by the stockholders. I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the Bylaws of Impaq Marketing Corporation, a Delaware corporation, as in effect on the date hereof. Dated as of May 7, 1992. /s/ Maureen Little ----------------------------------- Maureen Little Assistant Secretary (SEAL) EX-3.51 52 ex3-51_043004.txt CERTIFICATE OF INCORPORATION OF BEST BENEFITS STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 09/21/2000 001475981 - 3290948 CERTIFICATE OF INCORPORATION OF BEST BENEFITS, INC. The undersigned, a natural person, for the purpose of organizing a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified, and referred to as the "General Corporation Law of the State of Delaware"), hereby certifies that: FIRST: The name of the corporation (hereinafter called the "Corporation") is Best Benefits, Inc. SECOND: The address, including street, number, city and county, of the registered office of the Corporation in the State of Delaware is, 15 East North Street, Dover, Delaware, 19901, County of Kent, and the name of the registered agent of the Corporation in the State of Delaware at such address is United Corporate Services, Inc. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is twenty thousand (20,000) shares of Common Stock with a par value of $0.001 per share. FIFTH: The name and the mailing address of the incorporator are as follows: Name Mailing Address Jason A. Marsh c/o Diserio Martin O'Connor & Castiglioni, LLP One Atlantic Street, 5th Fl. Stamford, Connecticut 06901 SIXTH: The Corporation is to have a perpetual existence. SEVENTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under 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 creditors, and/or of the stockholders or class of creditors, and/or the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. EIGHTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation, and regulation of the powers of the Corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided: 1. The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the Bylaws. The phrase "whole Board" and the phrase "total number of directors" shall be deemed to have the same meaning, to wit, the total number of directors which the Corporation would have if there were no vacancies. No election of directors need be by written ballot. 2. After the original or other Bylaws of the Corporation have been adopted, amended, or repealed, as the case may be, in accordance with the provisions of Section 109 of the General Corporation Law of the State of Delaware, and, after the Corporation has received any payment for any of its stock, the power to adopt, amend, or repeal the Bylaws of the Corporation may be exercised by the Board of Directors of the Corporation; provided, however, that any provision for the classification of directors of the Corporation for staggered terms pursuant to the provisions of subsection (d) of Section 141 of the General Corporation Law of the State of Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by the stockholders entitled to vote of the Corporation unless provisions for such classification shall be set forth in this Certificate of Incorporation. 3. Whenever the corporation shall be authorized to issue only one class of stock, each outstanding share shall entitle the holder thereof to notice of, and the 2 right to vote at, any meeting of stockholders. Whenever the Corporation shall be authorized to issue more than one class of stock, no outstanding share of any class of stock which is denied voting power under the provisions of the Certificate of Incorporation shall entitle the holder thereof to the right to vote at any meeting of stockholders except as the provisions of paragraph (2) of subsection (b) of Section 242 of the General Corporation Law of the State of Delaware shall otherwise require; provided, that no share of any such class which is otherwise denied voting power shall entitle the holder thereof to vote upon the increase or decrease in the number of authorized shares of said class. NINTH: The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented. TENTH: The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. ELEVENTH: From time to time any of the provisions of this Certificate of Incorporation may be amended, altered, or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article ELEVENTH. Signed on September 21, 2000 By:/s/ JASON A. MARSH --------------------------------- Jason A. Marsh Incorporator 3 EX-3.52 53 ex3-52_043004.txt BYLAWS OF BEST BENEFITS BYLAWS OF BEST BENEFITS, INC. ARTICLE I STOCKHOLDERS 1. Certificates Representing Stock. Certificates representing stock in the Corporation shall be signed by, or in the name of, the Corporation by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation. Any or all of the signatures on any such certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Whenever the Corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, and whenever the Corporation shall issue any shares of its stock as partly paid stock, the certificates representing shares of any such class or series or of any such partly paid stock shall set forth thereon the statements prescribed by the General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares. The Corporation may issue a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate or uncertificated shares. 2. Uncertificated Shares. Subject to any conditions imposed by the General Corporation Law, the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Within a reasonable time after the issuance or transfer of any uncertificated shares, the Corporation shall send to the registered owner thereof any written notice prescribed by the General Corporation Law. 3. Fractional Share Interests. The Corporation may, but shall not be required to, issue fractions of a share. If the Corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered form (either represented by a certificate or uncertificated) or bearer form (represented by a certificate) which shall entitle the holder to receive a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share or an uncertificated fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the Corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the condition that they shall become void if not exchanged for certificates representing the full shares or uncertificated full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the Corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board of Directors may impose. 4. Stock Transfers. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the Corporation shall be made only on the stock ledger of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation or with a transfer agent or a registrar, if any, and, in the case of shares represented by certificates, on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon. 5. Record Date for Stockholders. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings 2 of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand or certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders of any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. 6. Meaning of Certain Terms. As used herein in respect to the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the Corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class upon which or upon whom the Certificate of Incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the Certificate of Incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder; provided, however, that no such right shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the Certificate of Incorporation, except as any provision of law may otherwise require. 7. Stockholder Meetings. Time. The annual meeting shall be held on the date and at the time fixed, from time to time, by the directors, provided, that the first annual meeting shall be held on a date within thirteen months after the organization of the Corporation, and each successive annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date and at the time fixed by the directors. Place. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the directors may, from time to time, fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the registered office of the Corporation in the State of Delaware. 3 Call. Annual meetings and special meetings may be called by the directors or by any officer instructed by the directors to call the meeting. Notice or Waiver of Notice. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the Corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called. The notice of any meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Law. Except as otherwise provided by the General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than sixty days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, and directed to each stockholder at his record address or at such other address which he may have furnished by request in writing to the Secretary of the Corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States Mail. If a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Notice need not be given to any stockholder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. Stockholder List. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the Corporation, or to vote at any meeting of stockholders. 4 Conduct of Meeting. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. Inspectors. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspectors at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots, or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question, or matter determined by him or them and execute a certificate of any fact found by him or them. Quorum. The holders of a majority of the outstanding shares of stock shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum. Voting. Each share of stock shall entitle the holders thereof to one vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different 5 percentage of votes and/or a different exercise of voting power, and except as may be otherwise prescribed by the provisions of the certificate of incorporation and these Bylaws. In the election of directors, and for any other action, voting need not be by ballot. 8. Stockholder Action Without Meetings. Any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Action taken pursuant to this paragraph shall be subject to the provisions of Section 228 of the General Corporation Law. ARTICLE II DIRECTORS 1. Functions and Definition. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors of the Corporation. The Board of Directors shall have the authority to fix the compensation of the members thereof. The use of the phrase "whole board" herein refers to the total number of directors which the Corporation would have if there were no vacancies. 2. Qualifications and Number. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The initial Board of Directors shall consist of five persons. Thereafter, the number of directors constituting the whole board shall be at least one. Subject to the foregoing limitation and except for the first Board of Directors, such number may be fixed from time to time by action of the stockholders or of the directors, or, if the number is not fixed, the number shall be nine. The number of directors may be increased or decreased by action of the stockholders of the Corporation. 3. Election and Term. The first Board of Directors, unless the members thereof shall have been named in the certificate of incorporation, shall be elected by the incorporator or incorporators and shall hold office until the first annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon written notice to the Corporation. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Except as the General Corporation Law may otherwise require, in the interim between annual meetings of 6 stockholders or of special meetings of stockholders called for the election of directors and/or for the removal of one or more directors and for the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause or without cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. 4. Meetings. Time. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. Place. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the Board. Call. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, or the President, or of a majority of the directors in the office. Notice or Actual or Constructive Waiver. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice. Quorum and Action. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of the directors is present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as herein otherwise provided, and except as otherwise provided by the General Corporation Law, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law and these Bylaws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board or action of disinterested directors. 7 Any member or members of the Board of Directors or of any committee designated by the Board, may participate in a meeting of the Board, or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Chairman of the Meeting. The Chairman of the Board, if any, and if present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the Board, if any, and if present and acting, or the President, if present and acting, or any other director chosen by the Board, shall preside. 5. Removal of Directors. Except as may otherwise be provided by the General Corporation Law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. 6. Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation with the exception of any authority the delegation of which is prohibited by Section 141 of the General Corporation Law, and may authorize the seal of the Corporation to be affixed to all papers which may require it. 7. Written Action. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. ARTICLE III OFFICERS The officers of the Corporation shall consist of a President, a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive Vice-President, one or more other Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolution of the Board of Directors choosing them shall designate. Except as may 8 otherwise be provided in the resolution of the Board of Directors choosing him, no officer other than the Chairman or Vice-Chairman of the Board, if any, need be a director. Any number of offices may be held by the same person, as the directors may determine. Unless otherwise provided in the resolution choosing him, each officer shall be chosen for a term which shall continue until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor shall have been chosen and qualified. All officers of the Corporation shall have such authority and perform such duties in the management and operation of the Corporation as shall be prescribed in the resolutions of the Board of Directors designating and choosing such officers and prescribing their authority and duties, and shall have such additional authority and duties as are incident to their office except to the extent that such resolutions may be inconsistent therewith. The Secretary or an Assistant Secretary of the Corporation shall record all of the proceedings of all meetings and actions in writing of stockholders, directors, and committees of directors, and shall exercise such additional authority and perform such additional duties as the Board shall assign to him. Any officer may be removed, with or without cause, by the Board of Directors. Any vacancy in any office may be filled by the Board of Directors. ARTICLE IV CORPORATE SEAL The corporate seal shall be in such form as the Board of Directors shall prescribe. ARTICLE V FISCAL YEAR The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE VI CONTROL OVER BYLAWS Subject to the provisions of the certificate of incorporation and the provisions of the General Corporation Law, the power to amend, alter, or repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors or by the stockholders. 9 I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the Bylaws of Best Benefits, Inc., a Delaware corporation, as in effect on the date hereof. Dated: October 12, 2000. /s/ James Duffy ----------------------------------- James Duffy Secretary (SEAL) 10 EX-3.53 54 ex3-53_043004.txt ARTICLES OF INCORPORATION OF UNI-CARE Exhibit 3.53 File Number: 5677-575-7 STATE OF ILLINOIS OFFICE OF THE SECRETARY OF STATE [LOGO] Whereas, ARTICLES OF INCORPORATION OF UNI-CARE, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF ILLINOIS, IN FORCE JULY 1, A.D. 1984. Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois, by virtue of the powers vested in my by law, do hereby issue this certificate and attach hereto a copy of the Application of the aforesaid corporation. In Testimony Whereof, I hereto set my hand and cause to be affixed the Great Seal of the State of Illinois, at the City of Springfield, this 26th day of MARCH A.D. 1992 and of the Independence of the United States the two hundred and 16th. [SEAL] /s/ George H. Ryan ---------------------------------------- SECRETARY OF STATE Form BCA-2.10 ARTICLES OF INCORPORATION - -------------------------------------------------------------------------------- (Rev. Jan. 1991) SUBMIT IN DUPLICATE! George H. Ryan Secretary of State This space for use by Department of Business Services Secretary of State Springfield, IL 62756 PAID Date 3/26/92 MAR 27, 1992 Franchise Tax $ 25 Payment must be made by Filing Fee $ 75 certified check, cashier's Approved: 100 check, Illinois attorney's (initialed) check, Illinois C.P.A.'s check or money order, payable to "Secretary of State." - -------------------------------------------------------------------------------- 1. CORPORATE NAME: Uni-Care, Inc. ----------------------------------------------------------------------------- (This corporate name must contain the word "corporation", "company," "incorporated," "limited" or an abbreviation thereof.) - -------------------------------------------------------------------------------- 2. Initial Registered Agent: Charles R. Mitchell ------------------------------------------------ First Name Middle Initial Last Name Initial Registered Office: 42 N. Milwaukee Avenue ------------------------------------------------ Number Street Suite # Wheeling 60089 Cook ------------------------------------------------ City Zip Code County - -------------------------------------------------------------------------------- 3. Purpose or purposes for which the corporation is organized: (If not sufficient space to cover this point, add one or more sheets of this size.) Marketing and Consulting - -------------------------------------------------------------------------------- 4. Paragraph 1: Authorized Shares, Issued Shares and Consideration Received:
Par Value Number of Shares Number of Shares Consideration to be Class per Share Authorized Proposed to be issued Received Therefor - ------------------------------------------------------------------------------------------------ Common $ NBY 10,000 1,000 $1,000.00 - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------
Paragraph 2: The preferences, qualifications, limitations, restrictions and special or relative rights in respect of the shares of each case are: none (If not sufficient space to cover this point, add one or more sheets of this size.) (over) 5. OPTIONAL: (a) Number of directors constituting the initial board of directors of the corporation: ___. (b) Names and addresses of the persons who are to serve as directors until the first annual meeting of shareholders or until their successors are elected and qualify: Name Residential Address ------------------------------------------------------------------- ------------------------------------------------------------------- ------------------------------------------------------------------- ------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. OPTIONAL: (a) It is estimated that the value of all property to be owned by the corporation for the following year wherever located will be: $1,000.00 ------------ (b) It is estimated that the value of the property to be located within the State of Illinois during the following year will be: $ ------------ (c) It is estimated that the gross amount of business that will be transacted by the corporation during the following year will be: $ ------------ (d) It is estimated that the gross amount of business that will be transacted from places of business in the State of Illinois during the following year will be: $ ------------ - -------------------------------------------------------------------------------- 7. OPTIONAL: OTHER PROVISIONS Attach a separate sheet of this size for any other provision to be included in the Articles of Incorporation, e.g., authorizing preemptive rights, denying cumulative voting, regulating internal affairs, voting majority requirements, fixing a duration other than perpetual, etc. - -------------------------------------------------------------------------------- 8. NAME(S) & ADDRESS(ES) OF INCORPORATOR(S) The undersigned incorporator(s) hereby declare(s), under penalties of perjury, that the statements made in the foregoing Articles of Incorporation are true. Dated March 17, , 1992. ---------------------------------------- -- Signature and Name Address 1. /s/ Charles R. Mitchell 1. 42 N. Milwaukke Ave. ----------------------------- --------------------------------- Signature Street Charles R. Mitchell Wheeling, IL 60089 ----------------------------- --------------------------------- (Type or Print Name) City/Town State Zip Code 2. 2. ----------------------------- --------------------------------- Signature Street ----------------------------- --------------------------------- (Type or Print Name) City/Town State Zip Code 3. 3. ----------------------------- --------------------------------- Signature Street ----------------------------- --------------------------------- (Type or Print Name) City/Town State Zip Code (Signatures must be in ink on original document. Carbon copy, photocopy or rubber stamp signatures may only be used on conformed copies.) NOTE: If a corporation acts as incorporator, the name of the corporation and the state of incorporation shall be shown and the execution shall be by its president or vice president and verified by him, and attested by its secretary or assistant secretary. - -------------------------------------------------------------------------------- FEE SCHEDULE o The initial franchise tax is assessed at the rate of 15/100 of 1 percent ($1.50 per $1,000) on the paid-in capital represented in this state, with a minimum of $25. o The filing fee is $75. FILED o The minimum total due (franchise tax + filing fee) MAR 26 1992 is $100. (Applies when the Consideration to be GEORGE H. RYAN Received as set forth in Item 4 does not exceed SECRETARY OF STATE $16,667). o The Department of Business Services in Springfield will provide assistance in calculating the total fees if necessary. Illinois Secretary of State Springfield, IL 62756 Department of Business Services Telephone (217)782-9522 782-9523 File # D 5677-575-7 - ----------------------------------- Form BCA-5.10 NFP-105.10 (Rev. April 1995) - ----------------------------------- George H. Ryan Secretary of State Department of Business Services Springfield, IL 62756 Telephone (217) 782-3647 http://www.sos.state.il.us - -------------------------------------------------------------------------------- SUBMIT IN DUPLICATE -------------------------- This space for use by Secretary of State STATEMENT OF FILED CHANGE FEB 18 2000 Date FEB 18 2000 OF REGISTERED AGENT -------------------------- AND/OR REGISTERED JESSE WHITE Filing Fee $5 OFFICE SECRETARY OF STATE -------------------------- Approved: (initialed) -------------------------- Remit payment in check or money order, payable to "Secretary of State." - -------------------------------------------------------------------------------- Type or print in black ink only. See reverse side for signature(s). 1. CORPORATE NAME: UNI-CARE, Inc. ------------------------------------------------------- 2. STATE OR COUNTRY OF INCORPORATION: Illinois ------------------------------------ - -------------------------------------------------------------------------------- 3. Name and address of the registered agent and registered office as they appear on the records of the office of the Secretary of State (before change): Registered Agent WIL MARECONDIA ------------------------------------------ First Name Middle Name Last Name Registered Office 2360 Hassell Rd #E ------------------------------------------ Number Street Suit No. (A P.O. Box alone is not acceptable) Hoffman Estates 60195 Cook ------------------------------------------ City Zip Code County 4. Name and address of the registered agent and registered office shall be (after all changes herein reported): Registered Agent ANTHONY JOSEPH POPE ------------------------------------------ First Name Middle Name Last Name Registered Office 185 N. York Road ------------------------------------------ Number Street Suit No. (A P.O. Box alone is not acceptable) ------------------------------------------ Elmhurst 60126-2790 DuPage ------------------------------------------ City Zip Code County 5. The address of the registered office and the address of the business office of the registered agent, as changed, will be identical. 6. The above change was authorized by: ("X" one box only) a. |X| By resolution duly adopted by the board of directors. (Note 5) b. |_| By action of the registered agent. (Note 6) NOTE: When the registered agent changes, the signatures of both president and secretary are required. 7. (If authorized by the board of directors, sign here. See Note 5) The undersigned corporation has caused this statement to be signed by its duly authorized officers, each of whom affirms, under penalties of perjury, that the facts stated herein are true.
Dated December 10, 19,99 UNI-CARE, INC. ----------------------------------------- ----------------------------------------------------- (Exact Name of Corporation) attested by /s/ Vincent DiBenedetto by /s/ Vincent DiBenedetto ----------------------------------------- --------------------------------------------------- (Signature of Secretary or Assistant Secretary) (Signature of President or Vice President) VINCENT DiBENEDETTO, Sec'y. VINCENT DiBENEDETTO, President ------------------------------------------ ----------------------------------------------------- (Type or Print Name and Title) (Type or Print Name and Title)
(If change of registered office by registered agent, sign here. See Note 6) The undersigned, under penalties of perjury, affirms that the facts stated herein are true. Dated 19, -------------------------------------------------------------------------- (Signature of Registered Agent of Record) NOTES 1. The registered office may, but need not be the same as the principal office of the corporation. However, the registered office and the office address of the registered agent must be the same. 2. The registered office must include a street or road address; a post office box number alone is not acceptable. 3. A corporation cannot act as its own registered agent. 4. If the registered office is changed from one county to another, then the corporation must file with the recorder of deeds of the new county a certified copy of the articles of incorporation and a certified copy of the statement of change of registered office. Such certified copies may be obtained ONLY from the Secretary of State. 5. Any change of registered agent must be by resolution adopted by the board of directors. The statement must then be signed by the president (or vice-president) and by the secretary (or an assistant secretary). 6. The registered agent may report a change of the registered office of the corporation for which he or she is registered agent. When the agent reports such a change, this statement must be signed by the registered agent. EX-3.54 55 ex3-54_043004.txt BYLAWS OF UNI-CARE UNI-CARE, INC. ------------------------------ BYLAWS ------------------------------ ARTICLE I Offices Section 1. Reqistered Office. The registered office of the Corporation shall be 2134 North Clifton Avenue, Chicago, Illinois 60616. Section 2. Additional Offices. The Corporation may also have offices at such other places, both within and without the State of Illinois, as the Board of Directors may from time to time determine or as the business of the Corporation may require. ARTICLE II Stockholders Section 1. Annual Meeting. Annual meetings of stockholders shall be held on the 1st day of May, if not a legal holiday, or, if a legal holiday, on the first secular day following, at 10:00 a.m., or at such other date and time as shall, from time to time, be designated by the Board of Directors and stated in the notice of the meeting. At the annual meeting, the stockholders shall elect a Board of Directors and shall transact such other business as may properly be brought before the meeting. Section 2. Special Meetinqs. Special meetings of the stockholders, for any purpose, unless otherwise prescribed by law, shall be called by the President, the Chairman of the Board, a majority of the Board of Directors or the holders of thirty (30%) percent or more of the shares of capital stock of the Corporation issued and outstanding and entitled to vote at the meeting unless any section of the Illinois Business Corporation Act (the "Act") otherwise provides. Such request shall state the purpose or purposes of the proposed meeting. No business other than that specified in the notice of meeting shall be transacted at any such special meeting. -1- Section 3. Notice of Special Meetings. Written notice of a meeting, stating its place, date, and time and, if a special meeting, the purpose or purposes for which the meeting is called, or such other notice as shall be required by the Act shall be given to each stockholder at such meeting not less than ten (10) days (unless a longer period is required by law) nor more than sixty (60) days (unless a shorter period is required by law) before the meeting. Such notice shall be delivered, persnally or by mail, by or at the direction of the person or persons calling the meeting to each stockholder of record entitled to vote at such meeting. Notice of a meeting of stockholders need not be given to any stockholder who signs a waiver of notice, in person or by proxy, either before or after such meeting. A waiver of notice of meeting of stockholders shall specify the purpose of such meeting. Attendance of a stockholder at a meeting, in person or by proxy, shall of itself constitute a waiver of notice, except when the stockholder attends a meeting solely for the purpose of stating his objection, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened. No act at any meeting of any Stockholders shall be deemed valid unless proper notice (as called for in this section) has been given to all Stockholders, both voting and nonvoting. Section 4. Place of Meetings. A meeting of stockholders for any purpose may be held at such place, within or without the State of Illinois, as the Board of Directors designates from time to time and as is stated in the notice of the meeting or in a duly executed waiver of notice. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the registered office of the Corporation. Section 5. Record Date. In order that the Corporation may determine the stockholders of record who are entitled to notice of or to vote at any meeting of stockholders or any adjournment, or who are entitled to receive payment of any dividend or other distribution, or so that the Corporation may make a determination of the stockholders of record for any other proper purpose, the Board of Directors may, in advance, fix a date as the record date for such determination. The date shall not be more than seventy (70) days nor less than ten (10) days before the date of the meeting or the date of any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting taken pursuant to Section 8 of this Article unless the Board of Directors fixes a new record date. The Board of Directors may, and if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for -2- the original meeting shall, fix a new record date for the adjourned meeting. Section 6. List of Stockholders. The officer in charge of the stock ledger of the Corporation, or the transfer agent or registrar, shall, after a record date is fixed, prepare and make, not later than the date on which notice of such meeting is given in accordance with Section 2 or 4 of this Article, 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. This list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for the period beginning on the date on which notice of such meeting is given in accordance with Section 2 or 4 of this Article and continuing through the meeting, at the registered office of the Corporation, at the principal place of business of the Corporation or at the office of the transfer agent or registrar, which place, if other than the registered office of the Corporation, shall be specified in the notice of the meeting. The list shall also be produced and kept at the time and place of the meeting or any adjournment thereof for which a new record date is not fixed during the whole time, and may be inspected by any stockholder who is present in person or by his duly authorized agent or attorney. Section 7. Presiding Officer; Order of Business. (a) Meetings of stockholders shall be presided over by the Chairman of the Board, or, if he is not present (or if there is none), by the President, or, if he is not present, by a Vice President, or, if none is present, by such person who may have been chosen by the Board of Directors. If none of these persons is present, a chairman to be chosen by the stockholders owning a majority of the shares of capital stock of the Corporation entitled to vote at the meeting and who are present in person or represented by proxy shall choose any person present to act as secretary of the meeting. (b) The following order of business, unless otherwise ordered at the meeting, shall be observed as far as practicable and consistent with the purposes of the meeting: (1) Call of the meeting to order. (2) Presentation of proof of mailing of the notice of the meeting and, if the meeting is a special meeting, the call thereof. (3) Presentation of proxies. -3- (4) Announcement that a quorum is present. (5) Reading and approval of the minutes of the previous meeting. (6) Reports, if any, of officers. (7) Election of directors, if the meeting is an annual meeting or a meeting called for that purpose. (8) Miscellaneous business or purposes for which meeting was called. (9) Adjournment. Section 8. Quorum; Adjournments. The holders of a majority of the shares of capital stock of the Corporation issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum, which is necessary to transact business at all meetings of the stockholders, except as otherwise provided herein, by law or by the Articles of Incorporation. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. If a quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken, until a quorum shall be present or represented. Even if a quorum shall be present or represented at any meeting of the stockholders, the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time for good cause, without notice of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken, until a date which is not more than thirty (30) days after the date of the original meeting. At any such adjourned meeting, at which a quorum shall be present in person or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote in accordance with the provisions of Section 2 and 4 of this Article, as the case may be. Section 9. Voting. (a) At any meeting of stockholders, every stockholder having -4- the right to vote shall be entitled to vote either in person or by proxy. Subject to the provisions of section 11 of this Article II and except as otherwise provided by law, each stockholder of record shall be entitled to one vote per share. (b) All matters shall be determined by a vote of a majority of the stockholders present in person or represented by proxy and voting on such matters. (c) Any vote requiring amendment to the Bylaws or for the payment of any dividends shall require a vote of three-fourths (3/4) of the stockholders present in person or represented by proxy in voting on such matters. (d) Except as otherwise provided, each outstanding, share, Class A Common Stock, shall be entitled to one vote on each matter submitted to a vote of the stockholders. Section 10. Proxies. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall confer authority to vote at any meeting, or any adjournment thereof, other than the next meeting to be held after the date on which such proxy was first sent or given. Except as provided by any section of the Act relating to irrevocable proxies, every proxy shall be revocable at the pleasure of the stockholder executing it. Revocation of a proxy may be effected by an instrument which by its terms revokes such proxy, or by a duly executed proxy bearing a later date. Section 11. Voting of Share by Certain Holders. (a) Shares held in the name of another corporation may be voted by such officers, agent or proxy as the bylaws of such corporation may prescribe, or in the absence of such provision, as the president of such corporation may determine. (b) Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Share held in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name. (c) Shares held in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name, if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. -5- (d) A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. (e) Shares of its own stock belonging to the Corporation or held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares at any given time. (f) A minor may vote shares which stand of record in his name and may not thereafter disaffirm or avoid such vote. (g) Shares standing in the name of a partnership may be voted by any general partner. Shares standing in the name of a person as life tenant may be voted by such life tenant. Shares held jointly or as tenants in common by two or more persons may be voted by one such shareholder. Generally, where share are held jointly or as tenants in common by more than two persons, the act of a majority of those acting shall bind all such shareholders. Section 12. Cumulative Voting. At each election for members of the Board of Directors every stockholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote, or to cumulate his votes by giving one candidate as many votes as the number of such directors multiplied by the number of his shares shall equal, or by distributing such votes on the same principle among any number of candidates. Any stockholder intending to cumulate his votes, as herein provided, either shall give written notice of such intention to the President or other officer of the Corporation not less than forty-eight (48) hours before the time fixed for the meeting or shall announce his intention in such meeting before the voting shall commence. Such notice having been given, all stockholders entitled to vote at such meeting shall be entitled to cumulate their votes. Section 13. Action by Consent. Any action required or permitted, by law or the Articles of Incorporation, to be taken at any meeting of stockholders may be taken without a meeting, without prior notice, and without a vote, if a written consent, setting forth the action that was taken, shall be signed by the holders of all shares of capital stock of the Corporation issued and outstanding entitled to vote at a meeting. Such written consent shall be filed with the minutes of meetings of stockholders. -6- ARTICLE III Directors Section 1. General Powers; Number; Tenure. The business of the Corporation shall be managed by its Board of Directors, which may exercise all powers of the Corporation and perform all lawful actions which are not by law, the Articles of Incorporation, these Bylaws or by agreement among stockholders directed or required to be performed by the stockholders. The number of directors shall be determined by the stockholders. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of the Article, and each director elected shall hold office until his successor is elected and qualifies. Directors need not be residents of the State of Illinois or stockholders of the Corporation. Section 2. Vacancies. Any vacancy in the Board of Directors may be filled by a majority of the directors then in office, although less than a quorum, or a sole remaining director. Each director so chosen shall hold office until the next annual meeting of stockholders and until his successor is duly elected and qualifies. If there are no directors in office, any officer or stockholder may call a special meeting of stockholders in accordance with the provision of these Bylaws, at which meeting such vacancies shall be filled. Any directorship to be filled by reason of an increase in the number of directors shall be filled by election at an annual meeting or at a special meeting of stockholders for that purpose. Section 3. Removal; Resignation (a) Except as otherwise provided by law, at a meeting of stockholders called expressly for that purpose, any director may be removed, with or without cause, by a vote of stockholders in which (i) stockholders holding a majority of the shares entitled to vote in an election of directors vote for his removal and (ii) the number of votes voted against his removal would be insufficient to elect him under cumulative voting. (b) Any director may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board, the President or the Secretary. Unless otherwise specified in such written notice, a resignation shall take effect upon its delivery to the Board of Directors or the designated officer. It shall not be necessary for a resignation to be accepted before it becomes effective. -7- Section 4. Place of Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Illinois. Section 5. Annual Meeting. The annual meeting of each newly elected Board of Directors shall be held immediately following the annual meeting of stockholders, and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. Section 6. Regular Meetings. Additional regular meetings of the Board of Directors may be held without notice at such time and place as may from time to time be determined by the Board of Directors. Section 7. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President, or by two (2) or more directors on seven (7) days' notice to each director, if such notice is delivered personally or sent by telegram, or on ten (10) days' notice, if sent by mail. Special meetings shall be called by the Chairman of the Board, the President, the Secretary or two (2) or more directors in like manner and on like notice on the written request of one-half or more of the directors then in office. Section 8. Notice. Notice of any regular meeting of the Board of Directors shall not be required to be given. Notice of any special meeting shall be in accordance with the above Article III, Section 7. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid. If notice is given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting either before or after the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. The business to be transacted at, or the purpose of, any regular or special meeting of the Board of Directors shall be specified in the notice or waiver of notice of such meeting. -8- Section 9. Quorum; Adjournments. At all meetings of the Board of Directors, a majority of the directors then in office shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise provided by law. If a quorum is not present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum until a quorum shall be present. Section 10. Compensation. Directors shall be entitled to such reasonable compensation for their services as directors and to such reimbursement for any reasonable expenses incurred in attending directors' meetings as may from time to time be fixed by the Board of Directors. The compensation of directors may be on any basis that is determined by the Board of Directors. Any director may waive compensation for any meeting. Any director receiving compensation under these provisions shall not be barred from serving the Corporation in any other capacity and receiving compensation and reimbursement for reasonable expenses for such other services. Section 11. Action by Consent. (a) Action taken without a meeting by a majority of the Board of Directors, or by such larger vote as the Articles of Incorporation may require, shall be deemed an action of the Board of Directors if all directors execute, either before or after the action is taken, a written consent thereto, and the consent is filed with the records of the Corporation. (b) If an otherwise valid meeting of the Board of Directors is held without call or notice where such is required, any action taken at such meeting shall be deemed ratified by a director who did not attend, unless after learning of the action taken and of the impropriety of the meeting, he makes prompt objection thereto. (c) Objection by a shareholder, director or committee member shall be effective only if written objection to the holding of the meeting or to any specific action so taken is filed with the Secretary of the Corporation, or such objection was duly recorded at the meeting. Section 12. Meetings by Telephone or Similar Communications. The Board of Directors may participate in a meeting by means of conference telephone or similar communications equipment by means of which all directors participating in the meeting can hear -9- each other, and participation in such meeting shall constitute presence in person by such director at such meeting. Section 13. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by certified mail, postage prepaid, return receipt requested, to the Secretary of the Corporation immediately after adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. ARTICLE IV Committees Section 1. Committees. The Board of Directors, by resolutions adopted by a majority of the whole Board of Directors, may appoint any committee or committees as it shall deem advisable, with the functions and duties as the Board of Directors shall prescribe. Section 2. Vacancies; Changes; Discharge. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, and to discharge any committee. Section 3. Compensation. Members of any committee shall be entitled to compensation for their services as members of the committee and to such reimbursement for any reasonable expenses incurred in attending committee meetings as may from time to time be fixed by the Board of Directors. Any member may waive compensation for any meeting. Any committee member receiving compensation under these provisions shall not be barred from serving the corporation in any other capacity and from receiving compensation and reimbursement expenses for these other services. Section 4. Action by Consent. Any action required or permitted to be taken at any meeting of any committee of the Board of Directors may be taken without a meeting if a written consent to the action is signed by all members -10- of the committee and the written consent is filed with the minutes of its proceedings. ARTICLE V Officers Section 1. Designations. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer (CEO), a President, one or more Vice Presidents, a Secretary, and a Treasurer. The Board of Directors may also choose one or more Assistant Secretaries and/or Assistant Treasurers and other officers and agents as it shall deem necessary or appropriate. All officers of the Corporation shall exercise the powers and perform the duties as are set forty in these Bylaws or as shall from time to time be determined by the Board of Directors. Any number of offices may be held by the same person. Section 2. Term of Office; Removal. The Board of Directors at its first regular meeting after each annual meeting of stockholders shall choose a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors may also choose one or more Assistant Secretaries and/or Assistant Treasurers and such other officers and agents as it shall deem necessary or appropriate. Each officer of the Corporation shall hold office until his successor is chosen and shall qualify. Any officer, elected or appointed by the Board of Directors may be removed, with or without cause, at any time by the affirmative vote of a majority of the directors then in office. Section 3. Compensation. The compensation of all officers of the Corporation shall be determined by the Board of Directors, and no officer shall be prevented from receiving a salary by reason of the fact that he is also a director of the Corporation. Section 4. Chief Executive Officer. The Chief Executive officer shall be a stockholder, or an officer or agent of a stockholder and shall be the chief executive officer of the Corporation and, subject to the direction of the Board of Directors, shall perform such executive, supervisory, and management functions and duties as may be assigned to him from time to time by the Board. He shall, if present, preside at all meetings of stockholders and of the Board of Directors. If, for any reason, there be no Chief Executive Officer, his duties shall devolve upon and be performed by the President. -11- Section 5. President. The President, subject to the direction of the Board of Directors, shall have general charge of the business affairs and property of the Corporation and general supervision over its other officers and agents. In general, he shall perform all duties incident to the office of President and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with the Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and executing thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed. Section 6. Vice Presidents. The Vice President (or the Vice Presidents, in the order designated or elected) shall, in the absence of the President or in the event of his disability or refusal to act, perform the duties and exercise the powers of the President, and shall generally assist the President and perform such other duties and have such other powers as may from time to time be prescribed by the Board of Directors. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation. Section 7. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and shall record all the votes and proceedings of the meetings in a book to be kept for that purpose. He shall perform like duties for the Executive Committee or other committees, if required. He shall give, or cause to be given, notice of all meetings of stockholders and special meetings of the Board of Directors, shall keep a register of the post office address of each stockholder, shall sign with the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors, and shall perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, or the President, under whose supervision he shall act. He shall have custody of the seal of the Corporation, and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it. When so affixed, the seal may be attested by his signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing of it by his signature. -12- Section 8. Assistant Secretary. The Assistant Secretary, if any (or the Assistant Secretaries, in the order designated elected), shall, in the absence of the Secretary or in the event of his disability, perform the duties and exercise the powers of the Secretary, and shall perform such other duties and have such other powers as may from time to time be prescribed by the Board of Directors. Section 9. Treasurer. The Treasurer shall have the custody of the corporate funds and other valuable effects, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation. He shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may from time to time be designated by the Board of Directors., He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board, the President and the Board of Directors, at regular meetings of the Board or whenever they may require it, an account of all of his transactions as Treasurer and of the financial condition of the Corporation. Section 10. Assistant Treasurer. The Assistant Treasurer, if any (or the Assistant Treasurers, in the order designated or elected), shall, in the absence of the Treasurer or in the event of his disability, perform, the duties and exercise the powers of the Treasurer, and shall perform such other duties and have such other power as may from time to time be prescribed by the Board of Directors. ARTICLE VI Indemnification of Directors and Officers Section 1. Statutory Indemnification. The Corporation shall indemnify any director or officer of the Corporation to the fullest extent permitted by Business Corporations Act of the State of Illinois, or any successor statutory provision. -13- ARTICLE VII Affiliated Transactions and Interested Directors Section 1. Conditions Under Which Affiliated Transactions Permitted and the Covenant not to Compete. (a) No contract or transaction between the Corporation and one or more of its directors, officers, or stockholders between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers shall have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee which authorizes the contract or transaction or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote, and the contract or transaction is specifically approved in good faith by the vote of the stockholders; or (3) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved, or ratified by the Board of Directors, a committee of the Board of Directors, or the stockholders. (b) Common interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes a contract of transaction described above. (c) Regardless of the forgoing nothing herein can be construed to permit any shareholder, director or officer to compete, participate in, be employed by or in any way affiliated with any corporation, partnership, business, group, or other entity whose business shall be the same or similar to that of the corporation. -14- ARTICLE VIII Stock Certificates Section 1. Form; Signatures. (a) Every holder of stock in the Corporation shall be entitled to have a certificate, signed by the Chairman of the Board, the President or any Vice President, and by the Secretary or an Assistant Secretary of the Corporation, exhibiting the number and class (and series, if any) of shares owned by him, and bearing the seal of the Corporation. Such signatures and seal may be facsimile. A certificate may be manually signed by a transfer agent or registrar other than the Corporation or its employee but may be a facsimile. In case any officer who has signed a certificate, or whose facsimile signature was placed thereon, shall have ceased to be such officer before such certificate is issued, it may nevertheless be issued by the Corporation with the same effect as if he were such officer at the date of its issue. (b) All stock certificates representing shares of capital stock that are subject to restrictions on transfer or to other restrictions may have imprinted on them such notation to such effect as may be determined by the Board of Directors. Section 2. Registration of Transfer. Upon surrender to the Corporation or any transfer agent or registrar of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, it shall be the duty of the Corporation or its transfer agent or registrar to issue a new certificate to the person entitled, to cancel the old certificate, and to record the transaction upon its books. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancel led, except that in case of a lost, stolen, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. Section 3. Reqistered Stockholders. (a) Except as otherwise provided by law or these Bylaws, the Corporation shall be entitled to recognize the exclusive right of a person who is registered on its books as the owner of shares of its capital stock to receive dividends or other distributions, and to vote as the owner, and the Corporation may hold liable for calls and assessments a person who is registered on its books as the owner of shares of its capital stock. The Corporation shall not be bound to recognize any equitable or legal claim to or interest in -15- the shares on the part of any other person. (b) If a stockholder desires that notices and/or dividends be sent to a name or address other than the name or address appearing on the stock ledger maintained by the Corporation (or by the transfer agent or registrar, if any), that stockholder shall have the duty to notify the Corporation (or the transfer agent or registrar, if any), in writing, of that desire. The written notice shall specifythe alternative name or address to be used. Section 4. Lost, Stolen, Mutilated or Destroyed Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate already issued by the Corporation which is claimed to have been lost, stolen, mutilated or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate was lost, stolen, mutilated or destroyed. When authorizing the issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance, require the owner of the lost, stolen mutilated or destroyed certificate, or its legal representative, to advertise the same in the manner as it shall require and/or to give the Corporation a bond in such sum, or other security in such form, as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate claimed to have been lost, stolen, mutilated or destroyed. ARTICLE IX General Provisions Section 1. Dividends. Dividends on preferred stock may be declared by the Board of Directors in accordance with the Articles of Incorporation [as corrected or amended]. Dividends on common stock may be declared by the Board of Directors. Section 2. Reserves. The Board of Directors shall have full power, subject to the provisions of applicable law and the Articles of Incorporation, to determine whether any and, if so, what part of the funds legally available for the payment of dividends shall be declared as dividends and paid to the stockholders of the Corporation. The Board of Directors, in its sole discretion, may fix a sum which may be set aside or reserved over and above the paid-in capital of the Corporation for working capital or as a reserve for any proper purpose, and may, from time to time, increase, diminish, or vary such fund or funds. -16- Section 3. Fiscal Year. The fiscal year of the Corporation shall be determined from time to time by the Board of Directors. Section 4. Seal. The corporate seal shall have inscribed on it the name of the Corporation, the year of its incorporation, and the words "Corporate Seal" and "Illinois". ARTICLE X Contracts, Loans, Checks and Deposits Section 1. Contracts. The Board of Directors may authorize any officer of officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 2. Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Section 3. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer of officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. Section 4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors may select. ARTICLE XI Amendments Section 1. Majority of Stockholders or Directors May Amend. The stockholders and the Board of Directors shall have the -17- power to make, amend, and repeal these Bylaws, and to adopt new bylaws, by an affirmative vote of a three-fourths (3/4) of the voting stockholders at any regular or special meeting or by a vote of three-fourths (3/4) of the Board of Directors at any regular or special meeting. ARTICLE XII Miscellaneous Section 1. References to Gender and Number Terms. In construing these Bylaws, feminine or neuter pronouns shall be substituted for those masculine in form and visa versa, and plural terms shall be substituted for singular and singular for plural in any place in which the context so requires. Section 2. Headings. The Article and Section headings in these Bylaws are inserted for convenience only and are not part of these Bylaws. I, William Maricondia, of Unicare, Inc. (the "Corporation") do hereby certify that the foregoing is a true and correct copy of the Corporation's Bylaws as adopted by the stockholders of the Corporation on April 3, 1993. IN WITNESS WHEREOF I have set my hand and affixed the Corporate Seal of the Corporation, this the 3 day of April, 1993. /s/ ------------------------------------ Secretary (corporate seal) -18- EX-3.55 56 ex3-55_043004.txt CERTIFICATE OF INCORPORATION OF QUOTA-PHONE CERTIFICATE OF INCORPORATION OF QUOTA-PHONE, INC. a Under Section 402 of the Business Corporation Law The undersigned, natural persons of the age of eighteen years or over, desiring to form a corporation pursuant to the provisions of the Business Corporation Law of the State of New York, hereby certify as follows: FIRST: The name of the corporation is QUOTA-PHONE, INC. SECOND: The purposes for which it is formed are as follows: To engage in the business of computerized quoting and buying service, and in connection therewith, to sell, lease, rent or otherwise market or deal in data processing related services, computer software, products or systems including but not limited to programming, systems analysis, computer processing of computer systems, computer time rental, data preparation, record keeping, report preparation, data processing consulting, management consulting, record storage, computer programs or systems, computers, data processing products, service bureau services or facilities management services. To purchase, manufacture, produce, assemble, receive, lease or in any manner acquire, hold, own, use, operate, install, maintain, service, repair, process, alter, improve, import, export, sell, lease, assign, transfer and generally to trade and deal in and with, raw materials, natural or manufactured articles or products, machinery, equipment, devices, systems, parts, supplies, apparatus and personal property of every kind, nature or description, tangible or intangible, used or capable of being used for any purpose whatsoever and to engage and participate in any mercantile, manufacturing or trading business of any kind or character. To purchase, receive, lease or otherwise acquire and to manage, hold, own, use, improve, convey, sell, mortgage, or otherwise deal in and with lands, buildings and real property of every description, or any interest therein. To adopt, apply for, obtain, register, purchase, lease or otherwise acquire and to maintain, protect, hold, use, own, exercise, develop, manufacture under, operate and introduce, and to sell and grant licenses or other rights in respect of, assign or otherwise dispose of, turn to account, or in any manner deal with and contract with references to, any trade marks, trade names, patents, patent rights, concessions, franchises, designs, copyrights and distinctive marks and rights analogous thereto, and inventions, devices, improvements, processes, recipes, formulae and the like, including such thereof as may be covered by, used in connection with, or secured or received under, Letters of Patent of the United States of America or elsewhere or otherwise, and any licenses in respect thereof and any or all rights connected therewith or appertaining thereto. In furtherance of its corporate business and subject to the limitations prescribed by statute, to acquire by purchase, exchange or otherwise, all or any part of, or any interest in, the properties, assets, business and goodwill of any one or more corporations, associations, partnerships, firms, syndicates or individuals and to pay for the same in cash, property or its own or other securities; to hold, operate, reorganize, liquidate, mortgage, pledge, sell, exchange, or in any manner dispose of the whole or any part thereof; and in connection therewith to assume or guarantee performance of any liabilities, obligations or contracts of corporations, associations, partnerships, firms, syndicates or individuals, and to conduct in any lawful manner the whole or any part of any similar business thus acquired. To acquire or become interested in, whether by subscription, purchase, underwriting, loan, participation in syndicates or otherwise, to own, hold, to sell, assign or otherwise dispose of, or in any manner to deal in or with stocks, bonds, debentures, warrants, rights, scrip, notes, evidences of indebtedness, or other securities or obligations of any kind by whomsoever issued, to exercise in respect thereof all powers and privileges of individual ownership or interest therein, including, the right to vote thereon for any and all purposes; to consent, or otherwise act with respect thereto, without limitations; and to issue in exchange therefor the corporation's stock, bonds, debentures, warrants, rights, scrip, notes, evidences of indebtedness or other securities or obligations of any kind. To borrow money for its corporate purposes, and to make, accept, endorse, execute and issue promissory notes, bills of exchange, bonds, debentures or other obligations from time to time, for the purchase of property, or for any purpose relating to the business of the corporation, and if deemed proper, to secure the payment of any such obligations by mortgage, pledge, guarantee, deed of trust or otherwise. To lend its uninvested funds from time to time to such extent, on such terms and on such security, if any, as the Board of Directors of the corporation may determine. In furtherance of its corporate business and subject to the limitations prescribed by statute, to be a promoter, partner, member, associate or manager of other business enterprises or ventures, or to the extent permitted in any other jurisdiction to be an incorporator of other corporations of any type or kind and to organize, or in any way participate in the organization, reorganization, merger or liquidation of any corporation, association or venture and the management thereof. Subject to the limitations prescribed by statute and in furtherance of its corporate business, to pay pensions, establish and carry out pension, profit sharing, share bonus, share purchase, share option, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions for any or all of its directors, officers and employees. To conduct its business in all or any of its branches, so far as permitted by law, in the State of New York and in all other states of the United States of America, in the territories and the District of Columbia and in any or all dependencies or possessions of the United States of America, and in foreign countries; and to hold, possess, purchase, lease, mortgage and convey real and personal property and to maintain offices and agencies either within or outside the State of New York. To carry out all or any part of the foregoing purposes as principal, factor, agent, broker, contractor or otherwise either alone or in conjunction with any persons, firms, associations, corporations or others in any part of the world; and in carrying on its business and for the purpose of attaining or furthering any of its purposes, to make and perform contracts of any kind and description, and to do anything and everything necessary, suitable, convenient or proper for the accomplishment of any of the purposes herein enumerated. For the accomplishment of the aforesaid purposes, and in furtherance thereof, the corporation shall have and may exercise all of the powers conferred by the Business Corporation Law upon corporations formed thereunder, subject to any limitations contained in Article 2 of said law or in accordance with the provisions of any other statute of the State of New York. THIRD: The office of the corporation in the State of New York shall be located in the City of New Rochelle, County of Westchester. FOURTH: (a) The aggregate number of shares which the corporation shall have authority to issue is two hundred (200) shares all of which are without par value. (b) No holder of any share of the corporation shall, because of his ownership of shares have a preemptive or other right, to purchase, subscribe for or take any part or other securities convertible into or carrying options or warrants to purchase shares of the corporation issued, optioned or sold by it after its incorporation, whether the shares be authorized by this certificate of incorporation or be authorized by an amended certificate duly filed and in effect at the time of the issuance or sale of such shares or of such notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase shares of the corporation. Any part of the shares authorized by this certificate of incorporation, or by an amended certificate duly filed, and any part of the notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase shares of the corporation may at any time be issued, optioned for sale and sold or disposed of by the corporation pursuant to resolution of its Board of Directors to such persons and upon such terms and conditions as may, to such Board, seem proper and advisable without first offering to existing shareholders the said shares or the said notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase shares of the corporation, or any part of any thereof. FIFTH: The Secretary of State is, designated as the agent of the corporation upon whom process against the corporation may be served, and the address to which the Secretary of State shall mail a copy of any process against the corporation served upon him is c/o Davis and Gilbert, 850 Third Avenue, New York, New York 10022. SIXTH: The shareholders, or the Board of Directors of the corporation without the assent or vote of the shareholders, shall have the power to adopt, alter, amend or repeal the By-Laws of the corporation. IN WITNESS WHEREOF, we hereunto sign our names and affirm that the statements made herein are true under the penalties of perjury, this 5th day of June, 1981. Name Address MARK SKUBICKI /s/ Mark Skubicki - --------------------------------- 9 East 40th Street Mark Skubicki-Incorporator New York, New York 10016 MARIA SILVESTRI /s/ Maria Silvestri - --------------------------------- 9 East 40th Street Maria Silvestri - Incorporator New York, New York 10016 CERTIFICATE OF MERGER OF Q.P. ACQUISITION CORP. INTO QUOTA-PHONE, INC. Under Section 904 of the Business Corporation Law The undersigned, Barry S. Lewisohn and Stuart A. Berger, being, respectively, the President and the Secretary of Quota-Phone, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of New York and James B. Duffy and George Thomas, being respectively the President and Secretary of Q.P. Acquisition Corp., a corporation duly organized and existing under and by virtue of the laws of the State of New York do hereby certify and set forth as follows: FIRST: The name of each constituent corporation is as follows: Q.P. Acquisition Corp. and Quota-Phone, Inc. SECOND: The name of the surviving corporation is Quota-Phone, Inc. which is a corporation organized under the laws of the State of New York. THIRD: The designation, number and voting rights of the outstanding shares of each class and series of the constituent corporation is as follows: Name Class Number issued Quota-Phone, Inc. Common 100 Q.P. Acquisition Corp. Common 100 FOURTH: The date when the Certificate of Incorporation of Q.P. Acquisition Corp., was filed by the New York Secretary of State is March 15, 1999. The name under which it was formed is Q.P. Acquisition Corp. FIFTH: The Jurisdiction of incorporation of Quota Phone, Inc. is the State of New York, and the date of incorporation is June 8, 1981. SIXTH: The merger herein certified was authorized in respect of the merged corporation and the surviving corporation by written consent of the holders of all outstanding shares of both corporations entitled to vote on the plan of merger. IN WITNESS WHEREOF, the undersigned affirm that the statements made herein are true under the penalties of perjury, this 9th day of April, 1999. /s/ Barry S. Lewisohn - --------------------------- Barry S. Lewisohn President of Quota-Phone, Inc. a New York corporation /s/ Stuart A. Berger - --------------------------- Stuart A. Berger Secretary of Quota-Phone, Inc. a New York corporation /s/ James B. Duffy - --------------------------- James B. Duffy President of Q.P. Acquisition Corp. a New York corporation /s/ George Thomas - --------------------------- George Thomas Secretary of Q.P. Acquisition Corp. a New York corporation Certificate of Amendment of the Certificate of Incorporation of QUOTA-PHONE, INC. under Section 805 of the Business Corporation Law IT IS HEREBY CERTIFIED THAT: (1) The name of the corporation is Quota-Phone, Inc. (2) The certificate of incorporation was filed by the department of state on the 8th day of June 1981. (3) The certificate of incorporation of this corporation is hereby amended to effect the following change* The present Paragraph FIFTH is hereby amended to read as follows: FIFTH: The Secretary of State is designated as the agent of the Corporation upon whom process against the Corporation may be served and the address to which the Secretary of State shall mail a copy of any process against the Corporation served upon him is Richard Dorff, Esq., c/o Mintz & Fraade, P.C., 488 Madison Avenue, New York, New York 10022. The Certificate of Incorporation is to be amended to add the following Paragraph SEVENTH: SEVENTH: The Corporation shall indemnify its directors to the fullest extent permitted by law. *Set forth the subject matter of each provision of the certificate of incorporation which is to be amended or eliminated and the full text of the provision (s), if any, which are to be substituted or added. If an amendment provides for a change of issued shares, the number and kind of shares changed, the number and kind of shares resulting from such change and the terms of change. If an amendment makes two or more such changes, a like statement shall be included in respect to each change. (4) The amendment to the certificate of incorporation was authorized: *first, by unanimous written consent of all the directors. *and then by unanimous written consent of the holders of all the outstanding shares entitled to vote thereon. *strike out where inapplicable IN WITNESS WHEREOF, this certificate has been subscribed this 27th day of December 1990 by the undersigned who affirm(s) that the statements made herein are true under the penalties of perjury. Type name Capacity in which signed Signature Mary Reichberg President /s/ Mary Reichberg Barry Lewisohn Secretary /s/ Barry Lewisohn Certificate of Amendment of the Certificate of Incorporation of QUOTA-PHONE, INC. under Section 805 of the Business Corporation Law Filed By: Lampf, Lipkind, Prupis, Petigrow & La Bue Address: 80 Main Street West Orange, New Jersey 07052 EX-3.56 57 ex3-56_043004.txt BYLAWS OF QUOTA-PHONE BY-LAWS OF QUOTA-PHONE, INC. ARTICLE FIRST OFFICES PART 1. PRINCIPAL OFFICE. - The principal office of the corporation shall be located in the City of New Rochelle, County of Westchester, State of New York. PART 2. OTHER OFFICES. - The corporation may have other offices, either in or outside the State of New York, as shall be designated from time to time by the Board of Directors. ARTICLE SECOND SHAREHOLDERS PART 1. LOCATION OF MEETINGS. - Shareholders' meetings may be held at such locations, either in or outside the State of New York, as shall be designated by the directors and set forth in the notice of the meeting. PART 2. NOTICE OF ANNUAL MEETING. - Notice of the annual meeting shall be given to each shareholder entitled to vote, at least ten days in advance of said meeting. PART 3. ANNUAL MEETING. - The annual shareholders' meeting for the election of directors and the transaction of such other business as may properly come before the meeting shall be held in each year subsequent to the year of incorporation on PART 4. NOTICE OF SPECIAL MEETING. - Notice of a special meeting, stating the names of those calling the meeting, the time, place and purpose or purposes thereof, shall be given to each shareholder entitled to vote, at least ten days in advance of said meeting. PART 5. SPECIAL MEETINGS. - Special shareholders' meetings may be called by the President or Secretary and must be called by either of them upon the written request of the holders of twenty-five percent of the shares outstanding and entitled to vote. PART 6. QUORUM. - The holders of a majority of shares entitled, to vote shall constitute a quorum for all purposes, except as otherwise provided by statute or the Certificate of Incorporation. PART 7. VOTING. - Every shareholder entitled to vote may vote in person or by proxy, and shall have one vote for each share of stock registered in his name unless otherwise provided in the Certificate of Incorporation. PART 8. ADJOURNED MEETINGS. - Shareholders' meetings may be adjourned to a designated time and place by a vote of a majority of the shareholders present. Notice of such an adjourned meeting need not be given, other than by announcement at the meeting, and any business may be transacted which might have been transacted at the meeting as originally called. PART 9. ACTION BY WRITTEN CONSENT OF SHAREHOLDERS. - Whenever, by any provision of statute or of the Certificate of Incorporation or of these By-Laws, the vote of shareholders at a meeting is required or permitted to be taken in connection with any corporate action, the meeting and vote of shareholders may be dispensed with, if all the shareholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action. ARTICLE THIRD DIRECTORS PART 1. NUMBER. - The number of directors of the corporation shall be three (3), who shall hold office for the term of one year and until successors are elected and qualify. The number of directors, who need not be shareholders, may be increased or decreased by amendment to these By-Laws by a majority of the Board of Directors or by the shareholders. The number of directors may be less than three only when shares are owned by less than three shareholders, but in such event the number of directors may not be less than the number of shareholders. In the case of one (1) director, such director must be the sole shareholder. PART 2. POWERS. - The Board of Directors may, in accordance with the laws of the State of New York, the Certificate of Incorporation and these By-Laws, adopt such rules and regulations for the conduct of its meetings, the exercise of its powers and the management of the business of the corporation as it may deem proper. In addition, the directors may exercise all powers of the corporation and carry out all lawful acts which are not required to be exercised or done by the shareholders as provided by statute, the Certificate of Incorporation or these By-Laws. PART 3. MEETINGS AND QUORUM. - Meetings of the Board may be held, either in or outside the State of New York, provided a quorum be in attendance. Unless otherwise provided by the Certificate of Incorporation or the laws of the State of New York, a majority of the directors shall constitute a quorum at any meeting of the Board and the vote of a majority of a quorum shall constitute the act of the Board. Unless restricted by the Certificate of Incorporation or elsewhere in these By-Laws, members of the Board of Directors or any committee designated by such board may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such meeting. Regular meetings of the Board of Directors may be scheduled by a resolution adopted by the Board. The Chairman of the Board or the President or Secretary may call, and if requested by any two directors, must call a special meeting of the Board and give five days' notice by mail, or two days' notice personally or by telegraph or cable to each director. The Board of Directors may hold an annual meeting, without notice, immediately after the annual meeting of shareholders. PART 4. VACANCIES AND REMOVAL. - Unless otherwise provided in the Certificate of Incorporation or in the following paragraph, vacancies occurring in the membership of the Board of Directors, from whatever cause arising (including vacancies occurring by reason of the removal of directors without cause and newly created directorships resulting from any increase in the authorized number of directors), may be filled by a majority vote of the remaining directors, though less than a quorum, or such vacancies may be filled by the shareholders. Unless the Certificate of Incorporation provides for cumulative voting or the election of one or more directors by class or their election by holders of bonds, or requires all action by shareholders to be by a greater vote, any one or more of the directors may be removed, (a) with or without cause, at any time, by vote of the shareholders holding a majority of the outstanding shares of the corporation entitled to vote, present in person or by proxy, at any special meeting of the shareholders or, (b) for cause, by action of the Board of Directors at any regular or special meeting of the Board. A vacancy or vacancies occurring from such removal may be filled at the special meeting of shareholders or at a regular or special meeting of the Board of Directors. PART 5. COMMITTEES. - The Board of Directors, by resolution adopted by a majority of the entire Board, may designate from its members an Executive Committee or other committee or committees, each consisting of three or more members, with such powers and authority (as are permitted by law) as may be provided in said resolution. PART 6. DIRECTOR ACTION WITHOUT MEETINGS. - Any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board of Directors or the committee, as the case may be, consent in writing to the adoption of a resolution authorizing the action, and the resolution and written consents thereto are filed with the minutes of the proceeding of the Board of Directors or committee. ARTICLE FOURTH OFFICES PART 1. PRIMARY OFFICES. - The primary offices of the corporation shall be a President, one or more Vice-Presidents, a Treasurer and a Secretary, who shall be elected annually by the directors. The Board of Directors may elect a Chairman of the Board of Directors and may appoint such other offices and agents with such powers and duties as it shall deem necessary. Except for the offices of President and Secretary, any two offices or more may be held by one person. The offices of President and Secretary may be held by one person if there is only one shareholder of the corporation. Vacancies occurring among any of the offices shall be filled by the directors. Any office may be removed at any time by the affirmative vote of a majority (unless the Certificate of Incorporation provides otherwise) of the directors present at a regular meeting of directors or at a special meeting of directors called for that purpose. PART 2. THE CHAIRMAN OF THE BOARD. - The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and shall perform such other duties as may be assigned by the Board of Directors or the Executive Committee. PART 3. THE PRESIDENT. - The President, who need not be a director, shall, in the absence or non-election of a Chairman of the Board, preside at all meetings of the shareholders and directors. While the directors are not in session, he shall have general management and control of the business and affairs of the corporation. PART 4. THE VICE-PRESIDENT. - The Vice-President, of if there are more than one, the senior Vice-President, as determined by the Board of Directors, in the absence or disability of the President, shall exercise the powers and perform the duties of the President and each Vice-President shall exercise such other powers and perform such other duties as shall be prescribed by the directors. PART 5. THE TREASURER. - The Treasurer shall have custody of all funds, securities and evidences of indebtedness of the corporation; he shall receive and give receipts and acquittances for moneys paid in on account of the corporation, and shall pay out of the funds on hand all bills, payrolls, and other just debts of the corporation, of whatever nature, upon maturity; he shall enter regularly in books to be kept by him for that purpose, full and accurate accounts of all moneys received and paid out by him on account of the corporation, and he shall perform all other duties incident to the office of Treasurer and as may be prescribed by the directors. PART 6. THE SECRETARY. - The Secretary shall keep the minutes of all proceedings of the directors and of the shareholders; he shall attend to the giving and serving of all notices to the shareholders and directors or other notice required by law or by these By-Laws; he shall affix the seal of the corporation to deeds, contracts and other instruments in writing requiring a seal, when duly signed or when so ordered by the directors; he shall have charge of the certificate books and stock books and such other books and papers as the Board may direct, and he shall perform all other duties incident to the office of Secretary. PART 7. SALARIES. - The salaries of all officers shall be fixed by the Board of Directors, and the fact that any officer is a director shall not preclude him from receiving a salary as a officer, or from voting upon the resolution so providing. ARTICLE FIFTH CAPITAL STOCK PART 1. FORM AND EXECUTION OF CERTIFICATES. - Certificates of stock shall be in such form as required by the laws of the state of New York and as shall be adopted by the Board of Directors. They shall be numbered and registered in the order issued; shall be signed by the Chairman or a Vice-Chairman of the Board (if any) or by the President or a Vice-President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be sealed with the corporate seal or a facsimile thereof. When such a certificate is countersigned by a transfer agent or registered by a registrar, the signatures of any such officers may be facsimile. PART 2. TRANSFER. - Transfer of shares shall be made only upon the books of the corporation by the registered holder in person or by attorney, duly authorized, and upon surrender of the certificate or certificates for such shares properly assigned for transfer. PART 3. LOST OR DESTROYED CERTIFICATES. - The holder of any certificate representing shares of stock of the corporation, may notify the corporation of any loss, theft or destruction thereof, and the Board of Directors may thereupon, in its discretion, cause a new certificate for the same number of shares, to be issued to such holder upon satisfactory proof of such loss, theft or destruction, and the deposit of indemnity by way of bond or otherwise, in such form and amount and with such surety or sureties as the Board of Directors may require, to indemnify the corporation against loss or liability by reason of the issuance of such new certificate. PART 4. RECORD DATE. - In lieu of closing the books of the corporation, the Board of Directors may fix, in advance, a date, not exceeding fifty (50) days, no less than ten (10) days, as the record date for the determination of shareholders entitled to receive notice of, or to vote, at any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payments of any dividends, or allotment of any rights, or for the purpose of any other action. ARTICLE SIXTH MISCELLANEOUS PART 1. DIVIDENDS. - The directors may declare dividends from time to time upon the capital stock of the corporation from the surplus or net profits available therefor. PART 2. SEAL. - The directors shall provide a suitable corporate seal which shall be in the charge of the Secretary and shall be used as authorized by the By-Laws. PART 3. FISCAL YEAR. - The fiscal year of the corporation shall be determined from time to time by resolution duly adopted by the Board of Directors. PART 4. CHECKS, NOTES, ETC. - Checks, notes, drafts, bills of exchange and orders for the payment of money shall be signed or endorsed in such manner as determined by the directors. The funds of the corporation shall be deposited in such bank or trust company, and checks drawn against such funds shall be signed in such manner as may be determined by the directors. PART 5. NOTICE AND WAIVER OF NOTICE. - Any notice required to be given under these By-Laws may be waived by the person entitled thereto, in writing, by telegram or cable, and the presence of any person at a meeting shall constitute waiver of notice thereof as to such person. When notice is required by these By-Laws to be given, personal notice is not meant unless expressly stated; any notice so required shall be deemed to be sufficient if given by depositing it in a post office or post box in. a sealed wrapper, addressed to such shareholder, officer or directors, at such address as appears on the books of the corporation and such notice shall be deemed to have been given on the day of such deposit. ARTICLE SEVENTH AMENDMENTS PART 1. BY SHAREHOLDERS. - These By-Laws may be amended at any shareholders' meeting by vote of the shareholders holding a majority (unless the Certificate of Incorporation requires a larger vote) of the outstanding shares having voting power, present either in person or by proxy, provided notice of the amendment is included in the notice or waiver of notice of such meeting. PART 2. BY DIRECTORS. - The Board of Directors may also amend these By-Laws at any regular or special meeting of the Board by a majority (unless the Certificate of Incorporation requires a larger vote) vote of the entire Board, but any By-Laws so made by the Board may be altered or repealed by the shareholders. EX-3.57 58 ex3-57_043004.txt CERTIFICATE OF INCORP. OF COUNTRYWIDE DENTAL CERTIFICATE OF INCORPORATION OF COUNTRY WIDE DENTAL, INC. ----------------------------- FIRST. The name of this Corporation shall be: COUNTRY WIDE DENTAL, INC. SECOND. Its registered office in the State of Delaware is to be located at 1013 Centre Road, in the City of Wilmington, County of Now Castle and its registered agent at such address is CORPORATION SERVICE COMPANY. THIRD. The purpose or purposes of the corporation shall be: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH. The total number of shares of stock which this corporation is authorized to issue is: Three Thousand (3,000) Shares Without Par Value. FIFTH. The name and address of the incorporator is as follows: Sherry A. Craig Corporation Service Company 1013 Centre Road Wilmington, DE 19805 SIXTH. The Board of Directors shall have the power to adopt, amend or repeal the by-laws. SEVENTH. No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law, (i) for 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) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment. EIGHTH. This Incorporation shall be effective July 1, 1993. IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore named, has executed, signed and acknowledged this certificate of incorporation this twenty-ninth day of June, A.D., 1993. /s/ Sherry A. Craig -------------------------------- Sherry A. Craig Incorporator CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF COUNTRY WIDE DENTAL, INC. The undersigned Secretary of COUNTRY WIDE DENTAL. INC., a corporation organized and existing under and by virtue of the general corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST. That the Board of Directors of the corporation, at a meeting duly convened and held, adopted the following resolution: RESOLVED that the Board of Directors declares it advisable and in the best interest of the Company that Article FIRST of the Certificate of Incorporation be amended to read as follows; FIRST: The name of this corporation shall be: COUNTRYWIDE DENTAL, INC. SECOND: That the above amendment has been consented to and authorized by the holder of all of the issued and outstanding stock entitled to vote by written consent given in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the above amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the general Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by Gary Johnson, its President, and attested by Steven Levenherz, its Secretary, this 30th day of September, 1993. /s/ Gary Johnson -------------------------------- Gary Johnson, President /s/ Steven H. Levenherz --------------------------------- Attested by: Steven H. Levenherz, Secretary CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE AND REGISTERED AGENT OF COUNTRYWIDE DENTAL, INC. The undersigned corporation hereby certifies as follows: FIRST: The name of the corporation is COUNTRYWIDE DENTAL, INC. SECOND: The address of the new registered office shall be 15 East North Street, in the City of Dover, County of Kent, State of Delaware 19901. THIRD: The name of the new registered agent is United Corporate Services, Inc. FOURTH: The aforesaid changes were duly authorized by appropriate resolutions adopted by the Board of Directors at a meeting thereof. IN WITNESS WHEREOF, I have hereunto signed my name and affirm that the statements made herein are true under the penalties of perjury, this third day of April, 1997. COUNTRYWIDE DENTAL, INC. /s/ Steven H. Levenherz ---------------------------------------- Steven H. Levenherz, Secretary EX-3.58 59 ex3-58_043004.txt BYLAWS OF COUNTRYWIDE DENTAL BYLAWS OF COUNTRYWIDE DENTAL, INC. (a Delaware corporation) ARTICLE I --------- STOCKHOLDERS ------------ 1. Certificates Representing Stock. Certificates representing stock in the Corporation shall be signed by, or in the name of, the Corporation by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation. Any or all of the signatures on any such certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Whenever the Corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, and whenever the Corporation shall issue any shares of its stock as partly paid stock, the certificates representing shares of any such class or series or of any such partly paid stock shall set forth thereon the statements prescribed by the General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares. The Corporation may issue a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate or uncertificated shares. 2. Uncertificated Shares. Subject to any conditions imposed by the General Corporation Law, the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Within a reasonable time after the issuance or transfer of any uncertificated shares, the Corporation shall send to the registered owner thereof any written notice prescribed by the General Corporation Law. 3. Fractional Share Interests. The Corporation may, but shall not be required to, issue fractions of a share. If the Corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered form (either represented by a certificate or uncertificated) or bearer form (represented by a certificate) which shall entitle the holder to receive a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share or an uncertificated fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the Corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the condition that they shall become void if not exchanged for certificates representing the full shares or uncertificated full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the Corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board of Directors may impose. 4. Stock Transfers. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the Corporation shall be made only on the stock ledger of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation or with a transfer agent or a registrar, if any, and, in the case of shares represented by certificates, on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon. 5. Record Date for Stockholders. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice 2 of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand or certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders of any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. 6. Meaning of Certain Terms. As used herein in respect to the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the Corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class 3 upon which or upon whom the Certificate of Incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the Certificate of Incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder; provided, however, that no such right shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the Certificate of Incorporation, except as any provision of law may otherwise require. 7. Stockholder Meetings. Time. The annual meeting shall be held on the date and at the time fixed, from time to time, by the directors, provided, that the first annual meeting shall be held on a date within thirteen months after the organization of the Corporation, and each successive annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date and at the time fixed by the directors. Place. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the directors may, from time to time, fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the registered office of the Corporation in the State of Delaware. Call. Annual meetings and special meetings may be called by the directors or by any officer instructed by the directors to call the meeting. Notice or Waiver of Notice. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the Corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called. The notice of any meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Law. Except as otherwise provided by the General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than sixty days before the date of the meeting, unless the lapse of the prescribed period of time shall 4 have been waived, and directed to each stockholder at his record address or at such other address which he may have furnished by request in writing to the Secretary of the Corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States Mail. If a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Notice need not be given to any stockholder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. Stockholder List. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the Corporation, or to vote at any meeting of stockholders. Conduct of Meeting. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. 5 Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. Inspectors. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspectors at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots, or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question, or matter determined by him or them and execute a certificate of any fact found by him or them. Quorum. The holders of a majority of the outstanding shares of stock shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum. Voting. Each share of stock shall entitle the holders thereof to one vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting 6 power, and except as may be otherwise prescribed by the provisions of the certificate of incorporation and these Bylaws. In the election of directors, and for any other action, voting need not be by ballot. 8. Stockholder Action Without Meetings. Any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Action taken pursuant to this paragraph shall be subject to the provisions of Section 228 of the General Corporation Law. ARTICLE II ---------- DIRECTORS --------- 1. Functions and Definition. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors of the Corporation. The Board of Directors shall have the authority to fix the compensation of the members thereof. The use of the phrase "whole board" herein refers to the total number of directors which the corporation would have if there were no vacancies. 2. Qualifications and Number. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The initial Board of Directors shall consist of three persons. Thereafter, the number of directors constituting the whole board shall be at least one. Subject to the foregoing limitation and except for the first Board of Directors, such number may be fixed from time to time by action of the stockholders or of the directors, or, if the number is not fixed, the number shall be three. The number of directors may be increased or decreased by action of the stockholders of the Corporation. 3. Election and Term. The first Board of Directors, unless the members thereof shall have been named in the certificate of incorporation, shall be elected by the incorporator or incorporators and shall hold office until the first annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon written notice to the 7 Corporation. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Except as the General Corporation Law may otherwise require, in the interim between annual meetings of stockholders or of special meetings of stockholders called for the election of directors and/or for the removal of one or more directors and for the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause or without cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. 4. Meetings. Time. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. Place. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the Board. Call. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of any Director on 5 days notice to each Director. Notice or Actual or Constructive Waiver. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice. Quorum and Action. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of 8 the directors is present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as herein otherwise provided, and except as otherwise provided by the General Corporation Law, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law and these Bylaws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board or action of disinterested directors. Any member or members of the Board of Directors or of any committee designated by the Board, may participate in a meeting of the Board, or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Chairman of the Meeting. The Chairman of the Board, if any, and if present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the Board, if any, and if present and acting, or the President, if present and acting, or any other director chosen by the Board, shall preside. 5. Removal of Directors. Except as may otherwise be provided by the General Corporation Law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. 6. Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation with the exception of any authority the delegation of which is prohibited by Section 141 of the General Corporation Law, and may authorize the seal of the Corporation to be affixed to all papers which may require it. 7. Written Action. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee 9 thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. ARTICLE III ----------- OFFICERS -------- The officers of the Corporation shall consist of a President, a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive Vice-President, one or more other Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolution of the Board of Directors choosing them shall designate. Except as may otherwise be provided in the resolution of the Board of Directors choosing him, no officer other than the Chairman or Vice-Chairman of the Board, if any, need be a director. Any number of offices may be held by the same person, as the directors may determine. Unless otherwise provided in the resolution choosing him, each officer shall be chosen for a term which shall continue until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor shall have been chosen and qualified. All officers of the Corporation shall have such authority and perform such duties in the management and operation of the Corporation as shall be prescribed in the resolutions of the Board of Directors designating and choosing such officers and prescribing their authority and duties, and shall have such additional authority and duties as are incident to their office except to the extent that such resolutions may be inconsistent therewith. The Secretary or an Assistant Secretary of the Corporation shall record all of the proceedings of all meetings and actions in writing of stockholders, directors, and committees of directors, and shall exercise such additional authority and perform such additional duties as the Board shall assign to him. Any officer may be removed, with or without cause, by the Board of Directors. Any vacancy in any office may be filled by the Board of Directors. ARTICLE IV ---------- CORPORATE SEAL -------------- The corporate seal shall be in such form as the Board of Directors shall prescribe. 10 ARTICLE V --------- FISCAL YEAR ----------- The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE VI ---------- CONTROL OVER BYLAWS ------------------- Subject to the provisions of the certificate of incorporation and the provisions of the General Corporation Law, the power to amend, alter, or repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors or by the stockholders. I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the Bylaws of COUNTRYWIDE DENTAL, INC., a Delaware corporation, as in effect on the date hereof. Dated: August _____, 1993. /s/ Steven H. Levenherz -------------------------------- Steven H. Levenherz (SEAL) Secretary 11 EX-3.59 60 ex3-59_043004.txt CERTIFICATE OF INCORP. OF MEMBERWORKS CANADA CERTIFICATE OF INCORPORATION OF MEMBERWORKS CANADA HOLDCO, INC. Article I Name The name of the corporation is MemberWorks Canada Holdco, Inc. (the "Corporation"). Article II Registered Office and Registered Agent The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name of the registered agent of the Corporation at such address is The Corporation Trust Company. Article III Corporate Purpose The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "General Corporation Law"). Article IV Capital Stock The total number of shares of all classes of stock that the Corporation shall have authority to issue is 1,000, all of which shall be shares of Common Stock, par value $.01 per share. Article V Directors (1) Elections of directors of the Corporation need not be by written ballot, except and to the extent provided in the By-laws of the Corporation. (2) To the fullest extent permitted by the General Corporation Law as it now exists and as it may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Article VI Indemnification of Directors, Officers and Others (1) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, 1 employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful. (2) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (3) To the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections (1) and (2) of this Article VI, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (4) Any indemnification under Sections (1) and (2) of this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in such Sections (1) and (2). Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (a) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (b) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (c) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (d) by the stockholders of the Corporation. (5) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the 2 Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation authorized in this Article VI. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate. (6) The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. (7) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of Section 145 of the General Corporation Law. (8) For purposes of this Article VI, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. (9) For purposes of this Article VI, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves service by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article VI. (10) The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, 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. 3 Article VII By-Laws The directors of the Corporation shall have the power to adopt, amend or repeal by-laws. Article VIII Reorganization Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. Article IX Amendment The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law, and all the provisions of this Certificate of Incorporation and all rights conferred on stockholders, directors and officers in this Certificate of Incorporation are subject to this reserved power. Article X Incorporator The name and mailing address of the sole incorporator is as follows: Jill Labert MemberWorks Incorporated 680 Washington Boulevard Suite 1100 Stamford, CT 06901 4 I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate of Incorporation, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 22nd day of March, 2004. /s/ Jill Labert ---------------------------- Jill Labert 5 EX-3.60 61 ex3-60_043004.txt BYLAWS OF MEMBERWORKS CANADA HOLDCO ================================================================================ BY-LAWS OF MEMBERWORKS CANADA HOLDCO INC. ================================================================================ Table of Contents Section Page ARTICLE I OFFICES SECTION 1.01. Registered Office...............................................1 SECTION 1.02. Other Offices...................................................1 ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 2.01. Annual Meetings.................................................1 SECTION 2.02. Special Meetings................................................1 SECTION 2.03. Notice of Meetings..............................................1 SECTION 2.04. Waiver of Notice................................................2 SECTION 2.05. Adjournments....................................................2 SECTION 2.06. Quorum..........................................................2 SECTION 2.07. Voting..........................................................2 SECTION 2.08. Proxies.........................................................3 SECTION 2.09. Stockholders' Consent in Lieu of Meeting........................3 ARTICLE III BOARD SECTION 3.01. General Powers..................................................3 SECTION 3.02. Number and Term of Office.......................................3 SECTION 3.03. Resignation.....................................................3 SECTION 3.04. Removal.........................................................3 SECTION 3.05. Vacancies.......................................................4 SECTION 3.06. Meetings........................................................4 SECTION 3.07. Committees of the Board.........................................5 SECTION 3.08. Directors' Consent in Lieu of Meeting...........................6 SECTION 3.09. Action by Means of Telephone or Similar Communications Equipment........................................6 SECTION 3.10. Compensation....................................................6 ARTICLE IV OFFICERS SECTION 4.01. Officers........................................................6 SECTION 4.02. Authority and Duties............................................6 SECTION 4.03. Term of Office, Resignation and Removal.........................6 SECTION 4.04. Vacancies.......................................................7 SECTION 4.05. The Chairman....................................................7 SECTION 4.06. The President...................................................7 SECTION 4.07. Vice Presidents.................................................7 i SECTION 4.08. The Secretary...................................................7 SECTION 4.09. Assistant Secretaries...........................................7 SECTION 4.10. The Treasurer...................................................8 SECTION 4.11. Assistant Treasurers............................................8 ARTICLE V CHECKS, DRAFTS, NOTES, AND PROXIES SECTION 5.01. Checks, Drafts and Notes........................................8 SECTION 5.02. Execution of Proxies............................................8 ARTICLE VI SHARES AND TRANSFERS OF SHARES SECTION 6.01. Certificates Evidencing Shares..................................8 SECTION 6.02. Stock Ledger....................................................9 SECTION 6.03. Transfers of Shares.............................................9 SECTION 6.04. Addresses of Stockholders.......................................9 SECTION 6.05. Lost, Destroyed and Mutilated Certificates......................9 SECTION 6.06. Regulations.....................................................9 SECTION 6.07. Fixing Date for Determination of Stockholders of Record.........9 ARTICLE VII SEAL SECTION 7.01. Seal...........................................................10 ARTICLE VIII FISCAL YEAR SECTION 8.01. Fiscal Year....................................................10 ARTICLE IX INDEMNIFICATION AND INSURANCE SECTION 9.01. Indemnification................................................10 SECTION 9.02. Insurance for Indemnification..................................12 ARTICLE X AMENDMENTS SECTION 10.01. Amendments....................................................12 ii BY-LAWS OF MEMBERWORKS CANADA HOLDCO, INC. ARTICLE I OFFICES SECTION 1.01. Registered Office. The registered office of MemberWorks Canada Holdco, Inc. (the "Corporation") in the State of Delaware shall be at the principal office of The Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801 and the registered agent in charge thereof shall be The Corporation Trust Company. SECTION 1.02. Other Offices. The Corporation may also have an office or offices at any other place or places within or without the State of Delaware as the Board of Directors of the Corporation (the "Board") may from time to time determine or the business of the Corporation may from time to time require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 2.01. Annual Meetings. The annual meeting of stockholders of the Corporation for the election of directors of the Corporation, and for the transaction of such other business as may properly come before such meeting, shall be held at such place, date and time as shall be fixed by the Board and designated in the notice or waiver of notice of such annual meeting; provided, however, that no annual meeting of stockholders need be held if all actions, including the election of directors, required by the General Corporation Law of the State of Delaware (the "General Corporation Law") to be taken at such annual meeting are taken by written consent in lieu of meeting pursuant to Section 2.09 hereof. SECTION 2.02. Special Meetings. Special meetings of stockholders for any purpose or purposes may be called by the Board or the Chairman of the Board, the President or the Secretary of the Corporation or by the recordholders of at least a majority of the shares of common stock of the Corporation issued and outstanding and entitled to vote thereat, to be held at such place, date and time as shall be designated in the notice or waiver of notice thereof. SECTION 2.03. Notice of Meetings. (a) Except as otherwise provided by law, written notice of each annual or special meeting of stockholders stating the place, date and time of such meeting and, in the case of a special meeting, the purpose or purposes for which such meeting is to be held, shall be given personally or by first-class mail (airmail in the case of international communications) to each recordholder of shares entitled to vote thereat, not less than 10 nor more than 60 days before the date of such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Corporation. If, prior to the time of mailing, the Secretary of the Corporation (the "Secretary") shall have received from any stockholder a written request that notices intended for such stockholder are to be mailed to some address other than the address that appears on the records of the Corporation, notices intended for such stockholder shall be mailed to the address designated in such request. (b) Notice of a special meeting of stockholders may be given by the person or persons calling the meeting, or, upon the written request of such person or persons, such notice shall be given by the Secretary on behalf of such person or persons. If the person or persons calling a special meeting of stockholders give notice thereof, such person or persons shall deliver a copy of such notice to the Secretary. Each request to the Secretary for the giving of notice of a special meeting of stockholders shall state the purpose or purposes of such meeting. SECTION 2.04. Waiver of Notice. Notice of any annual or special meeting of stockholders need not be given to any stockholder who files a written waiver of notice with the Secretary, signed by the person entitled to notice, whether before or after such meeting. Neither the business to be transacted at, nor the purpose of, any meeting of stockholders need be specified in any written waiver of notice thereof. Attendance of a stockholder at a meeting, in person or by proxy, shall constitute a waiver of notice of such meeting, except when such stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the grounds that the notice of such meeting was inadequate or improperly given. SECTION 2.05. Adjournments. Whenever a meeting of stockholders, annual or special, is adjourned to another date, time or place, notice need not be given of the adjourned meeting if the date, 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 entitled to vote thereat. At the adjourned meeting, any business may be transacted which might have been transacted at the original meeting. SECTION 2.06. Quorum. Except as otherwise provided by law or the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), the recordholders of a majority of the shares entitled to vote thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders, whether annual or special. If, however, such quorum shall not be present in person or by proxy at any meeting of stockholders, the stockholders entitled to vote thereat may adjourn the meeting from time to time in accordance with Section 2.05 hereof until a quorum shall be present in person or by proxy. SECTION 2.07. Voting. Each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Except as otherwise provided by law or the Certificate of Incorporation, when a quorum is present at any meeting of stockholders, the vote 2 of the recordholders of a majority of the shares constituting such quorum shall decide any question brought before such meeting. SECTION 2.08. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express, in writing, consent to or dissent from any action of stockholders without a meeting may authorize another person or persons to act for such stockholder by proxy. Such proxy shall be filed with the Secretary before such meeting of stockholders or such action of stockholders without a meeting, at such time as the Board may require. No proxy shall be voted or acted upon more than three years from its date, unless the proxy provides for a longer period. SECTION 2.09. Stockholders' Consent in Lieu of Meeting. Any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders, and any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the recordholders of shares having not less than the minimum number of votes necessary to authorize or take such action at a meeting at which the recordholders of all shares entitled to vote thereon were present and voted. ARTICLE III BOARD SECTION 3.01. General Powers. The business and affairs of the Corporation shall be managed by the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation or these By-laws directed or required to be exercised or done by stockholders. SECTION 3.02. Number and Term of Office. The number of directors shall be two or such other number as shall be fixed from time to time by the Board. Directors need not be stockholders. Directors shall be elected at the annual meeting of stockholders or, if, in accordance with Section 2.01 hereof, no such annual meeting is held, by written consent in lieu of meeting pursuant to Section 2.09 hereof, and each director shall hold office until his successor is elected and qualified, or until his earlier death or resignation or removal in the manner hereinafter provided. SECTION 3.03. Resignation. Any director may resign at any time by delivering his written resignation to the Board, the Chairman of the Board of the Corporation (the "Chairman") or the Secretary. Such resignation shall take effect at the time specified in such notice or, if the time be not specified, upon receipt thereof by the Board, the Chairman or the Secretary, as the case may be. Unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. SECTION 3.04. Removal. Any or all of the directors may be removed, with or without cause, at any time by vote of the recordholders of a majority of the shares then entitled to vote at an election of directors, or by written consent of the recordholders of shares pursuant to Section 2.09 hereof. 3 SECTION 3.05. Vacancies. Vacancies occurring on the Board as a result of the removal of directors without cause may be filled only by vote of the recordholders of a majority of the shares then entitled to vote at an election of directors, or by written consent of such recordholders pursuant to Section 2.09 hereof. Vacancies occurring on the Board for any other reason, including, without limitation, vacancies occurring as a result of the creation of new directorships that increase the number of directors, may be filled by such vote or written consent or by vote of the Board or by written consent of the directors pursuant to Section 3.08 hereof. If the number of directors then in office is less than a quorum, such other vacancies may be filled by vote of a majority of the directors then in office or by written consent of all such directors pursuant to Section 3.08 hereof. Unless earlier removed pursuant to Section 3.04 hereof, each director chosen in accordance with this Section 3.05 shall hold office until the next annual election of directors by the stockholders and until his successor shall be elected and qualified. SECTION 3.06. Meetings. (a) Annual Meetings. As soon as practicable after each annual election of directors by the stockholders, the Board shall meet for the purpose of organization and the transaction of other business, unless it shall have transacted all such business by written consent pursuant to Section 3.08 hereof. (b) Other Meetings. Other meetings of the Board shall be held at such times as the Chairman, the President of the Corporation (the "President"), the Secretary or a majority of the Board shall from time to time determine. (c) Notice of Meetings. The Secretary shall give written notice to each director of each meeting of the Board, which notice shall state the place, date, time and purpose of such meeting. Notice of each such meeting shall be given to each director, if by mail, addressed to him at his residence or usual place of business, at least three days before the day on which such meeting is to be held, or shall be sent to him at such place by telecopy, telegraph, cable, or other form of recorded communication, or be delivered personally or by telephone not later than the day before the day on which such meeting is to be held. A written waiver of notice, signed by the director entitled to notice, whether before or after the time of the meeting referred to in such waiver, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of any meeting of the Board need be specified in any written waiver of notice thereof. Attendance of a director at a meeting of the Board shall constitute a waiver of notice of such meeting, except as provided by law. (d) Place of Meetings. The Board may hold its meetings at such place or places within or without the State of Delaware as the Board or the Chairman may from time to time determine, or as shall be designated in the respective notices or waivers of notice of such meetings. (e) Quorum and Manner of Acting. One-third of the total number of directors then in office shall be present in person at any meeting of the Board in order to constitute a quorum for the transaction of business at such meeting, and the vote of a majority of those directors present at any such meeting at which a quorum is present shall be necessary for the passage of any resolution or act of the Board, except as otherwise expressly required by law, the Certificate of Incorporation or these By-laws. In the absence of a quorum for any such meeting, 4 a majority of the directors present thereat may adjourn such meeting from time to time until a quorum shall be present. (f) Organization. At each meeting of the Board, one of the following shall act as chairman of the meeting and preside, in the following order of precedence: (1) the Chairman; (2) the President; (3) any director chosen by a majority of the directors present. The Secretary or, in the case of his absence, any person (who shall be an Assistant Secretary, if an Assistant Secretary is present) whom the chairman of the meeting shall appoint shall act as secretary of such meeting and keep the minutes thereof. SECTION 3.07. Committees of the Board. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more directors. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any such absent or disqualified member. Any committee of the Board, to the extent provided in the resolution of the Board designating such committee, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no such committee shall have such power or authority in reference to amending the Certificate of Incorporation (except that such a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board as provided in Section 151(a) of the General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation under Section 251,252, 254, 255, 256, 257, 258, 263 or 264 of the General Corporation Law, recommending to the stockholders the sale, lease or exchange of all or substantially all the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or the revocation of a dissolution, or amending these By-laws; provided further, however, that, unless expressly so provided in the resolution of the Board designating such committee, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law. Each committee of the Board shall keep regular minutes of its proceedings and report the same to the Board when so requested by the Board. 5 SECTION 3.08. Directors' Consent in Lieu of Meeting. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, without prior notice and without a vote, if a consent in writing or by electronic transmission, setting forth the action so taken, shall be signed by all the members of the Board or such committee and such consent or electronic transmission is filed with the minutes of the proceedings of the Board or such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. SECTION 3.09. Action by Means of Telephone or Similar Communications Equipment. Any one or more members of the Board, or of any committee thereof, may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. SECTION 3.10. Compensation. Unless otherwise restricted by the Certificate of Incorporation, the Board may determine the compensation of directors. In addition, as determined by the Board, directors may be reimbursed by the Corporation for their expenses, if any, in the performance of their duties as directors. No such compensation or reimbursement shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE IV OFFICERS SECTION 4.01. Officers. The officers of the Corporation shall be the President, the Secretary and the Treasurer and may include one or more Vice Presidents and one or more Assistant Secretaries and one or more Assistant Treasurers. Any two or more offices may be held by the same person. SECTION 4.02. Authority and Duties. All officers shall have such authority and perform such duties in the management of the Corporation as may be provided in these By-laws or, to the extent not so provided, by resolution of the Board. SECTION 4.03. Term of Office, Resignation and Removal. (a) Each officer shall be appointed by the Board and shall hold office for such term as may be determined by the Board. Each officer shall hold office until his successor has been appointed and qualified or his earlier death or resignation or removal in the manner hereinafter provided. The Board may require any officer to give security for the faithful performance of his duties. (b) Any officer may resign at any time by giving written notice to the Board, the Chairman, the President or the Secretary. Such resignation shall take effect at the time specified in such notice or, if the time be not specified, upon receipt thereof by the Board, the Chairman, the President or the Secretary, as the case may be. Unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. 6 (c) All officers and agents appointed by the Board shall be subject to removal, with or without cause, at any time by the Board or by the action of the recordholders of a majority of the shares entitled to vote thereon. SECTION 4.04. Vacancies. Any vacancy occurring in any office of the Corporation, for any reason, shall be filled by action of the Board. Unless earlier removed pursuant to Section 4.03 hereof, any officer appointed by the Board to fill any such vacancy shall serve only until such time as the unexpired term of his predecessor expires unless reappointed by the Board. SECTION 4.05. The Chairman. The Chairman shall have the power to call special meetings of stockholders, to call special meetings of the Board and, if present, to preside at all meetings of stockholders and all meetings of the Board. The Chairman shall perform all duties incident to the office of Chairman of the Board and all such other duties as may from time to time be assigned to him by the Board or these By-laws. SECTION 4.06. The President. The President shall be the chief executive officer of the Corporation and shall have general and active management and control of the business and affairs of the Corporation, subject to the control of the Board, and shall see that all orders and resolutions of the Board are carried into effect. The President shall perform all duties incident to the office of President and all such other duties as may from time to time be assigned to him by the Board or these By-laws. SECTION 4.07. Vice Presidents. Vice Presidents, if any, in order of their seniority or in any other order determined by the Board, shall generally assist the President and perform such other duties as the Board or the President shall prescribe, and in the absence or disability of the President, shall perform the duties and exercise the powers of the President. SECTION 4.08. The Secretary. The Secretary shall, to the extent practicable, attend all meetings of the Board and all meetings of stockholders and shall record all votes and the minutes of all proceedings in a book to be kept for that purpose, and shall perform the same duties for any committee of the Board when so requested by such committee. He shall give or cause to be given notice of all meetings of stockholders and of the Board, shall perform such other duties as may be prescribed by the Board, the Chairman or the President and shall act under the supervision of the Chairman. He shall keep in safe custody the seal of the Corporation and affix the same to any instrument that requires that the seal be affixed to it and which shall have been duly authorized for signature in the name of the Corporation and, when so affixed, the seal shall be attested by his signature or the signature of the Treasurer or an Assistant Secretary, as so designated. He shall keep in safe custody the certificate books and stockholder records and such other books and records of the Corporation as the Board, the Chairman or the President may direct and shall perform all other duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board, the Chairman or the President. SECTION 4.09. Assistant Secretaries. Assistant Secretaries of the Corporation ("Assistant Secretaries"), if any, in order of their seniority or in any other order determined by the Board, shall generally assist the Secretary and perform such other duties as the Board or the 7 Secretary shall prescribe, and, in the absence or disability of the Secretary, shall perform the duties and exercise the powers of the Secretary. SECTION 4.10. The Treasurer. The Treasurer shall have the care and custody of all the funds of the Corporation and shall deposit such funds in such banks or other depositories as the Board, or any officer or officers, or any officer and agent jointly, duly authorized by the Board, shall, from time to time, direct or approve. He shall disburse the funds of the Corporation under the direction of the Board and the President. He shall keep a full and accurate account of all moneys received and paid on account of the Corporation and shall render a statement of his accounts whenever the Board, the Chairman or the President shall so request. He shall perform all other necessary actions and duties in connection with the administration of the financial affairs of the Corporation and shall generally perform all the duties usually appertaining to the office of treasurer of a corporation. When required by the Board, he shall give bonds for the faithful discharge of his duties in such sums and with such sureties as the Board shall approve. SECTION 4.11. Assistant Treasurers. Assistant Treasurers of the Corporation ("Assistant Treasurers"), if any, in order of their seniority or in any other order determined by the Board, shall generally assist the Treasurer and perform such other duties as the Board or the Treasurer shall prescribe, and, in the absence or disability of the Treasurer, shall perform the duties and exercise the powers of the Treasurer. ARTICLE V CHECKS, DRAFTS, NOTES, AND PROXIES SECTION 5.01. Checks, Drafts and Notes. All checks, drafts and other orders for the payment of money, notes and other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall be determined, from time to time, by resolution of the Board. SECTION 5.02. Execution of Proxies. The Chairman, the President or any Vice President may authorize, from time to time, the execution and issuance of proxies to vote shares of stock or other securities of other corporations held of record by the Corporation and the execution of consents to action taken or to be taken by any such corporation. All such proxies and consents, unless otherwise authorized by the Board, shall be signed in the name of the Corporation by the Chairman, the President or any Vice President. ARTICLE VI SHARES AND TRANSFERS OF SHARES SECTION 6.01. Certificates Evidencing Shares. Shares shall be evidenced by certificates in such form or forms as shall be approved by the Board. Certificates shall be issued in consecutive order and shall be numbered in the order of their issue, and shall be signed by the Chairman, the President or any Vice President and by the Secretary, any Assistant Secretary, the 8 Treasurer or any Assistant Treasurer. If such a certificate is manually signed by one such officer, any other signature on the certificate may be a facsimile. In the event any such officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to hold such office or to be employed by the Corporation before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such officer had held such office on the date of issue. SECTION 6.02. Stock Ledger. A stock ledger in one or more counterparts shall be kept by the Secretary, in which shall be recorded the name and address of each person, firm or corporation owning the shares evidenced by each certificate evidencing shares issued by the Corporation, the number of shares evidenced by each such certificate, the date of issuance thereof and, in the case of cancellation, the date of cancellation. Except as otherwise expressly required by law, the person in whose name shares stand on the stock ledger of the Corporation shall be deemed the owner and recordholder thereof for all purposes. SECTION 6.03. Transfers of Shares. Registration of transfers of shares shall be made only in the stock ledger of the Corporation upon request of the registered holder of such shares, or of his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, and upon the surrender of the certificate or certificates evidencing such shares properly endorsed or accompanied by a stock power duly executed, together with such proof of the authenticity of signatures as the Corporation may reasonably require. SECTION 6.04. Addresses of Stockholders. Each stockholder shall designate to the Secretary an address at which notices of meetings and all other corporate notices may be served or mailed to such stockholder, and, if any stockholder shall fail to so designate such an address, corporate notices may be served upon such stockholder by mail directed to the mailing address, if any, as the same appears in the stock ledger of the Corporation or at the last known mailing address of such stockholder. SECTION 6.05. Lost, Destroyed and Mutilated Certificates. Each recordholder of shares shall promptly notify the Corporation of any loss, destruction or mutilation of any certificate or certificates evidencing any share or shares of which he is the recordholder. The Board may, in its discretion, cause the Corporation to issue a new certificate in place of any certificate theretofore issued by it and alleged to have been mutilated, lost, stolen or destroyed, upon the surrender of the mutilated certificate or, in the case of loss, theft or destruction of the certificate, upon satisfactory proof of such loss, theft or destruction, and the Board may, in its discretion, require the recordholder of the shares evidenced by the lost, stolen or destroyed certificate or his legal representative to give the Corporation a bond sufficient to indemnify the Corporation against any claim made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. SECTION 6.06. Regulations. The Board may make such other rules and regulations as it may deem expedient, not inconsistent with these By-laws, concerning the issue, transfer and registration of certificates evidencing shares. SECTION 6.07. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any 9 meeting of stockholders or any adjournment thereof, or to express consent to, or to dissent from, corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other such action. A determination of the stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. ARTICLE VII SEAL SECTION 7.01. Seal. The Board may approve and adopt a corporate seal, which shall be in the form of a circle and shall bear the full name of the Corporation, the year of its incorporation and the words "Corporate Seal Delaware". ARTICLE VIII FISCAL YEAR SECTION 8.01. Fiscal Year. The fiscal year of the Corporation shall end on the thirtieth day of June of each year unless changed by resolution of the Board. ARTICLE IX INDEMNIFICATION AND INSURANCE SECTION 9.01. Indemnification. (a) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful. 10 (b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 9.01(a) and (b) of these By-laws, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (d) Any indemnification under Section 9.01(a) and (b) of these By-laws (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in Section 9.01(a) and (b) of these By-laws. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iv) by the stockholders of the Corporation. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation pursuant to this Article IX. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other Sections of this Article IX shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as 11 to action in such person's official capacity and as to action in another capacity while holding such office. (g) For purposes of this Article IX, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article IX with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. (h) For purposes of this Article IX, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves service by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article IX. (i) The indemnification and advancement of expenses provided by, or granted pursuant to, this Article IX shall, unless otherwise provided when authorized or ratified, 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 9.02. Insurance for Indemnification. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of Section 145 of the General Corporation Law. ARTICLE X AMENDMENTS SECTION 10.01. Amendments. Any By-law (including these By-laws) may be altered, amended or repealed by the vote of the recordholders of a majority of the shares then entitled to vote at an election of directors or by written consent of stockholders pursuant to Section 2.09 hereof, or by vote of the Board or by a written consent of directors pursuant to Section 3.08 hereof. 12 EX-3.61 62 ex3-61_043004.txt MEMORANDUM AND ARTICLES OF ASSOC. OF LAVALIFE MEMORANDUM OF ASSOCIATION OF LAVALIFE CORP. 1. The name of the Company is Lavalife Corp. 2. There are no restrictions on the objects and powers of the Company and the Company shall expressly have the following powers: (1) to sell or dispose of its undertaking, or a substantial part thereof; (2) to distribute any of its property in specie among its members; and (3) to amalgamate with any company or other body of persons. 3. The liability of the members is unlimited. ARTICLES OF ASSOCIATION OF LAVALIFE CORP. INTERPRETATION 1. In these Articles, unless there be something in the subject or context inconsistent therewith: (1) "Act" means the Companies Act (Nova Scotia); (2) "Articles" means these Articles of Association of the Company and all amendments hereto; (3) "Company" means the company named above; (4) "director" means a director of the Company; (5) "Memorandum" means the Memorandum of Association of the Company and all amendments thereto; (6) "month" means calendar month; (7) "Office" means the registered office of the Company; (8) "person" includes a body corporate; (9) "proxyholder" includes an alternate proxyholder; (10) "Register" means the register of members kept pursuant to the Act, and where the context permits includes a branch register of members; (11) "Registrar" means the Registrar as defined in the Act; (12) "Secretary" includes any person appointed to perform the duties of the Secretary temporarily; (13) "shareholder" means member as that term is used in the Act in connection with an unlimited company having share capital and as that term is used in the Memorandum; (14) "special resolution" has the meaning assigned by the Act; (15) "in writing" and "written" includes printing, lithography and other modes of representing or reproducing words in visible form; -2- (16) words importing number or gender include all numbers and genders unless the context otherwise requires. 2. The regulations in Table A in the First Schedule to the Act shall not apply to the Company. 3. The directors may enter into and carry into effect or adopt and carry into effect any agreement made by the promoters of the Company on behalf of the Company and may agree to any modification in the terms of any such agreement, either before or after its execution. 4. The directors may, out of the funds of the Company, pay all expenses incurred for the amalgamation and organization of the Company. SHARES 5. The capital of the company shall consist of $10 divided into 100,000,000 Class A common shares with a par value of $0.0000001 each and with the power to divide the shares in the capital for the time being into classes or series and to attach thereto respectively any preferred, deferred or qualified rights, privileges or conditions, including restrictions on voting rights and including redemption, purchase and other acquisition of such shares, subject, however, to the provisions of the Act. 6. The directors shall control the shares and, subject to the provisions of these Articles, may allot or otherwise dispose of them to such person at such times, on such terms and conditions and, if the shares have a par value, either at a premium or at par, as they think fit. 7 The directors may pay on behalf of the Company a reasonable commission to any person in consideration of subscribing or agreeing to subscribe (whether absolutely or conditionally) for any shares in the Company, or procuring or agreeing to procure subscriptions (whether absolute or conditional) for any shares in the Company. Subject to the Act, the commission may be paid or satisfied in shares of the Company. 8. On the issue of shares the Company may arrange among the holders thereof differences in the calls to be paid and in the times for their payment. 9. If the whole or part of the allotment price of any shares is, by the conditions of their allotment, payable in instalments, every such instalment shall, when due, be payable to the Company by the person who is at such time the registered holder of the shares. 10. Shares may be registered in the names of joint holders not exceeding three in number. 11. Joint holders of a share shall be jointly and severally liable for the payment of all instalments and calls due in respect of such share. On the death of one or more joint holders of shares the survivor or survivors of them shall alone be recognized by the Company as the registered holder or holders of the shares. -3- 12. Save as herein otherwise provided, the Company may treat the registered holder of any share as the absolute owner thereof and accordingly shall not, except as ordered by a court of competent jurisdiction or required by statute, be bound to recognize any equitable or other claim to or interest in such share on the part of any other person. 13. The Company is a private company, and: (1) no transfer of any share or prescribed security of the Company shall be effective unless or until approved by the directors; (2) the number of holders of issued and outstanding prescribed securities or shares of the Company, exclusive of persons who are in the employment of the Company or in the employment of an affiliate of the Company and exclusive of persons who, having been formerly in the employment of the Company or the employment of an affiliate of the Company, were, while in that employment, and have continued after termination of that employment, to own at least one prescribed security or share of the Company, shall not exceed 50 in number, two or more persons or companies who are the joint registered owners of one or more prescribed securities or shares being counted as one holder; and (3) the Company shall not invite the public to subscribe for any of its securities. In this Article, "private company" and "securities" have the meanings ascribed to those terms in the Securities Act (Nova Scotia), and "prescribed security" means any of the securities prescribed by the Nova Scotia Securities Commission from time to time for the purpose of the definition of "'private company" in the Securities Act (Nova Scotia). CERTIFICATES 14. Certificates of title to shares shall comply with the Act and may otherwise be in such form as the directors may from time to time determine. Unless the directors otherwise determine, every certificate of title to shares shall be signed manually by at least one of the Chairman, President, Secretary, Treasurer, a vice-president, an assistant secretary, any other officer of the Company or any director of the Company or by or on behalf of a share registrar transfer agent or branch transfer agent appointed by the Company or by any other person whom the directors may designate. When signatures of more than one person appear on a certificate all but one may be printed or otherwise mechanically reproduced. All such certificates when signed as provided in this Article shall be valid and binding upon the Company. If a certificate contains a printed or mechanically reproduced signature of a person, the Company may issue the certificate, notwithstanding that the person has ceased to be a director or an officer of the Company and the certificate is as valid as if such person were a director or an officer at the date of its issue. Any certificate representing shares of a class publicly traded on any stock exchange shall be valid and binding on the Company if it complies with the rules of such exchange whether or not it otherwise complies with this Article. -4- 15. Except as the directors may determine, each shareholder's shares may be evidenced by any number of certificates so long as the aggregate of the shares stipulated in such certificates equals the aggregate registered in the name of the shareholder. 16. Where shares are registered in the names of two or more persons, the Company shall not be bound to issue more than one certificate or set of certificates, and such certificate or set of certificates shall be delivered to the person first named on the Register. 17. Any certificate that has become worn, damaged or defaced may, upon its surrender to the directors, be cancelled and replaced by a new certificate. Any certificate that has become lost or destroyed may be replaced by a new certificate upon proof of such loss or destruction to the satisfaction of the directors and the furnishing to the Company of such undertakings of indemnity as the directors deem adequate. 18. The sum of one dollar or such other sum as the directors from time to time determine shall be paid to the Company for every certificate other than the first certificate issued to any holder in respect of any share or shares. 19. The directors may cause one or more branch Registers of shareholders to be kept in any place or places, whether inside or outside of Nova Scotia. CALLS 20. The directors may make such calls upon the shareholders in respect of all amounts unpaid on the shares held by them respectively and not made payable at fixed times by the conditions on which such shares were allotted, and each shareholder shall pay the amount of every call so made to the person and at the times and places appointed by the directors. A call may be made payable by instalments. 21. A call shall be deemed to have been made at the time when the resolution of the directors authorizing such call was passed. 22. At least 14 days' notice of any call shall be given, and such notice shall specify the time and place at which and the person to whom such call shall be paid. 23. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for the payment thereof, the holder for the time being of the share in respect of which the call has been made or the instalment is due shall pay interest on such call or instalment at the rate of 9% per year or such other rate of interest as the directors may determine from the day appointed for the payment thereof up to the time of actual payment. 24. At the trial or hearing of any action for the recovery of any amount due for any call, it shall be sufficient to prove that the name of the shareholder sued is entered on the Register as the holder or one of the holders of the share or shares in respect of which such debt accrued, that the resolution making the call is duly recorded in the minute book and that such notice of -5- such call was duly given to the shareholder sued in pursuance of these Articles. It shall not be necessary to prove the appointment of the directors who made such call or any other matters whatsoever and the proof of the matters stipulated shall be conclusive evidence of the debt. FORFEITURE OF SHARES 25. If any shareholder fails to pay any call or instalment on or before the day appointed for payment, the directors may at any time thereafter while the call or instalment remains unpaid serve a notice on such shareholder requiring payment thereof together with any interest that may have accrued and all expenses that may have been incurred by the Company by reason of such non-payment. 26. The notice shall name a day (not being less than 14 days after the date of the notice) and a place or places on and at which such call or instalment and such interest and expenses are to be paid. The notice shall also state that, in the event of non-payment on or before the day and at the place or one of the places so named, the shares in respect of which the call was made or instalment is payable will be liable to be forfeited. 27. If the requirements of any such notice are not complied with, any shares in respect of which such notice has been given may at any time thereafter, before payment of all calls or instalments, interest and expenses due in respect thereof, be forfeited by a resolution of the directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture. 28. When any share has been so forfeited, notice of the resolution shall be given to the shareholder in whose name it stood immediately prior to the forfeiture and an entry of the forfeiture shall be made in the Register. 29. Any share so forfeited shall be deemed the property of the Company and the directors may sell, re-allot or otherwise dispose of it in such manner as they think fit. 30. The directors may at any time before any share so forfeited has been sold, re-allotted or otherwise disposed of, annul the forfeiture thereof upon such conditions as they think fit. 31. Any shareholder whose shares have been forfeited shall nevertheless be liable to pay and shall forthwith pay to the Company all calls, instalments, interest and expenses owing upon or in respect of such shares at the time of the forfeiture together with interest thereon at the rate of 9% per year or such other rate of interest as the directors may determine from the time of forfeiture until payment. The directors may enforce such payment if they think fit, but are under no obligation to do so. 32. A certificate signed by the Secretary stating that a share has been duly forfeited on a specified date in pursuance of these Articles and the time when it was forfeited shall be -6- conclusive evidence of the facts therein stated as against any person who would have been entitled to the share but for such forfeiture. LIEN ON SHARES 33. The Company shall have a first and paramount lien upon all shares (other than fully paid-up shares) registered in the name of a shareholder (whether solely or jointly with others) and upon the proceeds from the sale thereof for debts, liabilities and other engagements of the shareholder, solely or jointly with any other person, to or with the Company, whether or not the period for the payment, fulfilment or discharge thereof has actually arrived, and such lien shall extend to all dividends declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of any lien of the Company on such shares. 34. For the purpose of enforcing such lien the directors may sell the shares subject to it in such manner as they think fit, but no sale shall be made until the period for the payment, fulfilment or discharge of such debts, liabilities or other engagements has arrived, and until notice in writing of the intention to sell has been given to such shareholder or the shareholder's executors or administrators and default has been made by them in such payment, fulfilment or discharge for seven days after such notice. 35. The net proceeds of any such sale after the payment of all costs shall be applied in or towards the satisfaction of such debts, liabilities or engagements and the residue, if any, paid to such shareholder. VALIDITY OF SALES 36. Upon any sale after forfeiture or to enforce a lien in purported exercise of the powers given by these Articles the directors may cause the purchaser's name to be entered in the Register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings or to the application of the purchase money, and after the purchaser's name has been entered in the Register in respect of such shares the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively. TRANSFER OF SHARES 37. The instrument of transfer of any share in the Company shall be signed by the transferor. The transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Register in respect thereof and shall be entitled to receive any dividend declared thereon before the registration of the transfer. 38. The instrument of transfer of any share shall be in writing in the following form or to the following effect: -7- For value received, ______ hereby sell, assign, and transfer unto _____, __ _____ shares in the capital of the Company represented by the within certificate, and do hereby irrevocably constitute and appoint ________ attorney to transfer such shares on the books of the Company with full power of substitution in the premises. Dated the __ day of ________, ____ Witness: 39. The directors may, without assigning any reason therefor, decline to register any transfer of shares (1) not fully paid-up or upon which the Company has a lien, or (2) the transfer of which is restricted by any agreement to which the Company is a party. 40. Every instrument of transfer shall be left for registration at the Office of the Company, or at any office of its transfer agent where a Register is maintained, together with the certificate of the shares to be transferred and such other evidence as the Company may require to prove title to or the right to transfer the shares. 41. The directors may require that a fee determined by them be paid before or after registration of any transfer. 42. Every instrument of transfer shall, after its registration, remain in the custody of the Company. Any instrument of transfer that the directors decline to register shall, except in case of fraud, be returned to the person who deposited it. TRANSMISSION OF SHARES 43. The executors or administrators of a deceased shareholder (not being one of several joint holders) shall be the only persons recognized by the Company as having any title to the shares registered in the name of such shareholder. When a share is registered in the names of two or more joint holders, the survivor or survivors or the executors or administrators of the deceased shareholder, shall be the only persons recognized by the Company as having any title to, or interest in, such share. 44. Notwithstanding anything in these Articles, if the Company has only one shareholder (not being one of several joint holders) and that shareholder dies, the executors or administrators of the deceased shareholder shall be entitled to register themselves in the Register as the holders of the shares registered in the name of the deceased shareholder whereupon they shall have all the rights given by these Articles and by law to shareholders. -8- 45. Any person entitled to shares upon the death or bankruptcy of any shareholder or in any way other than by allotment or transfer, upon producing such evidence of entitlement as the directors require, may be registered as a shareholder in respect of such shares, or may, without being registered, transfer such shares subject to the provisions of these Articles respecting the transfer of shares. The directors shall have the same right to refuse registration as if the transferee were named in an ordinary transfer presented for registration. SURRENDER OF SHARES 46. The directors may accept the surrender of any share by way of compromise of any question as to the holder being properly registered in respect thereof. Any share so surrendered may be disposed of in the same manner as a forfeited share. INCREASE AND REDUCTION OF CAPITAL 47. Subject to the Act, the shareholders may by special resolution amend these Articles to increase or alter the share capital of the Company as they think expedient. Without prejudice to any special rights previously conferred on the holders of existing shares, any share may be issued with such preferred, deferred or other special rights, or with such restrictions, whether in regard to dividends, voting, return of share capital or otherwise, as the shareholders may from time to time determine by special resolution. Except as otherwise provided by the conditions of issue, or by these Articles, any capital raised by the creation of new shares shall be considered part of the original capital and shall be subject to the provisions herein contained with reference to payment of calls and instalments, transfer and transmission, forfeiture, lien and otherwise. 48. The Company may, by special resolution where required, reduce its share capital in any way and with and subject to any incident authorized and consent required by law. Subject to the Act and any provisions attached to such shares, the Company may redeem, purchase or acquire any of its shares and the directors may determine the manner and the terms for redeeming, purchasing or acquiring such shares and may provide a sinking fund on such terms as they think fit for the redemption, purchase or acquisition of shares of any class or series. MEETINGS AND VOTING BY CLASS OR SERIES 49. Where the holders of shares of a class or series have, under the Act, the terms or conditions attaching to such shares or otherwise, the right to vote separately as a class in respect of any matter then, except as provided in the Act, these Articles or such terms or conditions, all the provisions in these Articles concerning general meetings (including, without limitation, provisions respecting notice, quorum and procedure) shall, mutatis mutandis, apply to every meeting of holders of such class or series of shares convened for the purpose of such vote. -9- 50. Unless the rights, privileges, terms or conditions attached to a class or series of shares provide otherwise, such class or series of shares shall not have the right to vote separately as a class or series upon an amendment to the Memorandum or Articles to: (1) increase or decrease any maximum number of authorized shares of such class or series, or increase any maximum number of authorized shares of a class or series having rights or privileges equal or superior to the shares of such class or series; (2) effect an exchange, reclassification or cancellation of all or part of the shares of such class or series; or (3) create a new class or series of shares equal or superior to the shares of such class or series. BORROWING POWERS 51. The directors on behalf of the Company may: (1) raise or borrow money for the purposes of the Company or any of them; (2) secure the repayment of funds so raised or borrowed in such manner and upon such terms and conditions in all respects as they think fit, and in particular by the execution and delivery of mortgages of the Company's real or personal property, or by the issue of bonds, debentures or other securities of the Company secured by mortgage or other charge upon all or any part of the property of the Company, both present and future including its uncalled capital for the time being; (3) sign or endorse bills, notes, acceptances, cheques, contracts, and other evidence of or securities for funds borrowed or to be borrowed for the purposes aforesaid; (4) pledge debentures as security for loans; (5) guarantee obligations of any person. 52. Bonds, debentures and other securities may be made assignable, free from any equities between the Company and the person to whom such securities were issued. 53. Any bonds, debentures and other securities may be issued at a discount, premium or otherwise and with special privileges as to redemption, surrender, drawings, allotment of shares, attending and voting at general meetings of the Company, appointment of directors and other matters. -10- GENERAL MEETINGS 54. Ordinary general meetings of the Company shall be held at least once in every calendar year at such time and place as may be determined by the directors and not later than 15 months after the preceding ordinary general meeting. All other meetings of the Company shall be called special general meetings. Ordinary or special general meetings may be held either within or without the Province of Nova Scotia. 55. The President, a vice-president or the directors may at any time convene a special general meeting, and the directors, upon the requisition of shareholders in accordance with the Act shall forthwith proceed to convene such meeting or meetings to be held at such time and place or times and places as the directors determine. 56. The requisition shall state the objects of the meeting requested, be signed by the requisitionists and deposited at the Office of the Company. It may consist of several documents in like form each signed by one or more of the requisitionists. 57. At least seven clear days' notice, or such longer period of notice as may be required by the Act, of every general meeting, specifying the place, day and hour of the meeting and. when special business is to be considered, the general nature of such business, shall be given to the shareholders entitled to be present at such meeting by notice given as permitted by these Articles. With the consent in writing of all the shareholders entitled to vote at such meeting, a meeting may be convened by a shorter notice and in any manner they think fit, or notice of the time, place and purpose of the meeting may be waived by all of the shareholders. 58. When it is proposed to pass a special resolution, the two meetings may be convened by the same notice, and it shall be no objection to such notice that it only convenes the second meeting contingently upon the resolution being passed by the requisite majority at the first meeting. 59. The accidental omission to give notice to a shareholder, or non-receipt of notice by a shareholder, shall not invalidate any resolution passed at any general meeting. RECORD DATES 60. (1) The directors may fix in advance a date as the record date for the determination of shareholders (a) entitled to receive payment of a dividend or entitled to receive any distribution; (b) entitled to receive notice of a meeting; or (c) for any other purpose. -11- (2) If no record date is fixed, the record date for the determination of shareholders (a) entitled to receive notice of a meeting shall be the day immediately preceding the day on which the notice is given, or, if no notice is given, the day on which the meeting is held; and (b) for any other purpose shall be the day on which the directors pass the resolution relating to the particular purpose. PROCEEDINGS AT GENERAL MEETINGS 61. The business of an ordinary general meeting shall be to receive and consider the financial statements of the Company and the report of the directors and the report, if any, of the auditors, to elect directors in the place of those retiring and to transact any other business which under these Articles ought to be transacted at an ordinary general meeting. 62. No business shall be transacted at any general meeting unless the requisite quorum is present at the commencement of the business. A corporate shareholder of the Company that has a duly authorized agent or representative present at any such meeting shall for the purpose of this Article be deemed to be personally present at such meeting. 63. One person, being a shareholder, proxyholder or representative of a corporate shareholder, present and entitled to vote shall constitute a quorum for a general meeting, and may hold a meeting. 64. The Chairman shall be entitled to take the chair at every general meeting or, if there be no Chairman, or if the Chairman is not present within fifteen (15) minutes after the time appointed for holding the meeting, the President or, failing the President, a vice-president shall be entitled to take the chair. If the Chairman, the President or a vice-president is not present within 15 minutes after the time appointed for holding the meeting or if all such persons present decline to take the chair, the shareholders present entitled to vote at the meeting shall choose another director as chairman and if no director is present or if all the directors present decline to take the chair, then such shareholders shall choose one of their number to be chairman. 65. If within half an hour from the time appointed for a general meeting a quorum is not present, the meeting, if it was convened pursuant to a requisition of shareholders, shall be dissolved; if it was convened in any other way, it shall stand adjourned to the same day, in the next week, at the same time and place. If at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the shareholders present shall be a quorum and may hold the meeting. 66. Subject to the Act, at any general meeting a resolution put to the meeting shall be decided by a show of hands unless, either before or on the declaration of the result of the show of hands, a poll is demanded by the chairman, a shareholder or a proxyholder; and unless a poll is so -12- demanded, a declaration by the chairman that the resolution has been carried, carried by a particular majority, lost or not carried by a particular majority and an entry to that effect in the Company's book of proceedings shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour or against such resolution. 67. When a poll is demanded, it shall be taken in such manner and at such time and place as the chairman directs, and either at once or after an interval or adjournment or otherwise. The result of the poll shall be the resolution of the meeting at which the poll was demanded. The demand of a poll may be withdrawn. When any dispute occurs over the admission or rejection of a vote, it shall be resolved by the chairman and such determination made in good faith shall be final and conclusive. 68. The chairman shall not have a casting vote in addition to any vote or votes that the chairman has as a shareholder. 69. The chairman of a general meeting may with the consent of the meeting adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting that was adjourned. 70. Any poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith without adjournment. 71. The demand of a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded. VOTES OF SHAREHOLDERS 72. Subject to the Act and to any provisions attached to any class or series of shares concerning or restricting voting rights: (1) on a show of hands every shareholder entitled to vote present in person, every duly authorized representative of a corporate shareholder, and, if not prevented from voting by the Act, every proxyholder, shall have one vote; and (2) on a poll every shareholder present in person, every duly authorized representative of a corporate shareholder, and every proxyholder, shall have one vote for every share held; whether or not such representative or proxyholder is a shareholder. 73. Any person entitled to transfer shares upon the death or bankruptcy of any shareholder or in any way other than by allotment or transfer may vote at any general meeting in respect thereof in the same manner as if such person were the registered holder of such shares so long as the directors are satisfied at least 48 hours before the time of holding the meeting of such person's right to transfer such shares. -13- 74. Where there are joint registered holders of any share, any of such holders may vote such share at any meeting, either personally or by proxy, as if solely entitled to it. If more than one joint holder is present at any meeting, personally or by proxy, the one whose name stands first on the Register in respect of such share shall alone be entitled to vote it. Several executors or administrators of a deceased shareholder in whose name any share stands shall for the purpose of this Article be deemed joint holders thereof. 75. Votes may be cast either personally or by proxy or, in the case of a corporate shareholder by a representative duly authorized under the Act. 76. A proxy shall be in writing and executed in the manner provided in the Act. A proxy or other authority of a corporate shareholder does not require its seal. 77. A shareholder of unsound mind in respect of whom an order has been made by any court of competent jurisdiction may vote by guardian or other person in the nature of a guardian appointed by that court, and any such guardian or other person may vote by proxy. 78. A proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Office of the Company or at such other place as the directors may direct. The directors may, by resolution, fix a time not exceeding 48 hours excluding Saturdays and holidays preceding any meeting or adjourned meeting before which time proxies to be used at that meeting must be deposited with the Company at its Office or with an agent of the Company. Notice of the requirement for depositing proxies shall be given in the notice calling the meeting. The chairman of the meeting shall determine all questions as to validity of proxies and other instruments of authority. 79. A vote given in accordance with the terms of a proxy shall be valid notwithstanding the previous death of the principal, the revocation of the proxy, or the transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, revocation or transfer is received at the Office of the Company before the meeting or by the chairman of the meeting before the vote is given. 80. Every form of proxy shall comply with the Act and its regulations and subject thereto may be in the following form: -14- I, __________ of __________ being a shareholder of __________ hereby appoint __________ of __________ (or failing him/her __________ of __________) as my proxyholder to attend and to vote for me and on my behalf at the ordinary/special general meeting of the Company, to be held on the day of and at any adjournment thereof, or at any meeting of the Company which may be held prior to [insert specified date or event]. [If the proxy is solicited by or behalf of the management of the Company, insert a statement to that effect.] Dated this __ day of _________ __. __________________________ Shareholder 81. Subject to the Act, no shareholder shall be entitled to be present or to vote on any question, either personally or by proxy, at any general meeting or be reckoned in a quorum while any call is due and payable to the Company in respect of any of the shares of such shareholder. 82. Any resolution passed by the directors, notice of which has been given to the shareholders in the manner in which notices are hereinafter directed to be given and which is, within one month after it has been passed, ratified and confirmed in writing by shareholders entitled on a poll to three-fifths of the votes, shall be as valid and effectual as a resolution of a general meeting. This Article shall not apply to a resolution for winding up the Company or to a resolution dealing with any matter that by statute or these Articles ought to be dealt with by a special resolution or other method prescribed by statute. 83. A resolution, including a special resolution, in writing and signed by every shareholder who would be entitled to vote on the resolution at a meeting is as valid as if it were passed by such shareholders at a meeting and satisfies all of the requirements of the Act respecting meetings of shareholders. DIRECTORS 84. Unless otherwise determined by resolution of shareholders, the number of directors shall not be less than one or more than fifteen. 85. Notwithstanding anything herein contained the persons named in the Amalgamation Agreement pursuant to which the Company was formed shall be the first directors of the Company. 86. The directors may be paid out of the funds of the Company as remuneration for their service such sums, if any, as the Company may by resolution of its shareholders determine, and such -15- remuneration shall be divided among them in such proportions and manner as the directors determine. The directors may also be paid their reasonable travelling, hotel and other expenses incurred in attending meetings of directors and otherwise in the execution of their duties as directors. 87. The continuing directors may act notwithstanding any vacancy in their body, but if their number falls below the minimum permitted, the directors shall not, except in emergencies or for the purpose of filling vacancies, act so long as their number is below the minimum. 88. A director may, in conjunction with the office of director, and on such terms as to remuneration and otherwise as the directors arrange or determine, hold any other office or place of profit under the Company or under any company in which the Company is a shareholder or is otherwise interested. 89. The office of a director shall ipso facto be vacated, if the director: (1) becomes bankrupt or makes an assignment for the benefit of creditors; (2) is, or is found by a court of competent jurisdiction to be, of unsound mind; (3) by notice in writing to the Company, resigns the office of director; or (4) is removed in the manner provided by these Articles. 90. No director shall be disqualified by holding the office of director from contracting with the Company, either as vendor, purchaser, or otherwise, nor shall any such contract, or any contract or arrangement entered into or proposed to be entered into by or on behalf of the Company in which any director is in any way interested, either directly or indirectly, be avoided, nor shall any director so contracting or being so interested be liable to account to the Company for any profit realized by any such contract or arrangement by reason only of such director holding that office or of the fiduciary relations thereby established, provided the director makes a declaration or gives a general notice in accordance with the Act. No director shall, as a director, vote in respect of any contract or arrangement in which the director is so interested, and if the director does so vote, such vote shall not be counted. This prohibition may at any time or times be suspended or relaxed to any extent by a resolution of the shareholders and shall not apply to any contract by or on behalf of the Company to give to the directors or any of them any security for advances or by way of indemnity. ELECTION OF DIRECTORS 91. At the dissolution of every ordinary general meeting at which their successors are elected, all the directors shall retire from office and be succeeded by the directors elected at such meeting. Retiring directors shall be eligible for re-election. -16- 92. If at any ordinary general meeting at which an election of directors ought to take place no such election takes place, or if no ordinary general meeting is held in any year or period of years, the retiring directors shall continue in office until their successors are elected. 93. The Company may by resolution of its shareholders elect any number of directors permitted by these Articles and may determine or alter their qualification. 94. The Company may, by special resolution or in any other manner permitted by statute, remove any director before the expiration of such director's period of office and may, if desired, appoint a replacement to hold office during such time only as the director so removed would have held office. 95. The directors may appoint any other person as a director so long as the total number of directors does not at any time exceed the maximum number permitted. No such appointment, except to fill a casual vacancy, shall be effective unless two-thirds of the directors concur in it. Any casual vacancy occurring among the directors may be filled by the directors, but any person so chosen shall retain office only so long as the vacating director would have retained it if the vacating director had continued as director. MANAGING DIRECTOR 96. The directors may appoint one or more of their body to be managing directors of the Company, either for a fixed term or otherwise, and may remove or dismiss them from office and appoint replacements. 97. Subject to the provisions of any contract between a managing director and the Company, a managing director shall be subject to the same provisions as to resignation and removal as the other directors of the Company. A managing director who for any reason ceases to hold the office of director shall ipso facto immediately cease to be a managing director. 98. The remuneration of a managing director shall from time to time be fixed by the directors and may be by way of any or all of salary, commission and participation in profits. 99. The directors may from time to time entrust to and confer upon a managing director such of the powers exercisable under these Articles by the directors as they think fit, and may confer such powers for such time, and to be exercised for such objects and purposes and upon such terms and conditions, and with such restrictions as they think expedient; and they may confer such powers either collaterally with, or to the exclusion of, and in substitution for, all or any of the powers of the directors in that behalf; and may from time to time revoke, withdraw, alter or vary all or any of such powers. -17- CHAIRMAN OF THE BOARD 100. The directors may elect one of their number to be Chairman and may determine the period during which the Chairman is to hold office. The Chairman shall perform such duties and receive such special remuneration as the directors may provide. PRESIDENT AND VICE-PRESIDENTS 101. The directors shall elect the President of the Company, who need not be a director, and may determine the period for which the President is to hold office. The President shall have general supervision of the business of the Company and shall perform such duties as may be assigned from time to time by the directors. 102. The directors may also elect vice-presidents, who need not be directors, and may determine the periods for which they are to hold office. A vice-president shall, at the request of the President or the directors and subject to the directions of the directors, perform the duties of the President during the absence, illness or incapacity of the President, and shall also perform such duties as may be assigned by the President or the directors. SECRETARY AND TREASURER 103. The directors shall appoint a Secretary of the Company to keep minutes of shareholders' and directors' meetings and perform such other duties as may be assigned by the directors. The directors may also appoint a temporary substitute for the Secretary who shall, for the purposes of these Articles, be deemed to be the Secretary. 104. The directors may appoint a treasurer of the Company to carry out such duties as the directors may assign. OFFICERS 105. The directors may elect or appoint such other officers of the Company, having such powers and duties, as they think fit. 106. If the directors so decide the same person may hold more than one of the offices provided for in these Articles. PROCEEDINGS OF DIRECTORS 107. The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings and proceedings, as they think fit, and may determine the quorum necessary for the transaction of business. Until otherwise determined, one director shall constitute a quorum and may hold a meeting. -18- 108. If all directors of the Company entitled to attend a meeting either generally or specifically consent, a director may participate in a meeting of directors or of a committee of directors by means of such telephone or other communications facilities as permit all persons participating in the meeting to hear each other, and a director participating in such a meeting by such means is deemed to be present at that meeting for purposes of these Articles. 109. Meetings of directors may be held either within or without the Province of Nova Scotia and the directors may from time to time make arrangements relating to the time and place of holding directors' meetings, the notices to be given for such meetings and what meetings may be held without notice. Unless otherwise provided by such arrangements: (1) A meeting of directors may be held at the close of every ordinary general meeting of the Company without notice. (2) Notice of every other directors' meeting may be given as permitted by these Articles to each director at least 48 hours before the time fixed for the meeting. (3) A meeting of directors may be held without formal notice if all the directors are present or if those absent have signified their assent to such meeting or their consent to the business transacted at such meeting. 110. The President or any director may at any time, and the Secretary, upon the request of the President or any director, shall summon a meeting of the directors to be held at the Office of the Company. The President, the Chairman or a majority of the directors may at any time, and the Secretary, upon the request of the President, the Chairman or a majority of the directors, shall summon a meeting to be held elsewhere. 111. (1) Questions arising at any meeting of directors shall be decided by a majority of votes. The chairman of the meeting may vote as a director but shall not have a second or casting vote. (2) At any meeting of directors the chairman shall receive and count the vote of any director not present in person at such meeting on any question or matter arising at such meeting whenever such absent director has indicated by telegram, letter or other writing lodged with the chairman of such meeting the manner in which the absent director desires to vote on such question or matter and such question or matter has been specifically mentioned in the notice calling the meeting as a question or matter to be discussed or decided thereat. In respect of any such question or matter so mentioned in such notice any director may give to any other director a proxy authorizing such other director to vote for such first named director at such meeting, and the chairman of such meeting, after such proxy has been so lodged, shall receive and count any vote given in pursuance thereof notwithstanding the absence of the director giving such proxy. -19- 112. If no Chairman is elected, or if at any meeting of directors the Chairman is not present within five minutes after the time appointed for holding the meeting, or declines to take the chair, the President, if a director, shall preside. If the President is not a director, is not present at such time or declines to take the chair, a vice-president who is also a director shall preside. If no person described above is present at such time and willing to take the chair, the directors present shall choose some one of their number to be chairman of the meeting. 113. A meeting of the directors at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions for the time being vested in or exercisable by the directors generally. 114. The directors may delegate any of their powers to committees consisting of such number of directors as they think fit. Any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on them by the directors. 115. The meetings and proceedings of any committee of directors shall be governed by the provisions contained in these Articles for regulating the meetings and proceedings of the directors insofar as they are applicable and are not superseded by any regulations made by the directors. 116. All acts done at any meeting of the directors or of a committee of directors or by any person acting as a director shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of the director or person so acting, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director. 117. A resolution in writing and signed by every director who would be entitled to vote on the resolution at a meeting is as valid as if it were passed by such directors at a meeting. 118. If any one or more of the directors is called upon to perform extra services or to make any special exertions in going or residing abroad or otherwise for any of the purposes of the Company or the business thereof, the Company may remunerate the director or directors so doing, either by a fixed sum or by a percentage of profits or otherwise. Such remuneration shall be determined by the directors and may be either in addition to or in substitution for remuneration otherwise authorized by these Articles. REGISTERS 119. The directors shall cause to be kept at the Company's Office in accordance with the provisions of the Act a Register of the shareholders of the Company, a register of the holders of bonds, debentures and other securities of the Company and a register of its directors. Branch registers of the shareholders and of the holders of bonds, debentures and other securities may be kept elsewhere, either within or without the Province of Nova Scotia, in accordance with the Act. -20- MINUTES 120. The directors shall cause minutes to be entered in books designated for the purpose: (1) of all appointments of officers; (2) of the names of directors present at each meeting of directors and of any committees of directors; (3) of all orders made by the directors and committees of directors; and (4) of all resolutions and proceedings of meetings of shareholders and of directors. Any such minutes of any meeting of directors or of any committee of directors or of shareholders, if purporting to be signed by the chairman of such meeting or by the chairman of the next succeeding meeting, shall be receivable as prima facie evidence of the matters stated in such minutes. POWERS OF DIRECTORS 121. The management of the business of the Company is vested in the directors who, in addition to the powers and authorities by these Articles or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the Company and are not hereby or by statute expressly directed or required to be exercised or done by the shareholders, but subject nevertheless to the provisions of any statute, the Memorandum or these Articles. No modification of the Memorandum or these Articles shall invalidate any prior act of the directors that would have been valid if such modification had not been made. 122. Without restricting the generality of the terms of any of these Articles and without prejudice to the powers conferred thereby, the directors may: (1) take such steps as they think fit to carry out any agreement or contract made by or on behalf of the Company; (2) pay costs, charges and expenses preliminary and incidental to the promotion, formation, establishment, and registration of the Company; (3) purchase or otherwise acquire for the Company any property, rights or privileges that the Company is authorized to acquire, at such price and generally on such terms and conditions as they think fit; (4) pay for any property, rights or privileges acquired by, or services rendered to the Company either wholly or partially in cash or in shares (fully paid-up or otherwise), bonds, debentures or other securities of the Company; -21- (5) subject to the Act, secure the fulfilment of any contracts or engagements entered into by the Company by mortgaging or charging all or any of the property of the Company and its unpaid capital for the time being, or in such other manner as they think fit; (6) appoint, remove or suspend at their discretion such experts, managers, secretaries, treasurers, officers, clerks, agents and servants for permanent, temporary or special services, as they from time to time think fit, and determine their powers and duties and fix their salaries or emoluments and require security in such instances and to such amounts as they think fit; (7) accept a surrender of shares from any shareholder insofar as the law permits and on such terms and conditions as may be agreed; (8) appoint any person or persons to accept and hold in trust for the Company any property belonging to the Company, or in which it is interested, execute and do all such deeds and things as may be required in relation to such trust, and provide for the remuneration of such trustee or trustees; (9) institute, conduct, defend, compound or abandon any legal proceedings by and against the Company, its directors or its officers or otherwise concerning the affairs of the Company, and also compound and allow time for payment or satisfaction of any debts due and of any claims or demands by or against the Company; (10) refer any claims or demands by or against the Company to arbitration and observe and perform the awards; (11) make and give receipts, releases and other discharges for amounts payable to the Company and for claims and demands of the Company; (12) determine who may exercise the borrowing powers of the Company and sign on the Company's behalf bonds, debentures or other securities, bills, notes, receipts, acceptances, assignments, transfers, hypothecations, pledges, endorsements, cheques, drafts, releases, contracts, agreements and all other instruments and documents; (13) provide for the management of the affairs of the Company abroad in such manner as they think fit, and in particular appoint any person to be the attorney or agent of the Company with such powers (including power to sub-delegate) and upon such terms as may be thought fit; (14) invest and deal with any funds of the Company in such securities and in such manner as they think fit; and vary or realize such investments; (15) subject to the Act, execute in the name and on behalf of the Company in favour of any director or other person who may incur or be about to incur any personal liability -22- for the benefit of the Company such mortgages of the Company's property, present and future, as they think fit; (16) give any officer or employee of the Company a commission on the profits of any particular business or transaction or a share in the general profits of the Company; (17) set aside out of the profits of the Company before declaring any dividend such amounts as they think proper as a reserve fund to meet contingencies or provide for dividends, depreciation, repairing, improving and maintaining any of the property of the Company and such other purposes as the directors may in their absolute discretion think in the interests of the Company; and invest such amounts in such investments as they think fit, and deal with and vary such investments, and dispose of all or any part of them for the benefit of the Company, and divide the reserve fund into such special funds as they think fit, with full power to employ the assets constituting the reserve fund in the business of the Company without being bound to keep them separate from the other assets; (18) make, vary and repeal rules respecting the business of the Company, its officers and employees, the shareholders of the Company or any section or class of them; (19) enter into all such negotiations and contracts, rescind and vary all such contracts, and execute and do all such acts, deeds and things in the name and on behalf of the Company as they consider expedient for or in relation to any of the matters aforesaid or otherwise for the purposes of the Company; (20) provide for the management of the affairs of the Company in such manner as they think fit. SOLICITORS 123. The Company may employ or retain solicitors any of whom may, at the request or on the instruction of the directors, the Chairman, the President or a managing director, attend meetings of the directors or shareholders, whether or not the solicitor is a shareholder or a director of the Company. A solicitor who is also a director may nevertheless charge for services rendered to the Company as a solicitor. THE SEAL 124. The directors shall arrange for the safe custody of the common seal of the Company (the "Seal"). The Seal may be affixed to any instrument in the presence of and contemporaneously with the attesting signature of (i) any director or officer acting within such person's authority or (ii) any person under the authority of a resolution of the directors or a committee thereof. For the purpose of certifying documents or proceedings the Seal may be affixed by any director or the President, a vice-president, the Secretary, an assistant -23- secretary or any other officer of the Company without the authorization of a resolution of the directors. 125. The Company may have facsimiles of the Seal which may be used interchangeably with the Seal. 126. The Company may have for use at any place. outside the Province of Nova Scotia, as to all matters to which the corporate existence and capacity of the Company extends, an official seal that is a facsimile of the Seal of the Company with the addition on its face of the name of the place where it is to be used; and the Company may by writing under its Seal authorize any person to affix such official seal at such place to any document to which the Company is a party. DIVIDENDS 127. The directors may from time to time declare such dividend as they deem proper upon shares of the Company according to the rights and restrictions attached to any class or series of shares, and may determine the date upon which such dividend will be payable and that it will be payable to the persons registered as the holders of the shares on which it is declared at the close of business upon a record date. No transfer of such shares registered after the record date shall pass any right to the dividend so declared. 128. Dividends may be paid as permitted by law and, without limitation, may be paid out of the profits, retained earnings or contributed surplus of the Company. No interest shall be payable on any dividend except insofar as the rights attached to any class or series of shares provide otherwise. 129. The declaration of the directors as to the amount of the profits, retained earnings or contributed surplus of the Company shall be conclusive. 130. The directors may from time to time pay to the shareholders such interim dividends as in their judgment the position of the Company justifies. 131. Subject to these Articles and the rights and restrictions attached to any class or series of shares, dividends may be declared and paid to the shareholders in proportion to the amount of capital paid-up on the shares (not including any capital paid-up bearing interest) held by them respectively. 132. The directors may deduct from the dividends payable to any shareholder amounts due and payable by the shareholder to the Company on account of calls, instalments or otherwise, and may apply the same in or towards satisfaction of such amounts so due and payable. -24- 133. The directors may retain any dividends on which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. 134. The directors may retain the dividends payable upon shares to which a person is entitled or entitled to transfer upon the death or bankruptcy of a shareholder or in any way other than by allotment or transfer, until such person has become registered as the holder of such shares or has duly transferred such shares. 135. When the directors declare a dividend on a class or series of shares and also make a call on such shares payable on or before the date on which the dividend is payable, the directors may retain all or part of the dividend and set off the amount retained against the call. 136. The directors may declare that a dividend be paid by the distribution of cash, paid-up shares (at par or at a premium), debentures, bonds or other securities of the Company or of any other company or any other specific assets held or to be acquired by the Company or in any one or more of such ways. 137. The directors may settle any difficulty that may arise in regard to the distribution of a dividend as they think expedient, and in particular without restricting the generality of the foregoing may issue fractional certificates, may fix the value for distribution of any specific assets, may determine that cash payments will be made to any shareholders upon the footing of the value so fixed or that fractions may be disregarded in order to adjust the rights of all parties, and may vest cash or specific assets in trustees upon such trusts for the persons entitled to the dividend as may seem expedient to the directors. 138. Any person registered as a joint holder of any share may give effectual receipts for all dividends and payments on account of dividends in respect of such share. 139. Unless otherwise determined by the directors, any dividend may be paid by a cheque or warrant delivered to or sent through the post to the registered address of the shareholder entitled, or, when there are joint holders, to the registered address of that one whose name stands first on the register for the shares jointly held. Every cheque or warrant so delivered or sent shall be made payable to the order of the person to whom it is delivered or sent. The mailing or other transmission to a shareholder at the shareholder's registered address (or, in the case of joint shareholders at the address of the holder whose name stands first on the register) of a cheque payable to the order of the person to whom it is addressed for the amount of any dividend payable in cash after the deduction of any tax which the Company has properly withheld, shall discharge the Company's liability for the dividend unless the cheque is not paid on due presentation. If any cheque for a dividend payable in cash is not received, the Company shall issue to the shareholder a replacement cheque for the same amount on such terms as to indemnity and evidence of non-receipt as the directors may impose. No shareholder may recover by action or other legal process against he Company any dividend represented by a cheque that has not been duly presented to a banker of the -25- Company for payment or that otherwise remains unclaimed for 6 years from the date on which it was payable. ACCOUNTS 140. The directors shall cause proper books of account to be kept of the amounts received and expended by the Company, the matters in respect of which such receipts and expenditures take place, all sales and purchases of goods by the Company, and the assets, credits and liabilities of the Company. 141. The books of account shall be kept at the head office of the Company or at such other place or places as the directors may direct. 142. The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions the accounts and books of the Company or any of them shall be open to inspection of the shareholders, and no shareholder shall have any right to inspect any account or book or document of the Company except as conferred by statute or authorized by the directors or a resolution of the shareholders. 143. At the ordinary general meeting in every year the directors shall lay before the Company such financial statements and reports in connection therewith as may be required by the Act or other applicable statute or regulation thereunder and shall distribute copies thereof at such times and to such persons as may be required by statute or regulation. AUDITORS AND AUDIT 144. Except in respect of a financial year for which the Company is exempt from audit requirements in the Act, the Company shall at each ordinary general meeting appoint an auditor or auditors to hold office until the next ordinary general meeting. If at any general meeting at which the appointment of an auditor or auditors is to take place and no such appointment takes place, or if no ordinary general meeting is held in any year or period of years, the directors shall appoint an auditor or auditors to hold office until the next ordinary general meeting. 145. The first auditors of the Company may be appointed by the directors at any time before the first ordinary general meeting and the auditors so appointed shall hold office until such meeting unless previously removed by a resolution of the shareholders, in which event the shareholders may appoint auditors. 146. The directors may fill any casual vacancy in the office of the auditor but while any such vacancy continues the surviving or continuing auditor or auditors, if any, may act. -26- 147. The Company may appoint as auditor any person, including a shareholder, not disqualified by statute. 148. An auditor may be removed or replaced in the circumstances and in the manner specified in the Act. 149. The remuneration of the auditors shall be fixed by the shareholders, or by the directors pursuant to authorization given by the shareholders, except that the remuneration of an auditor appointed to fill a casual vacancy may be fixed by the directors. 150. The auditors shall conduct such audit as may be required by the Act and their report, if any, shall be dealt with by the Company as required by the Act. NOTICES 151. A notice (including any communication or document) shall be sufficiently given, delivered or served by the Company upon a shareholder, director, officer or auditor by personal delivery at such person's registered address (or, in the case of a director, officer or auditor, last known address) or by prepaid mail, telegraph, telex, facsimile machine or other electronic means of communication addressed to such person at such address. 152. Shareholders having no registered address shall not be entitled to receive notice. 153. All notices with respect to registered shares to which persons are jointly entitled may be sufficiently given to all joint holders thereof by notice given to whichever of such persons is named first in the Register for such shares. 154. Any notice sent by mail shall be deemed to be given, delivered or served on the earlier of actual receipt and the third business day following that upon which it is mailed, and in proving such service it shall be sufficient to prove that the notice was properly addressed and mailed with the postage prepaid thereon. Any notice given by electronic means of communication shall be deemed to be given when entered into the appropriate transmitting device for transmission. A certificate in writing signed on behalf of the Company that the notice was so addressed and mailed or transmitted shall be conclusive evidence thereof. 155. Every person who by operation of law, transfer or other means whatsoever becomes entitled to any share shall be bound by every notice in respect of such share that prior to such person's name and address being entered on the Register was duly served in the manner hereinbefore provided upon the person from whom such person derived title to such share. 156. Any notice delivered, sent or transmitted to the registered address of any shareholder pursuant to these Articles, shall, notwithstanding that such shareholder is then deceased and that the Company has notice thereof, be deemed to have been served in respect of any registered shares, whether held by such deceased shareholder solely or jointly with other persons, until some other person is registered as the holder or joint holder thereof, and such -27- service shall for all purposes of these Articles be deemed a sufficient service of such notice on the heirs, executors or administrators of the deceased shareholder and all joint holders of such shares. 157. Any notice may bear the name or signature, manual or reproduced, of the person giving the notice written or printed. 158. When a given number of days' notice or notice extending over any other period is required to be given, the day of service and the day upon which such notice expires shall not, unless it is otherwise provided, be counted in such number of days or other period. INDEMNITY 159. Every director or officer, former director or officer, or person who acts or acted at the Company's request, as a director or officer of the Company, a body corporate, partnership or other association of which the Company is or was a shareholder, partner, member or creditor, and the heirs and legal representatives of such person, in the absence of any dishonesty on the part of such person, shall be indemnified by the Company against, and it shall be the duty of the directors out of the funds of the Company to pay, all costs, losses and expenses, including an amount paid to settle an action or claim or satisfy a judgment, that such director, officer or person may incur or become liable to pay in respect of any claim made against such person or civil, criminal or administrative action or proceeding to which such person is made a party by reason of being or having been a director or officer of the Company or such body corporate, partnership or other association, whether the Company is a claimant or party to such action or proceeding or otherwise; and the amount for which such indemnity is proved shall immediately attach as a lien on the property of the Company and have priority as against the shareholders over all other claims. 160. No director or officer, former director or officer, or person who acts or acted at the Company's request, as a director or officer of the Company, a body corporate, partnership or other association of which the Company is or was a shareholder, partner, member or creditor, in the absence of any dishonesty on such person's part, shall be liable for the acts, receipts, neglects or defaults of any other director, officer or such person, or for joining in any receipt or other act for conformity, or for any loss, damage or expense happening to the Company through the insufficiency or deficiency of title to any property acquired for or on behalf of the Company, or through the insufficiency or deficiency of any security in or upon which any of the funds of the Company are invested, or for any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person with whom any funds, securities or effects are deposited, or for any loss occasioned by error of judgment or oversight on the part of such person, or for any other loss, damage or misfortune whatsoever which happens in the execution of the duties of such person or in relation thereto. -28- EXECUTION OF DOCUMENTS AND INSTRUMENTS 161. Deeds, transfers, assignments, contracts, obligations, certificates and other instruments and documents of any description whatsoever shall be effectively authorized by and signed on behalf of the Company if signed by any director or officer acting within such person's authority, whether under seal or otherwise as such signatories may see fit. In addition, the board of directors or the shareholders may from time to time by resolution direct the manner in which and the person or persons by whom any particular document or instrument or class of documents or instruments may or shall be signed. Any articles, notice, resolution, requisition, statement or other document or instrument required or permitted to be executed by more than one person may be executed in several documents or instruments of like form each of which is executed by one or more of such persons, and such documents or instruments, when duly executed by all persons required or permitted, as the case may be, to do so, shall be deemed to constitute one document for all relevant purposes. The secretary or any other officer or any director may sign certificates and similar instruments on the Company's behalf with respect to any factual matters relating to the Company's business and affairs, including certificates verifying copies of the constating documents, resolutions and minutes of meetings of the Company. REMINDERS 162. The directors shall comply with the following provisions of the Act or the Corporations Registration Act (Nova Scotia) where indicated: (1) Keep a current register of shareholders (Section 42). (2) Keep a current register of directors, officers and managers, send to the Registrar a copy thereof and notice of all changes therein (Section 98). (3) Keep a current register of holders of bonds, debentures and other securities (Section 111 and Third Schedule). (4) Call a general meeting every year within the proper time (Section 83). Meetings must be held not later than 15 months after the preceding general meeting. (5) Send to the Registrar copies of all special resolutions (Section 88). (6) Send to the Registrar notice of the address of the Company's Office and of all changes in such address (Section 79). (7) Keep proper minutes of all shareholders' meetings and directors' meetings in the Company's minute book kept at the Company's Office (Sections 89 and 90). (8) Obtain a certificate under the Corporations Registration Act (Nova Scotia) as soon as business is commenced. -29- (9) Send notice of recognized agent to the Registrar under the Corporations Registration Act (Nova Scotia). EX-3.62 63 ex3-62_043004.txt CERTIFICATE OF INCORP. OF MYHEALTHSAVINGS.COM STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 11:35 AM 09/25/2000 001482371 - 3290691 CERTIFICATE OF INCORPORATION OF MYHEALTHYSAVINGS.COM, INC. The undersigned, a natural person, for the purpose of organizing a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified, and referred to as the "General Corporation Law of the State of Delaware"), hereby certifies that: FIRST: The name of the corporation (hereinafter called the "Corporation") is MyHealthySavings.com, Inc. SECOND: The address, including street, number, city and county, of the registered office of the Corporation in the State of Delaware is, 15 East North Street, Dover, Delaware, 19901, County of Kent, and the name of the registered agent of the Corporation in the State of Delaware at such address is United Corporate Services, Inc. The principal offices of the Corporation shall be established at c/o MemberWorks Incorporated, 9 West Broad Street, Stamford, Connecticut 06901, until further notice by the Corporation. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is twenty thousand (20,000), all of which shall have a par value of $.01 per share. All such shares are of one class and are shares of Common Stock. FIFTH: The name and the mailing address of the incorporator are as follows: Name Mailing Address ---- --------------- William A. Durkin, III c/o Diserio Martin O'Connor & Castiglioni LLP One Atlantic Street, 5th Fl. Stamford, Connecticut 06901 SIXTH: The Corporation is to have a perpetual existence. SEVENTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under 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 creditors, and/or of the stockholders or class of creditors, and/or the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. EIGHTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation, and regulation of the powers of the Corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided: 1. The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the Bylaws. The phrase "whole Board" and the phrase "total number of directors" shall be deemed to have the same meaning, to wit, the total number of directors which the Corporation would have if there were no vacancies. No election of directors need be by written ballot. 2. After the original or other Bylaws of the Corporation have been adopted, amended, or repealed, as the case may be, in accordance with the provisions of Section 109 of the General Corporation Law of the State of Delaware, and, after the Corporation has received any payment for any of its stock, the power to adopt, amend, or repeal the Bylaws of the Corporation may be exercised by the Board of Directors of the Corporation; provided, however, that any provision for the classification of directors of the Corporation for staggered terms pursuant to the provisions of subsection (d) of Section 141 of the General Corporation Law of the State of Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by the stockholders entitled to vote of the Corporation unless provisions for such classification shall be set forth in this Certificate of Incorporation. 2 3. Whenever the corporation shall be authorized to issue only one class of stock, each outstanding share shall entitle the holder thereof to notice of, and the right to vote at, any meeting of stockholders. Whenever the Corporation shall be authorized to issue more than one class of stock, no outstanding share of any class of stock which is denied voting power under the provisions of the Certificate of Incorporation shall entitle the holder thereof to the right to vote at any meeting of stockholders except as the provisions of paragraph (2) of subsection (b) of Section 242 of the General Corporation Law of the State of Delaware shall otherwise require; provided, that no share of any such class which is otherwise denied voting power shall entitle the holder thereof to vote upon the increase or decrease in the number of authorized shares of said class. NINTH: The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented. TENTH: The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. ELEVENTH: From time to time any of the provisions of this Certificate of Incorporation may be amended, altered, or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article ELEVENTH. Signed on September 22, 2000 By /s/ William A. Durkin, III -------------------------------------- William A. Durkin, III Incorporator 3 EX-3.63 64 ex3-63_043004.txt CERTIFICATE OF INCORP. OF MYHEALTHSAVINGS.COM BY-LAWS MYHEALTHYSAVINGS.COM, INC. ARTICLE I SHAREHOLDERS Section 1.1. Annual Meetings. The Annual Meeting of Shareholders of the Corporation shall be held on the second Tuesday in January in each year if not a legal holiday, and if a legal holiday, then on the next succeeding business day, at 9:00 a.m., at the office of the Corporation or at such other hour or at such other place within or without the State of Connecticut as the Board of Directors may designate. The Secretary or an Assistant Secretary or such other officer of the Corporation designated by the Board of Directors shall serve personally or send through the mail a written notice of meeting, stating the place, day and hour of such meeting, addressed to each Shareholder of record entitled to vote, at his address as it appears on the books of the Corporation not less than ten days before the meeting. At any meeting at which all Shareholders shall be present, or of which all Shareholders not present waive notice in writing (such waiver being executed either before or after the holding of the meeting), the giving of notice as required herein may be dispensed with. Section 1.2. Special Meetings. Special meetings of Shareholders, other than those required by statute, may be called at any time by the President or by a majority of the Board of Directors and shall be called by the President whenever so requested in writing by Shareholders representing at least one-tenth of the voting power of all shares entitled to vote at such meeting. 1 Notice of each special meeting shall be served in the same manner as notice of an annual meeting except that the notice may be served at least seven days before the meeting. Such notice shall state the purpose or purposes for which the meeting is called and the time when, and the place where, within or without the State of Connecticut, the meeting is to be held. At any meeting at which all Shareholders shall be present, or of which all Shareholders not present waive notice in writing (such waiver being executed either before or after the holding of the meeting), the giving of notice as required herein may be dispensed with. Section 1.3. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or Shareholders entitled to receive payment of any dividends, or in order to make a determination of Shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty days. If the stock transfer books shall be closed for the purpose of determining Shareholders entitled to notice of or to vote at a meeting of Shareholders, such books shall be closed for a least ten days immediately preceding such meeting. In lieu of closing stock transfer books, the Board of Directors may fix in advance a date as the record date of any such determination of Shareholders, such date in any case to be not more than sixty days and, in case of a meeting of Shareholders, not less than ten days prior to the date on which the particular action requiring such determination of Shareholders is to be taken. If the stock transfer books are not closed and no record date is fixed for a determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders or a determination of Shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the 2 Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. Section 1.4. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make a complete list of the Shareholders entitled to vote at each meeting of Shareholders or any adjournment thereof, arranged in alphabetical order with the address of and the number of shares by each. Such list or other equivalent record shall, for a period of five days prior to such meeting, be kept on file at the principal office of the Corporation or at the office or place of business of a transfer agent in this state and shall be subject to inspection by any Shareholder during usual business hours for any proper purpose. Such list or other equivalent record shall also be produced and kept at the time and place of the meeting and shall be subject for any such proper purpose to such inspection during the whole time of the meeting. Section 1.5. Quorum. At all meetings of Shareholders, except where it is otherwise provided by law, the presence in person or by proxy of Shareholders of record representing at least 50% of the issued and outstanding shares shall be necessary to constitute a quorum. A meeting at which less than a quorum is present may be adjourned from time to time by a majority of the Shareholders present in person or by proxy. Section 1.6. Proxies. At all meetings of Shareholders, a Shareholder may vote in person or by proxy executed in writing by the Shareholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. Section 1.7. Voting. Except as otherwise provided by statute or by these By-laws, each 3 outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at a meeting of Shareholders. Section 1.8. Action Without a Meeting. Any action that may be taken by the Shareholders at a meeting may be taken without a meeting if a consent in writing, setting forth the action so to be taken, shall be signed by all of the Shareholders. ARTICLE II DIRECTORS Section 2.1. Number. The business and affairs of the Corporation shall be conducted and managed by a Board of not less than the minimum permitted by law, nor more than nine Directors. The number of Directorships at any time within such minimum and maximum shall be the number fixed by the resolution of the Shareholders or Directors, or in the absence of such resolution shall be the number of Directors elected at the preceding annual meeting of Shareholders. Section 2.2. Election. The Directors shall (except for the filling of vacancies) be elected at each annual meeting of Shareholders and shall hold office until their successors are elected. Section 2.3. Duties of Directors. The Board of Directors shall have the control and general management of the affairs and business of the Corporation, except as may be otherwise provided by the laws of the State of Connecticut. Section 2.4. Director's Meetings. A regular meeting of the Board of Directors shall be held immediately following the annual meeting of the Shareholders, and at such other times as the Board of Directors may determine. A special meeting of the Board of Directors may be called by the Chairman of the Board or the President at any time, and shall be called by the Chairman of the Board or the President upon the written request of at least two Directors. 4 Section 2.5. Notice of Meetings. Notice of meetings, other than of the regular annual meeting, for which no notice need be given, shall be given by an officer of the Corporation orally, or by service thereof upon each Director in person, or by mail, or by telegram, at his last known post office address, not less than two days before such meeting, specifying the time and place within or without the State of Connecticut of such meeting. At any meeting at which every member of the Board of Directors shall be present, or of which all Directors not present waive notice in writing (such waiver being executed either before or after the holding of the meeting), the giving of notice as required herein may be dispensed with. Section 2.6. Quorum. At all meetings of the Board a majority of the Directors shall constitute a quorum for the transaction of business, except that a quorum shall be not less than two (unless there are fewer than two Directorships) Directors. If a quorum shall not be present at any meeting of the Board, the Directors present thereat may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present. Section 2.7. Manner of Acting. The act 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. A Director or a member of a committee of the Board of Directors may participate in a meeting of the Board of Directors or of such committee by means of conference telephone or similar communications equipment enabling all Directors participating in the meeting to hear one another, and such participation shall constitute presence in person at such meeting. Section 2.8. Action Without a Meeting. Any action that may be taken by the Board of Directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so to be taken, shall be signed by all of the Directors. 5 Section 2.9. Vacancies. Whenever any vacancy shall occur in the Board of Directors by death, resignation or otherwise, the vacancy may be filled for the unexpired term by action of the remaining Director(s) in office, or by the concurring vote of a majority of the remaining Directors in office though such remaining Directors are less than a quorum and though such majority is less than a quorum. The terms of this section shall not apply to any Directorship to be filled by reason of an increase in the number of Directors. Section 2.10. Compensation. By resolution of the Board of Directors, each Director may be paid his expenses, if any, of attendance at such meeting of the Board of Directors, and may be paid a salary as Director or a fixed sum for attendance at each meeting of the Board of Directors, or both. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 2.11. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 2.12. Directors' Committees. The Board of Directors, by resolution adopted by a majority of the full Board, may designate two or more of its members to constitute an Executive Committee or other committees. The designation of such Executive Committee or other committee shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility 6 imposed by law. The Executive Committee, when the Board of Directors is not in session, shall have and may exercise all of the authority of the Board of Directors except to the extent, if any, that such authority shall be limited by these By-laws or by resolution appointing the Executive Committee. Each such other committee shall have and may exercise such powers as may be authorized in the resolution appointing such other committee. Neither the Executive Committee nor such other committees shall have the authority of the Board of Directors in reference to amending the Certificate of Incorporation, adopting a plan of merger or consolidation, recommending to the Shareholders a voluntary dissolution of the Corporation or a revocation thereof, or amending the By-laws of the Corporation. ARTICLE III OFFICERS Section 3.1. Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President and a Secretary. The Board of Directors may also choose one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers, and may from time to time appoint additional officers with such duties as may be delegated to them by the Board. The officers of the Corporation need not be Directors, and one person may hold two or more offices, provided, however, that no one person shall hold the offices of both President and Secretary. Section 3.2. Election. All officers shall be elected by and shall hold office at the pleasure of the Board of Directors. Such election shall be by a majority of the Directors. Section 3.3. Removal. Any officer may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be 7 without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer shall not of itself create contract rights. Section 3.4. Duties of Officers. In addition to those powers and duties that may from time to time be delegated to them by the Board of Directors, and except as may be otherwise provided by the Board, the officers of the Corporation shall have the powers and perform the duties which by law and general usage appertain to their respective offices. Section 3.5. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the Corporation. ARTICLE IV STOCK Section 4.1. Certificates. Certificates representing shares of the Corporation shall be in the form prescribed by the Board of Directors, and shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation, and shall be numbered in the order in which issued. Certificates shall be bound in a book and issued in consecutive order therefrom, and in the margin or stub thereof shall be entered the name of the person holding the shares therein represented, the number of shares and the date of issue. Each certificate exchanged or returned to the Corporation shall be cancelled, and the date of cancellation shall be indicated thereon by the Secretary, and such certificate shall be immediately pasted in the certificate books opposite the memorandum of its issue. Section 4.2. Transfer. Transfers of shares shall be made only upon the books of the Corporation by the holder of record thereof in person or by duly authorized attorney-in-fact under a 8 power of attorney duly executed, acknowledged and filed with the Corporation, and only upon the surrender of the certificate for such shares, except that shares sold by the Corporation to satisfy any lien which it holds thereon may be transferred without the surrender of such certificates. ARTICLE V CORPORATE ACTION Section 5.1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 5.2. Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Section 5.3. Checks, Drafts, Etc. All check, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. Section 5.4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors may elect. ARTICLE VI MISCELLANEOUS Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 6.2. Amendments. These By-laws maybe altered, amended, or repealed, and new 9 By-laws may be adopted, by the vote of a majority of all of the Shareholders of the Corporation at any annual or special meeting of Shareholders or by the vote of a majority of all of the Directors of the Corporation at any meeting of the Board of Directors. Section 6.3. Waiver of Notice. Whenever any notice is required to be given to any Shareholder or Director of the Corporation, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Section 6.4. Indemnification. The Corporation shall indemnify any Director, or officer of the Corporation against expenses (including legal fees), judgments, fines, penalties and amounts paid in settlement, actually and reasonably incurred by him, to the fullest extent now or hereafter permitted by law in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, brought or threatened to be brought against him, by reason of the fact that he is or was a Director, or officer of the Corporation, or any of its subsidiaries, or acted as a Director or officer or in any other capacity on behalf of the Corporation, or any of its subsidiaries 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, provided that he acted in good faith and in a manner which is reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was unlawful. The provisions of this section shall be applicable to all actions, suits or proceedings commenced after its adoption and shall continue as to a person who has ceased to be a Director or officer or to render services for or at the request of the Corporation and shall inure to the benefit of 10 the heirs, executors and administrators of such a person. The rights of indemnification provided for herein shall not be deemed the exclusive rights to which any Director, officer, employee or agent of the Corporation may be entitled. I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the Bylaws Of MyHealthySavings.com, Inc., a Delaware Corporation, as in effect on the date hereof. Dated: September 28, 2000. /s/ James B. Duffy -------------------------------- James B. Duffy Secretary 11 EX-3.64 65 ex3-64_043004.txt CERTIFICATE OF INCORP. OF BILLING SERVICES INTER. CERTIFICATE OF INCORPORATION OF BILLING SERVICES INTERNATIONAL, INC. The undersigned, a natural person, for the purpose of organizing a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified, and referred to as the "General Corporation Law of the State of Delaware"), hereby certifies that: FIRST: The name of the corporation (hereinafter called the "Corporation") is Billing Services International, Inc. SECOND: The address, including street, number, city and county, of the registered office of the Corporation in the State of Delaware is, 15 East North Street, Dover, Delaware, 19901, County of Kent, and the name of the registered agent of the Corporation in the State of Delaware at such address is United Corporate Services, Inc. The principal offices of the Corporation shall be established at c/o Diserio Martin O'Connor & Castiglioni LLP, One Atlantic Street, Stamford, Connecticut 06901, until further notice by the Corporation. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is twenty thousand (20,000), all of which shall have a par value of $.01 per share. All such shares are of one class and are shares of Common Stock. FIFTH: The name and the mailing address of the incorporator are as follows: Name Mailing Address William A. Durkin, III c/o Diserio Martin O'Connor & Castiglioni LLP One Atlantic Street, 5th Fl. Stamford, Connecticut 06901 SIXTH: The Corporation is to have a perpetual existence. SEVENTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under 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 creditors, and/or of the stockholders or class of creditors, and/or the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. EIGHTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation, and regulation of the powers of the Corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided: 1. The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the Bylaws. The phrase "whole Board" and the phrase "total number of directors" shall be deemed to have the same meaning, to wit, the total number of directors which the Corporation would have if there were no vacancies. No election of directors need be by written ballot. 2. After the original or other Bylaws of the Corporation have been adopted, amended, or repealed, as the case may be, in accordance with the provisions of Section 109 of the General Corporation Law of the State of Delaware, and, after the Corporation has received any payment for any of its stock, the power to adopt, amend, or repeal the Bylaws of the Corporation may be exercised by the Board of Directors of the Corporation; provided, however, that any provision for the classification of directors of the Corporation for staggered terms pursuant to the provisions of subsection (d) of Section 141 of the General Corporation Law of the State of Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by the stockholders entitled to vote of the Corporation unless provisions for such classification shall be set forth in this Certificate of Incorporation. 2 3. Whenever the corporation shall be authorized to issue only one class of stock, each outstanding share shall entitle the holder thereof to notice of, and the right to vote at, any meeting of stockholders. Whenever the Corporation shall be authorized to issue more than one class of stock, no outstanding share of any class of stock which is denied voting power under the provisions of the Certificate of Incorporation shall entitle the holder thereof to the right to vote at any meeting of stockholders except as the provisions of paragraph (2) of subsection (b) of Section 242 of the General Corporation Law of the State of Delaware shall otherwise require; provided, that no share of any such class which is otherwise denied voting power shall entitle the holder thereof to vote upon the increase or decrease in the number of authorized shares of said class. NINTH: The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented. TENTH: The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. ELEVENTH: From time to time any of the provisions of this Certificate of Incorporation may be amended, altered, or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article ELEVENTH. Signed on July 7, 2000 By /s/ William A. Durkin, III ------------------------------ William A. Durkin, III Incorporator 3 EX-3.65 66 ex3-65_043004.txt BYLAWS OF BILLING SERVICES INTERNATIONAL BY-LAWS BILLING SERVICES INTERNATIONAL, INC. ARTICLE I SHAREHOLDERS Section 1.1. Annual Meetings. The Annual Meeting of Shareholders of the Corporation shall be held on the second Tuesday in January in each year if not a legal holiday, and if a legal holiday, then on the next succeeding business day, at 9:00 a.m., at the office of the Corporation or at such other hour or at such other place within or without the State of Connecticut as the Board of Directors may designate. The Secretary or an Assistant Secretary or such other officer of the Corporation designated by the Board of Directors shall serve personally or send through the mail a written notice of meeting, stating the place, day and hour of such meeting, addressed to each Shareholder of record entitled to vote, at his address as it appears on the books of the Corporation not less than ten days before the meeting. At any meeting at which all Shareholders shall be present, or of which all Shareholders not present waive notice in writing (such waiver being executed either before or after the holding of the meeting), the giving of notice as required herein may be dispensed with. Section 1.2. Special Meetings. Special meetings of Shareholders, other than those required by statute, may be called at any time by the President or by a majority of the Board of Directors and shall be called by the President whenever so requested in writing by Shareholders representing at least one-tenth of the voting power of all shares entitled to vote at such meeting 1 Notice of each special meeting shall be served in the same manner as notice of an annual meeting except that the notice may be served at least seven days before the meeting. Such notice shall state the purpose or purposes for which the meeting is called and the time when, and the place where, within or without the State of Connecticut, the meeting is to be held. At any meeting at which all Shareholders shall be present, or of which all Shareholders not present waive notice in writing (such waiver being executed either before or after the holding of the meeting), the giving of notice as required herein may be dispensed with. Section 1.3. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or Shareholders entitled to receive payment of any dividends, or in order to make a determination of Shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty days. If the stock transfer books shall be closed for the purpose of determining Shareholders entitled to notice of or to vote at a meeting of Shareholders, such books shall be closed for a least ten days immediately preceding such meeting. In lieu of closing stock transfer books, the Board of Directors may fix in advance a date as the record date of any such determination of Shareholders, such date in any case to be not more than sixty days and, in case of a meeting of Shareholders, not less than ten days prior to the date on which the particular action requiring such determination of Shareholders is to be taken. If the stock transfer books are not closed and no record date is fixed for a determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders or a determination of Shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the 2 Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. Section 1.4. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make a complete list of the Shareholders entitled to vote at each meeting of Shareholders or any adjournment thereof, arranged in alphabetical order with the address of and the number of shares by each. Such list or other equivalent record shall, for a period of five days prior to such meeting, be kept on file at the principal office of the Corporation or at the office or place of business of a transfer agent in this state and shall be subject to inspection by any Shareholder during usual business hours for any proper purpose. Such list or other equivalent record shall also be produced and kept at the time and place of the meeting and shall be subject for any such proper purpose to such inspection during the whole time of the meeting. Section 1.5. Quorum. At all meetings of Shareholders, except where it is otherwise provided by law, the presence in person or by proxy of Shareholders of record representing at least 50% of the issued and outstanding shares shall be necessary to constitute a quorum. A meeting at which less than a quorum is present may be adjourned from time to time by a majority of the Shareholders present in person or by proxy. Section 1.6. Proxies. At all meetings of Shareholders, a Shareholder may vote in person or by proxy executed in writing by the Shareholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. Section 1.7. Voting. Except as otherwise provided by statute or by these By-laws, each 3 outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at a meeting of Shareholders. Section 1.8. Action Without a Meeting. Any action that may be taken by the Shareholders at a meeting may be taken without a meeting if a consent in writing, setting forth the action so to be taken, shall be signed by all of the Shareholders. ARTICLE II DIRECTORS Section 2.1. Number. The business and affairs of the Corporation shall be conducted and managed by a Board of not less than the minimum permitted by law, nor more than nine Directors. The number of Directorships at any time within such minimum and maximum shall be the number fixed by the resolution of the Shareholders or Directors, or in the absence of such resolution shall be the number of Directors elected at the preceding annual meeting of Shareholders. Section 2.2. Election. The Directors shall (except for the filling of vacancies) be elected at each annual meeting of Shareholders and shall hold office until their successors are elected. Section 2.3. Duties of Directors. The Board of Directors shall have the control and general management of the affairs and business of the Corporation, except as may be otherwise provided by the laws of the State of Connecticut. Section 2.4. Director's Meetings. A regular meeting of the Board of Directors shall be held immediately following the annual meeting of the Shareholders, and at such other times as the Board of Directors may determine. A special meeting of the Board of Directors may be called by the Chairman of the Board or the President at any time, and shall be called by the Chairman of the Board or the President upon the written request of at least two Directors. 4 Section 2.5. Notice of Meetings. Notice of meetings, other than of the regular annual meeting, for which no notice need be given, shall be given by an officer of the Corporation orally, or by service thereof upon each Director in person, or by mail, or by telegram, at his last known post office address, not less than two days before such meeting, specifying the time and place within or without the State of Connecticut of such meeting. At any meeting at which every member of the Board of Directors shall be present, or of which all Directors not present waive notice in writing (such waiver being executed either before or after the holding of the meeting), the giving of notice as required herein may be dispensed with. Section 2.6. Quorum. At all meetings of the Board a majority of the Directors shall constitute a quorum for the transaction of business, except that a quorum shall be not less than two (unless there are fewer than two Directorships) Directors. If a quorum shall not be present at any meeting of the Board, the Directors present thereat may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present. Section 2.7. Manner of Acting. The act 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. A Director or a member of a committee of the Board of Directors may participate in a meeting of the Board of Directors or of such committee by means of conference telephone or similar communications equipment enabling all Directors participating in the meeting to hear one another, and such participation shall constitute presence in person at such meeting. Section 2.8. Action Without a Meeting. Any action that may be taken by the Board of Directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so to be taken, shall be signed by all of the Directors. 5 Section 2.9. Vacancies. Whenever any vacancy shall occur in the Board of Directors by death, resignation or otherwise, the vacancy may be filled for the unexpired term by action of the remaining Director(s) in office, or by the concurring vote of a majority of the remaining Directors in office though such remaining Directors are less than a quorum and though such majority is less than a quorum. The terms of this section shall not apply to any Directorship to be filled by reason of an increase in the number of Directors. Section 2.10. Compensation. By resolution of the Board of Directors, each Director may be paid his expenses, if any, of attendance at such meeting of the Board of Directors, and may be paid a salary as Director or a fixed sum for attendance at each meeting of the Board of Directors, or both. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 2.11. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. Section 2.12. Directors' Committees. The Board of Directors, by resolution adopted by a majority of the full Board, may designate two or more of its members to constitute an Executive Committee or other committees. The designation of such Executive Committee or other committee shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility 6 imposed by law. The Executive Committee, when the Board of Directors is not in session, shall have and may exercise all of the authority of the Board of Directors except to the extent, if any, that such authority shall be limited by these By-laws or by resolution appointing the Executive Committee. Each such other committee shall have and may exercise such powers as may be authorized in the resolution appointing such other committee. Neither the Executive Committee nor such other committees shall have the authority of the Board of Directors in reference to amending the Certificate of Incorporation, adopting a plan of merger or consolidation, recommending to the Shareholders a voluntary dissolution of the Corporation or a revocation thereof, or amending the Bylaws of the Corporation. ARTICLE III OFFICERS Section 3.1. Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President and a Secretary. The Board of Directors may also choose one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers, and may from time to time appoint additional officers with such duties as may be delegated to them by the Board. The officers of the Corporation need not be Directors, and one person may hold two or more offices, provided, however, that no one person shall hold the offices of both President and Secretary. Section 3.2. Election. All officers shall be elected by and shall hold office at the pleasure of the Board of Directors. Such election shall be by a majority of the Directors. Section 3.3. Removal. Any officer may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be 7 without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer shall not of itself create contract rights. Section 3.4. Duties of Officers. In addition to those powers and duties that may from time to time be delegated to them by the Board of Directors, and except as may be otherwise provided by the Board, the officers of the Corporation shall have the powers and perform the duties which by law and general usage appertain to their respective offices. Section 3.5. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the Corporation. ARTICLE IV STOCK Section 4.1. Certificates. Certificates representing shares of the Corporation shall be in the form prescribed by the Board of Directors, and shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation, and shall be numbered in the order in which issued. Certificates shall be bound in a book and issued in consecutive order therefrom, and in the margin or stub thereof shall be entered the name of the person holding the shares therein represented, the number of shares and the date of issue. Each certificate exchanged or returned to the Corporation shall be cancelled, and the date of cancellation shall be indicated thereon by the Secretary, and such certificate shall be immediately pasted in the certificate books opposite the memorandum of its issue. Section 4.2. Transfer. Transfers of shares shall be made only upon the books of the Corporation by the holder of record thereof in person or by duly authorized attorney-in-fact under a 8 power of attorney duly executed, acknowledged and filed with the Corporation, and only upon the surrender of the certificate for such shares, except that shares sold by the Corporation to satisfy any lien which it holds thereon may be transferred without the surrender of such certificates. ARTICLE V CORPORATE ACTION Section 5.1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 5.2. Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Section 5.3. Checks, Drafts, Etc. All check, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. Section 5.4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors may elect. ARTICLE VI MISCELLANEOUS Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 6.2. Amendments. These By-laws may be altered, amended, or repealed, and new 9 By-laws may be adopted, by the vote of a majority of all of the Shareholders of the Corporation at any annual or special meeting of Shareholders or by the vote of a majority of all of the Directors of the Corporation at any meeting of the Board of Directors. Section 6.3. Waiver of Notice. Whenever any notice is required to be given to any Shareholder or Director of the Corporation, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Section 6.4. Indemnification. The Corporation shall indemnify any Director, or officer of the Corporation against expenses (including legal fees), judgments, fines, penalties and amounts paid in settlement, actually and reasonably incurred by him, to the fullest extent now or hereafter permitted by law in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, brought or threatened to be brought against him, by reason of the fact that he is or was a Director, or officer of the Corporation, or any of its subsidiaries, or acted as a Director or officer or in any other capacity on behalf of the Corporation, or any of its subsidiaries 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; provided that he acted in good faith and in a manner which is reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was unlawful. The provisions of this section shall be applicable to all actions, suits or proceedings commenced after its adoption and shall continue as to a person who has ceased to be a Director or officer or to render services for or at the request of the Corporation and shall inure to the benefit of 10 the heirs, executors and administrators of such a person. The rights of indemnification provided for herein shall not be deemed the exclusive rights to which any Director, officer, employee or agent of the Corporation may be entitled. I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the Bylaws Of Billing Services International, Inc., a Delaware Corporation, as in effect on the date hereof. Dated: July 7, 2000. /s/ James B. Duffy -------------------------------- James B. Duffy Secretary 11 EX-4.1 67 ex4-1_043004.txt INDENTURE ================================================================================ MEMBERWORKS INCORPORATED as Issuer AND EACH OF THE GUARANTORS PARTY HERETO 9 1/4% SENIOR NOTES DUE 2014 ______________________ INDENTURE Dated as of April 13, 2004 ______________________ LaSalle Bank National Association, as Trustee ______________________ ================================================================================ TABLE OF CONTENTS ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE .........................1 SECTION 1.01 DEFINITIONS .................................................1 SECTION 1.02 OTHER DEFINITIONS...........................................23 SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT...........23 SECTION 1.04 RULES OF CONSTRUCTION.......................................24 ARTICLE 2. THE NOTES..........................................................24 SECTION 2.01 FORM AND DATING.............................................24 SECTION 2.02 EXECUTION AND AUTHENTICATION................................26 SECTION 2.03 REGISTRAR AND PAYING AGENT..................................27 SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST.........................27 SECTION 2.05 HOLDER LISTS................................................27 SECTION 2.06 TRANSFER AND EXCHANGE.......................................28 SECTION 2.07 REPLACEMENT NOTES ..........................................34 SECTION 2.08 OUTSTANDING NOTES...........................................35 SECTION 2.09 TREASURY NOTES..............................................35 SECTION 2.10 TEMPORARY NOTES ............................................35 SECTION 2.11 CANCELLATION................................................35 SECTION 2.12 DEFAULTED INTEREST..........................................36 SECTION 2.13 CUSIP NUMBERS ..............................................36 SECTION 2.14 ISSUANCE OF ADDITIONAL NOTES................................36 ARTICLE 3. REDEMPTION AND PREPAYMENT .........................................37 SECTION 3.01 NOTICES TO TRUSTEE..........................................37 SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED OR PURCHASED..............37 SECTION 3.03 NOTICE OF REDEMPTION........................................37 SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION..............................38 SECTION 3.05 DEPOSIT OF REDEMPTION OR PURCHASE PRICE.....................38 SECTION 3.06 NOTES REDEEMED OR PURCHASED IN PART.........................39 SECTION 3.07 OPTIONAL REDEMPTION.........................................39 SECTION 3.08 MANDATORY REDEMPTION........................................40 SECTION 3.09 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.........40 ARTICLE 4. COVENANTS..........................................................42 SECTION 4.01 PAYMENT OF NOTES ...........................................42 SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY.............................42 SECTION 4.03 REPORTS.....................................................43 SECTION 4.04 COMPLIANCE CERTIFICATE......................................44 SECTION 4.05 TAXES.......................................................44 SECTION 4.06 STAY, EXTENSION AND USURY LAWS..............................45 SECTION 4.07 RESTRICTED PAYMENTS.........................................45 SECTION 4.08 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES..............................................48 SECTION 4.09 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK..50 SECTION 4.10 ASSET SALES ................................................53 SECTION 4.11 TRANSACTIONS WITH AFFILIATES ...............................54 SECTION 4.12 LIENS ......................................................56 i SECTION 4.13 BUSINESS ACTIVITIES ........................................56 SECTION 4.14 CORPORATE EXISTENCE.........................................56 SECTION 4.15 OFFER TO REPURCHASE UPON CHANGE OF CONTROL .................56 SECTION 4.16 PAYMENTS FOR CONSENT .......................................58 SECTION 4.17 ADDITIONAL SUBSIDIARY GUARANTEES ...........................58 SECTION 4.18 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES ....58 SECTION 4.19 CHANGES IN COVENANTS WHEN NOTES RATED INVESTMENT GRADE .....59 ARTICLE 5. SUCCESSORS.........................................................60 SECTION 5.01 MERGER, CONSOLIDATION OR SALE OF ASSETS ....................60 SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED ..........................61 ARTICLE 6. DEFAULTS AND REMEDIES .............................................61 SECTION 6.01 EVENTS OF DEFAULT ..........................................61 SECTION 6.02 ACCELERATION ...............................................63 SECTION 6.03 OTHER REMEDIES .............................................63 SECTION 6.04 WAIVER OF PAST DEFAULTS.....................................64 SECTION 6.05 CONTROL BY MAJORITY.........................................64 SECTION 6.06 LIMITATION ON SUITS.........................................64 SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT........................65 SECTION 6.08 COLLECTION SUIT BY TRUSTEE .................................65 SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM............................65 SECTION 6.10 PRIORITIES .................................................66 SECTION 6.11 UNDERTAKING FOR COSTS ......................................66 ARTICLE 7. TRUSTEE ...........................................................66 SECTION 7.01 DUTIES OF TRUSTEE ..........................................66 SECTION 7.02 RIGHTS OF TRUSTEE ..........................................67 SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE ...............................68 SECTION 7.04 TRUSTEE'S DISCLAIMERS ......................................69 SECTION 7.05 NOTICE OF DEFAULTS .........................................69 SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS ..............................69 SECTION 7.07 COMPENSATION AND INDEMNITY .................................69 SECTION 7.08 REPLACEMENT OF TRUSTEE .....................................70 SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC............................71 SECTION 7.10 ELIGIBILITY; DISQUALIFICATION ..............................71 SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY ..........72 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE ..........................72 SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE....72 SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE..............................72 SECTION 8.03 COVENANT DEFEASANCE.........................................73 SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE..................73 SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.............74 SECTION 8.06 REPAYMENT TO COMPANY .......................................75 SECTION 8.07 REINSTATEMENT ..............................................75 ii ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER...................................76 SECTION 9.01 WITHOUT CONSENT OF HOLDERS..................................76 SECTION 9.02 WITH CONSENT OF HOLDERS.....................................77 SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT.........................79 SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS...........................79 SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES............................79 SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC.............................79 ARTICLE 10. SUBSIDIARY GUARANTEES ............................................79 SECTION 10.01 AGREEMENT TO GUARANTEE......................................79 SECTION 10.02 EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.............80 SECTION 10.03 GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS ..........81 SECTION 10.04 RELEASES....................................................82 ARTICLE 11. SATISFACTION AND DISCHARGE........................................83 SECTION 11.01 SATISFACTION AND DISCHARGE..................................83 SECTION 11.02 APPLICATION OF TRUST MONEY..................................84 ARTICLE 12. MISCELLANEOUS.....................................................85 SECTION 12.01 TRUST INDENTURE ACT CONTROLS ...............................85 SECTION 12.02 NOTICES.....................................................85 SECTION 12.03 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS................86 SECTION 12.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT..........86 SECTION 12.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION...............86 SECTION 12.06 RULES BY TRUSTEE AND AGENTS.................................87 SECTION 12.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS..............................................87 SECTION 12.08 GOVERNING LAW...............................................87 SECTION 12.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS ..............87 SECTION 12.10 SUCCESSORS..................................................87 SECTION 12.11 SEVERABILITY................................................88 SECTION 12.12 COUNTERPART ORIGINALS.......................................88 SECTION 12.13 TABLE OF CONTENTS, HEADINGS, ETC............................88 EXHIBITS - -------- EXHIBIT A FORM OF NOTE EXHIBIT B FORM OF SUPPLEMENTAL INDENTURE EXHIBIT C FORM OF NOTATION ON SENIOR NOTE RELATING TO SUBSIDIARY GUARANTEE iii Cross-Reference Table* Trust Indenture Indenture Act Section Section 310 (a)(1)........................................................ 7.10 (a)(2)........................................................ 7.10 (a)(3)........................................................ N.A. (a)(4)........................................................ N.A. (a)(5)........................................................ 7.10 (b) .......................................................... 7.10 (c)........................................................... N.A. 311 (a)........................................................... 7.11 (b)........................................................... 7.11 (c)........................................................... N.A. 312 (a)........................................................... 2.05 (b) .......................................................... 12.03 (c)........................................................... 12.03 313 (a)........................................................... 7.06 (b)(1)........................................................ N.A. (b)(2)........................................................ 7.06; 7.07 (c)........................................................... 7.06; 12.02 (d) .......................................................... 7.06 314 (a)........................................................... 4.03; 12.02 (b) .......................................................... N.A. (c)(1)........................................................ 12.04 (c)(2)........................................................ 12.04 (c)(3)........................................................ N.A. (d) .......................................................... N.A. (e)........................................................... 12.05 (f)........................................................... N.A. 315 (a)........................................................... 7.01 (b) .......................................................... 7.05, 12.02 (c)........................................................... 7.01 (d) .......................................................... 7.01 (e)........................................................... 6.11 316 (a)(last sentence)............................................ 2.09 (a)(1)(A) .................................................... 6.05 (a)(1)(B)..................................................... 6.04 (a)(2)........................................................ N.A. (b) .......................................................... 6.07 (c)........................................................... 2.12 317 (a)(1)........................................................ 6.08 - ---------------------------- * This Cross-Reference Table is not part of the Indenture. iv (a)(2)........................................................ 6.09 (b)........................................................... 2.04 318 (a)........................................................... 12.01 (b)........................................................... N.A. (c)........................................................... 12.01 N.A. means not applicable. *This Cross-Reference Table is not part of the Indenture. v This INDENTURE dated as of April 13, 2004, among MemberWorks Incorporated, a Delaware corporation (the "Company ), Billing Services International, Inc., Best Benefits, Inc., Impac Marketing Corp., MyHealthySavings.com, Inc., CountryWide Dental, Inc., MemberWorks Canada Holdco, Inc., Interactive Media Consolidated, Inc., and Interactive Media Group (USA) Ltd., each a Delaware corporation; MemberWorks Canada LLC, Interactive Voice Media Baltimore LLC, Interactive Voice Media Colorado LLC, Interactive Voice Media Georgia LLC, Interactive Voice Media Michigan LLC, Interactive Voice Media New Jersey LLC, Interactive Voice Media New York LLC, Interactive Voice Media Ohio LLC, Interactive Voice Media Pennsylvania LLC, Lavalife Washington DC LLC, each a Delaware limited liability company; Quota Phone, Inc. and Barnes Holding Corp., each a New York corporation; Interactive LA Voice Media Corp., Interactive SJ Voice Media Corp., Interactive Voice Media (CA) Corp., Interactive Voice Media (Sacramento) Corp., each a California corporation; Discount Development Services, LLC, an Illinois limited liability company, Unicare, Inc., an Illinois corporation, Interactive Media (IL) Corp., an Illinois corporation, Coverdell & Company Inc., a Georgia corporation, Interactive Media MO Corp., a Missouri corporation, Interactive Voice Media (MN) Corp., a Minnesota corporation, Interactive (TX) Voice Media Corp., a Texas corporation and Lavalife Corp., a Nova Scotia unlimited liability company ("Lavalife") (each of the foregoing referred to collectively herein as, the "Guarantors") and LaSalle Bank National Association, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 9 1/4% Senior Notes due 2014 (the "Initial Notes"), any Additional Notes (as defined below) and the 9 1/4% Senior Notes due 2014 to be issued in exchange for Notes pursuant to the Registration Rights Agreement (the "Exchange Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Notes" means additional notes (other than the Initial Notes), if any, issued under this Indenture in accordance with Sections 2.02, 2.14 and 4.09 hereof, as part of the same series as the Initial Notes. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Agent" means any Registrar, co-registrar, Paying Agent or additional paying agent. "Applicable Premium" means, with respect to any Note on any Redemption Date, the greater of: (1) 1.0% of the principal amount of the Note; and (2) the excess of: (a) the present value at such Redemption Date of (i) the redemption price of the Note at April 1, 2009 (such redemption price as set forth in Section 3.07(d) hereof) plus (ii) all required interest payments due on the Note through April 1, 2009 (excluding accrued but unpaid interest) computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 0.50%; over (b) the principal amount of the Note. "Asset Sale" means: (1) the sale, lease, conveyance or other disposition of any assets or rights; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by Section 4.15 hereof and/or Section 5.01 hereof and not by Section 4.10 hereof; and (2) the issuance of Equity Interests in any of the Company's Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries. Notwithstanding the preceding, the following items will not be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a fair market value of less than $3,000,000; (2) a sale, lease, transfer conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries; (3) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; 2 (4) the sale, lease, transfer conveyance or other disposition of products, services, equipment, inventory, accounts receivable or other assets in the ordinary course of business or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; (5) the sale or other disposition of cash or Cash Equivalents; (6) the license of patents, trademarks, copyrights and know-how to third Persons in the ordinary course of business; (7) the creation of Liens; and (8) a Restricted Payment that does not violate, or Permitted Investment that is permitted by, Section 4.07 hereof. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned" have correlative meanings. "Board of Directors" means: (1) with respect to a corporation, the board of directors of the corporation; (2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and (3) with respect to any other Person, the board or committee of such Person serving a similar function. "Business Day" means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York, or at a place of payment, are authorized or required by law to close. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means: (1) in the case of a corporation, corporate stock; 3 (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means: (1) United States dollars and any other currency that is convertible into United States dollars without legal restrictions and which is utilized by the Company or any of its Restricted Subsidiaries in the ordinary course of its business; (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition; (3) certificates of deposit and eurodollar time deposits with maturities of 270 days or less from the date of acquisition, bankers' acceptances with maturities not exceeding 270 days and overnight bank deposits, in each case, with any lender party to the Credit Agreement or with any domestic commercial bank having capital and surplus in excess of $500,000,000 and a Thomson BankWatch Rating of "B" or better; (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; (5) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and in each case maturing within 270 days after the date of acquisition; and (6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition. "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act); (2) the approval by the holders of Voting Stock of the Company of a plan relating to the liquidation or dissolution of the Company or the adoption of a plan relating to the liquidation or dissolution of the Company by its Board of Directors; 4 (3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as that term is used in Section 13(d)(3) of the Exchange Act), becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, measured by voting power rather than number of shares; (4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or (5) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance). Notwithstanding the foregoing, a Change of Control shall not be deemed to occur as a result of any merger primarily for the purpose of changing the Company's jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of common stock of the surviving entity. "Clearstream" means Clearstream Banking, S.A., or any successor securities clearing agency. "Commission" means the U.S. Securities Exchange Commission. "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus: (1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with (a) an Asset Sale or (b) the disposition of any securities by, or the extinguishment of any Indebtedness of, such Person or any of its Restricted Subsidiaries, to the extent such losses were deducted in computing such Consolidated Net Income; plus (2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (3) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit 5 or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus (4) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; plus (5) unrealized non-cash losses resulting from foreign currency balance sheet adjustments required by GAAP to the extent such losses were deducted in computing such Consolidated Net Income; minus (6) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person; (2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (3) the cumulative effect of a change in accounting principles will be excluded; (4) any impairment loss of such Person or its Restricted Subsidiaries relating to goodwill or other non-amortizing intangible asset will be excluded; and (5) the Net Income or loss of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. 6 "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who: (1) was a member of such Board of Directors on the date of this Indenture; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. "Convertible Senior Subordinated Notes" means the 5.50% Convertible Senior Subordinated Notes of the Company due October 1, 2010. "Corporate Trust Office of the Trustee" will be at the principal address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company. "Credit Agreement" means that certain Amended and Restated Credit Agreement, dated as of March 25, 2004 by and among the Company, certain Subsidiaries of the Company, LaSalle Bank National Association, as Agent, certain financial institutions as lenders and other agents and arrangers party thereto, providing for up to $45,000,000 of revolving credit borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of Debt Issuances), in whole or in part, from time to time. "Credit Facilities" means, one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities, in each case with banks, investment banks, insurance companies, mutual funds and/or other institutional lenders providing for revolving credit loans, term loans, receivables or inventory financing (including through the sale of receivables or inventory to such lenders or to special purpose entities formed to borrow from such lenders against such receivables or inventory) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of Debt Issuances) in whole or in part from time to time. "Debt Issuances" means, with respect to the Company or any Guarantor, one or more issuances after the Issue Date of Indebtedness evidenced by notes, debentures, bonds or other similar securities or instruments. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Article 2 hereof, substantially in the form of Exhibit A hereto, except that such Note will not bear the Global Note Legend and will not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. 7 "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provisions of this Indenture. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof "Distribution Compliance Period" means, with respect to any Notes, the period of 40 consecutive days beginning on and including the later of (i) the day on which such Notes are first offered to Persons other than distributors (as defined in Regulation S) in reliance on Regulation S and (ii) the issue date with respect to such Notes. "Domestic Subsidiary" means any Restricted Subsidiary of the Company that was formed under the laws of the United States or any state of the United States or the District of Columbia. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of Equity Interests (other than Disqualified Stock) made for cash on a primary basis by the Company after the Issue Date. "Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any successor securities clearing agency. "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended. "Exchange Notes" means the 9 1/4% Senior Notes due 2014, registered under the Securities Act, issued pursuant to this Indenture in connection with an Exchange Offer pursuant to the Registration Rights Agreement and (ii) Additional Notes, if any, issued pursuant to a registration statement filed with the SEC under the Securities Act. "Exchange Offer" means the exchange and issuance by the Company, pursuant to a Registration Rights Agreement, of a principal amount of Exchange Notes (which will be registered pursuant to the Exchange Offer Registration Statement (as defined in the Registration Rights Agreement)) equal to the outstanding principal amount of Initial Notes or Additional 8 Notes, as the case may be, tendered by Holders thereof in connection with such exchange and issuance. "Existing Indebtedness" means Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the Issue Date, until such amounts are repaid. "Fixed Charge Coverage Ratio" means with respect to any specified Person for any four-quarter reference period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the applicable period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of such period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, subsequent to the commencement of the applicable four-quarter reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period, including any Consolidated Cash Flow and any pro forma expense and cost reductions that have occurred or are reasonably expected to occur, in the reasonable judgment of the chief financial officer of the specified Person (regardless of whether those cost savings or operating improvements could then be reflected in pro forma financial statements in accordance with Regulation S-X promulgated under the Securities Act or any other regulation or policy of the Commission related thereto); (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded; (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date; 9 (4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during the applicable four-quarter reference period; (5) any Person that is not a Restricted Subsidiary on such Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during the applicable four-quarter reference period; and (6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire applicable four-quarter reference period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Subsidiary Guarantee or Lien is called upon; plus (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) if such dividends are not deductible for income tax purposes based on the law in effect at the time of payment, a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Foreign Subsidiary" means Subsidiaries of the Company that are not Domestic Subsidiaries. 10 "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto issued in accordance with Article 2 hereof. "Global Note Legend" means the legend set forth in Section 2.06(e)(i) hereof to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which Guarantee or obligations the full faith and credit of the United States is pledged. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person incurred in the ordinary course of business and not for speculative purposes under: (1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements entered into with one or more financial institutions and designed to protect the Person or entity entering into the agreement against fluctuations in interest rates with respect to Indebtedness incurred; (2) foreign exchange contracts and currency protection agreements entered into with one or more financial institutions that are designed to protect the Person or entity entering into the agreement against fluctuations in currency exchanges rates with respect to Indebtedness incurred; (3) any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities used by such Person at the time; and (4) other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency exchange rates. "Holder" means a holder of Notes. 11 "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of banker's acceptances; (4) representing Capital Lease Obligations; (5) representing the balance deferred and unpaid of the purchase price of any property due more than six months after such property is acquired; or (6) representing Hedging Obligations; if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness; and (3) with respect to Hedging Obligations, the amount required to be recorded as a liability in accordance with GAAP. In addition, for the purpose of avoiding duplication in calculating the outstanding principal amount of Indebtedness for purposes of Section 4.09 hereof, Indebtedness arising solely by reason of the existence of a Lien to secure other Indebtedness permitted to be incurred under Section 4.09 hereof will not be considered incremental Indebtedness. Indebtedness will not include the obligations of any Person (A) resulting from the endorsement of negotiable instruments for collection in the ordinary course of business, (B) under stand-by letters of credit to the extent collateralized by cash or Cash Equivalents and (C) resulting from representations, warranties, covenants and indemnities given by such Person that are reasonably customary for sellers or transferors in an accounts receivable securitization transaction. "Indenture" means this Indenture, as amended or supplemented from time to time. 12 "Initial Notes" means $150,000,000 in aggregate principal amount of 9 1/4% Senior Notes due 2014 issued under this Indenture on the Issue Date. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition in an amount equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.07 hereof. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person will be deemed to be an Investment made by the Company or such Restricted Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person on the date of any such acquisition in an amount determined as provided in the final paragraph of Section 4.07 hereof. "Issue Date" means the first date on which the Notes are initially issued. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized or required by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest will accrue for the intervening period. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Liquidated Damages" means amounts payable under the Registration Rights Agreement as pursuant to Section 4 of the Registration Rights Agreement. "Moorly's" means Moody's Investor Services, Inc. or any successor rating agency. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: 13 (1) any gain (or loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, recording fees, title transfer fees, appraiser fees, costs of preparation of assets for sale and any relocation expenses incurred as a result of the Asset Sale, and taxes paid or payable as a result of the Asset Sale in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale, all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries or joint ventures as a result of the Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Recourse Debt" means Indebtedness: (1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) is the lender; (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock (other than the stock of an Unrestricted Subsidiary pledged by the Company or any of its Restricted Subsidiaries) or assets of the Company or any of its Restricted Subsidiaries. "Non-U.S. Person" means a Person who is not a U.S. Person. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Notes" means the Initial Notes and, unless the context otherwise requires, the Additional Notes, including any Exchange Notes. 14 "Obligations" means any principal, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for post-filing interest is allowed in such proceeding), premium and Liquidated Damages, if any, penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereto. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by one Officer of the Company, who must be the principal executive officer, the principal financial officer, a vice president, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 12.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Participant" means, with respect to DTC, Euroclear or Clearstream, a Person who has an account with DTC, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream). "Permitted Business" means (i) lines of business conducted by the Company and its Restricted Subsidiaries on the Issue Date, (ii) any business in the field of consumer services and (iii) any business incidental or reasonably related to the foregoing clauses (i) and (ii) or which is a reasonable extension thereof as determined in good faith by the Company's Board of Directors and set forth in an officers' certificate delivered to the Trustee. "Permitted Investments" means: (1) any Investment in the Company or in a Restricted Subsidiary of the Company; (2) any Investment in Cash Equivalents; (3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary of the Company; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof; 15 (5) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company or made with the proceeds of a substantially concurrent sale of such Equity Interests (other than Disqualified Stock); (6) any Investments received in compromise or resolution of obligations of (A) trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or (B) litigation, arbitration or other similar disputes; (7) Hedging Obligations permitted to be incurred under Section 4.09 hereof, (8) repurchases of the Notes; (9) loans and advances made in the ordinary course of business, to officers, directors and employees in an aggregate amount not to exceed $1,000,000 outstanding at any one time; (10) Investments of any Person (other than Indebtedness of such Person) in existence at the time such Person becomes a Subsidiary of the Company; provided such Investment was not made in connection with or anticipation of such Person becoming a Subsidiary of the Company; (11) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business and advances, loans or extensions of credit to suppliers in the ordinary course of business; and (12) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (12) since the Issue Date that remain outstanding at the time, not to exceed $5,000,000; provided, however, that if any Investment pursuant to this clause (12) is made in any Person that subsequent to the date of such Investment becomes a Restricted Subsidiary of the Company, then such Investment shall thereafter be deemed to have been made pursuant to clause (1) above, and the amount of such Investment shall be reset to zero for purposes of this clause (12). "Permitted Liens" means: (1) Liens of the Company and the Guarantors securing Indebtedness under Credit Facilities that was permitted by the terms of this Indenture, whether incurred pursuant to Section 4.09(a) hereof or Section 4.09(b)(i) hereof, (2) Liens in favor of the Company or the Guarantors; (3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided 16 that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or any Restricted Subsidiary; (4) Liens on property existing at the time of acquisition of the property by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (iv) of Section 4.09(b) hereof covering only the assets acquired with or financed by such Indebtedness; (7) Liens existing on the Issue Date; (8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; (9) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (10) Liens imposed by law, such as carriers', warehousemen's, landlord's and mechanics' Liens, in each case, incurred in the ordinary course of business; (11) survey exceptions, casements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (12) Liens created for the benefit of (or to secure) the Notes (or Subsidiary Guarantees of the Notes); (13) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Indenture; provided, however, that: (A) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and 17 (B) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Referencing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement; (14) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; and (15) Liens incurred in the ordinary course of business of the Company or any Subsidiary of the Company with respect to obligations that do not exceed $5,000,000 at any one time outstanding. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary of the Company that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Private Placement Legend" means the legend set forth in Section 2.06(e)(i) hereof to be placed on all Notes issued under this Indenture except as otherwise permitted by the provisions of this Indenture. 18 "Purchase Agreement" means (i) with respect to the Initial Notes, the Purchase Agreement, dated April 7, 2004, among the Company and the Guarantors and the Initial Purchasers named therein and (ii) with respect to each issuance of Additional Notes, the purchase agreement or underwriting agreement among the Company, the Guarantors and the Persons purchasing such Additional Notes. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Issue Date, by and among the Company and the Guarantors and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time and, with respect to any Additional Notes, one or more registration rights agreements among the Company and the Guarantors and the other parties thereto, as such agreements may be amended, modified or supplemented from time to time, relating to rights given by the Company to the purchasers of Additional Notes to register such Additional Notes under the Securities Act. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a Global Note bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of the Depositary and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S. "Responsible Officer" when used with respect to the Trustee, means any officer within the Corporate Trust Services Division of the Trustee (or any successor group of the Trustee) with direct responsibility for the administration of this Indenture or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Global Notes" means the Rule 144A Global Note and the Regulation S Global Note, each of which shall bear the Private Placement Legend. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 144A Securities" means all Notes offered and sold to QIBs in reliance on Rule 144A. "Rule 903" means Rule 903 promulgated under the Securities Act. 19 "Rule 904" means Rule 904 promulgated under the Securities Act. "Securities Act" means the U.S. Securities Act of 1933, as amended. "Senior Debt" means, Indebtedness of the Company and its Restricted Subsidiaries, at the time any determination is to be made, in an amount equal to the sum of: (1) all Indebtedness of the Company and its Restricted Subsidiaries outstanding under Credit Facilities and Hedging Obligations related thereto at such time, and (2) all other outstanding Indebtedness of the Company or any of its Restricted Subsidiaries, unless the instrument under which such Indebtedness is incurred expressly provides that such Indebtedness is subordinated to the Notes and the Guarantees. Notwithstanding anything to the contrary in the preceding sentence, Senior Debt will not include: (1) any liability for federal, state, local or other taxes owed or owing by the Company or any of its Restricted Subsidiaries; (2) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates that is by its term subordinate to the Notes; (3) any trade payables; or (4) any obligations with respect to any Capital Stock of the Company or any of its Restricted Subsidiaries. "Senior Debt to Consolidated Cash Flow Ratio" means, for any four full fiscal quarter period, the ratio of (x) Senior Debt at the time of determination to (y) Consolidated Cash Flow of the Company and its Restricted Subsidiaries for such period. "Shelf Registration Statement" means the shelf registration statement issued by the Company in connection with the offer and sale of Notes pursuant to a Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. 20 "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). "Subsidiary Guarantee" means any Guarantee by a Guarantor of the Company's payment Obligations under this Indenture and the Notes, executed pursuant to the provisions of this Indenture. "S&P" means Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., or any successor rating agency. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under TIA. "Transfer Restricted Securities" means securities that bear or are required to bear the Private Placement Legend set forth in Section 2.06(e)(i) hereof. "Treasury Rate" means, as of any Redemption Date, the yield to maturity as of such Redemption Date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the Redemption Date to April 1, 2009; provided, however, that if the period from the Redemption Date to April 1, 2009 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used. "Trustee" means the party named as such in the preamble to this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Global Note" means one or more Global Notes, substantially in the form of Exhibit A attached hereto, that bear the Global Note Legend, that do not and are not required to bear the Private Placement Legend and are deposited with or on behalf of and registered in the name of the Depositary or its nominee. "Unrestricted Subsidiary" means any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors of the Company, but only to the extent that such Subsidiary: 21 (1) has no Indebtedness other than Non-Recourse Debt; (2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not Guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company will be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. "U.S. Person" means a U.S. person as defined in Rule 902(k) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by 22 (2) the then outstanding principal amount of such Indebtedness. "Wholly-Owned Restricted Subsidiary" means a direct or indirect Restricted Subsidiary of the Company all of the Capital Stock of which, other than directors' qualifying shares, is owned by the Company or another Wholly-Owned Restricted Subsidiary. Section 1.02 Other Definitions. Defined in Term Section "Affiliate Transaction"..........................................4.11 "Asset Sale Offer" ..............................................3.09 "Authentication Order............................................2.02 "Change of Control Offer" .......................................4.15 "Change of Control Payment ......................................4.15 "Change of Control Payment Date" ................................4.15 "Company"....................................................Preamble "Covenant Defeasance"............................................8.03 "DTC" ...........................................................2.03 "Event of Default"...............................................6.01 "Excess Proceeds" ...............................................4.10 "Guarantors" ................................................Preamble "incur" .........................................................4.09 "Investment Grade Rating"........................................4.19 "Legal Defeasance" ..............................................8.02 "Offer Amount" ..................................................3.09 "Offer Period"...................................................3.09 "Paying Agent" ..................................................2.03 "Payment Default" ...............................................6.01 "Regulation S Global Note .......................................2.01 "Permitted Debt" ................................................4.09 "Purchase Date" .................................................3.09 "Redemption Date" ...............................................3.07 "Registrar" .....................................................2.03 "Restricted Payments" ...........................................4.07 "Rule 144A Global Note" .........................................2.01 "Suspended Covenant" ............................................4.19 Section 1.03 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; 23 "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means the Company and the Guarantors, respectively, and any successor obligor on the Notes. All other terms used in this Indenture that arc defined by the TIA, defined by TIA reference to another statute or defined by Commission rule under the TIA have the meanings so assigned to them. Section 1.04 Rules of Construction. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (iii) "or" is not exclusive; (iv) words in the singular include the plural, and in the plural include the singular; (v) provisions apply to successive events and transactions; and (vi) references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the Commission from time to time. ARTICLE 2. THE NOTES Section 2.01 Form and Dating. (a) General. The Notes and the Trustee's certificate of authentication will be substantially in the form of Exhibit A hereto. The Notes may be issued in the form of Definitive Notes or Global Notes, as specified by the Company. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes will be in denominations of $1,000 and integral multiples thereof. Notes issued in global form will be substantially in the form of Exhibit A attached hereto (including the Global Note Legend and the "Schedule of Exchanges in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note will represent such of the 24 outstanding Notes as will he specified therein and each will provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will he made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be hound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture will govern and be controlling. (b) Initial Notes. The Initial Notes will be offered and sold by the Company pursuant to a Purchase Agreement. The Initial Notes will be resold initially only to (i) QIBs in reliance on Rule 144A and (ii) Non-U.S. Persons in reliance on Regulation S. Initial Notes may thereafter be transferred to, among others, QIBs and purchasers in reliance on Regulation S, subject to the restrictions on transfer set forth herein. Initial Notes initially resold pursuant to Rule 144A will be issued initially in the form of one or more Global Notes in definitive, fully registered form (collectively, the "Rule 144A Global Note") and Initial Notes initially resold pursuant to Regulation S will be issued initially in the form of one or more Global Notes in definitive, fully registered form (collectively, the "Regulation S Global Note"), in each case without interest coupons and with the Global Note Legend and Private Placement Legend set forth in Exhibit A hereto, which will be deposited on behalf of the purchasers of the Initial Notes represented thereby with the Notes Custodian, and registered in the name of DTC or a nominee of the DTC, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Beneficial ownership interests in the Regulation S Global Note may be held only through Euroclear and Clearstream (as indirect participants in DTC) and will not be exchangeable for interests in the Rule 144A Global Note or a Definitive Note without a legend containing restrictions on transfer of such Note prior to the expiration of the Distribution Compliance Period and then only upon (x) certification in form reasonably satisfactory to the Trustee that Beneficial Ownership interests in such Regulation S Global Note are owned either by Non-U.S. Persons or U.S. Persons who purchased such interests in a transaction that did not require registration under the Securities Act and (y) in the case of an exchange for a Definitive Note, in compliance with Section 2.01(c) hereof. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided. (c) Book-Entry Provisions. This Section 2.01(c) will apply only to a Global Note deposited with or on behalf of the Depositary. The Company will execute and the Trustee will, in accordance with this Section 2.01(c), authenticate and deliver initially one or more Global Notes that (a) will be deposited upon issuance with the Trustee as custodian for the Depositary, in New York, New 25 York or Chicago, Illinois and (b) will be registered in the name of the Depositary or its nominee, in each case for credit to an account of a direct or indirect participant in Depositary. Participants in the Depositary will have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Note, and the Company, the Trustee and any agent of the Company or the Trustee will be entitled to treat the Depositary as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein will prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants, the operation of customary practices of such Depositary governing the exercise of the rights of a Holder of a beneficial interest in any Global Note. (d) Certificated Notes. Except as provided in this Section 2.01 or Section 2.03 or 2.04 hereof, owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of Definitive Notes. Section 2.02 Execution and Authentication. One Officer will sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid. A Note will not be valid until authenticated by the manual or facsimile signature of the Trustee. The signature will be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee will authenticate and deliver: (i) on the Issue Date, an aggregate principal amount of $150,000,000 9 1/4% Senior Notes Due 2014, (ii) Additional Notes for an original issue in an aggregate principal amount specified in the written order of the Company pursuant to this Section 2.02 and (iii) Exchange Notes for issue only in an Exchange Offer pursuant to a Registration Rights Agreement, for a like principal amount of Initial Notes or Additional Notes, in each case upon a written order of the Company signed by one Officer of the Company (an "Authentication Order"). Such order will specify the amount of the Notes to be authenticated and the date on which the original issue of the Notes is to be authenticated. The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent for service of notices and demands. 26 Section 2.03 Registrar and Paying Agent. The Company will maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar will keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee will act as such. The Company or any of its Restricted Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes. Section 2.04 Paying Agent to Hold Money in Trust. The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, interest, premium or Liquidated Damages, if any, on the Notes, and will notify the Trustee of any Default by the Company in making any such payment. While any such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) will have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee will serve as Paying Agent for the Notes. Section 2.05 Holder Lists. The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and will otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company will furnish to the Trustee, at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders and the Company will otherwise comply with TIA ss. 312(a). 27 Section 2.06 Transfer and Exchange. (a) Transfer and Exchange of Definitive Notes. When Definitive Notes are presented to the Registrar or a co-registrar with a request: (x) to register the transfer of such Definitive Notes or (y) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the Registrar or co-registrar will register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange: (i) are duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar or co-registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and (ii) if such Definitive Notes are required to bear a restricted securities legend, they are being transferred or exchanged pursuant to an effective registration statement under the Securities Act, pursuant to Section 2.06(b) hereof or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable: (A) if such Definitive Notes are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or (B) if such Definitive Notes are being transferred to the Company, a certification to that effect; or (C) if such Definitive Notes are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A, Regulation S or Rule 144 or (y) in reliance upon another exemption from the requirements of the Securities Act: (1) a certification to that effect (in the form set forth on the reverse of the Note) and (2) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to compliance with the restrictions set forth in the legend set forth in Section 2.06(e)(i) hereof. (b) Restrictions on Transfer of a Definitive Note for a Beneficial Interest in a Global Security. A Definitive Note may not be exchanged for a beneficial interest in a Rule 144A Global Note or a Regulation S Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with: (i) certification, in the form set forth on the reverse of the Note, that such Definitive Note is either (A) being transferred to a QIB in accordance with Rule 144A or (B) is being transferred after expiration of the Distribution Compliance Period by a 28 Person who initially purchased such Note in reliance on Regulation S to a buyer who elects to hold its interest in such Note in the form of a beneficial interest in the Regulation S Global Security; and (ii) written instructions directing the Trustee to make, or to direct the Notes Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Note (in the case of a transfer pursuant to clause (b)(i)(A)) or Regulation S Global Note (in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an increase in the aggregate principal amount of the Notes represented by the Rule 144A Global Note or Regulation S Global Note, as applicable, such instructions to contain information regarding the Depositary account to be credited with such increase, then the Trustee will cancel such Definitive Note and cause, or direct the Notes Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Notes Custodian, the aggregate principal amount of Notes represented by the Rule 144A Global Note or Regulation S Global Note, as applicable, to be increased by the aggregate principal amount of the Definitive Note to be exchanged and will credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Note or Regulation S Global Note, as applicable, equal to the principal amount of the Definitive Note so canceled. If no Rule 144A Global Notes or Regulation S Global Notes, as applicable, are then outstanding, the Company will issue and the Trustee will authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Rule 144A Global Note or Regulation S Global Note, as applicable, in the appropriate principal amount. (c) Transfer and Exchange of Global Notes. (i) The transfer and exchange of Global Notes or beneficial interests therein will be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Note will deliver to the Registrar a written order given in accordance with the Depositary's procedures containing information regarding the Participant account of the Depositary to be credited with a beneficial interest in the Global Note. The Registrar will, in accordance with such instructions, instruct the Depositary to credit to the account of the Person specified in such instructions a beneficial interest in the Global Note and to debit the account of the Person making the transfer the beneficial interest in the Global Note being transferred. (ii) If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar will reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar will reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Note from which such interest is being transferred. (iii) Notwithstanding any other provisions of this Indenture (other than the provisions set forth in Section 2.06(c)(v) hereof), a Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the 29 Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (iv) In the event that a Global Note is exchanged for Definitive Notes pursuant to Section 2.06(c)(v) hereof, prior to the consummation of an Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Notes, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.06 (including the certification requirements set forth on the reverse of the Initial Notes intended to ensure that such transfers comply with Rule 144A or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company. (v) A Global Note deposited with the Depositary or with the Trustee as Notes Custodian for the Depositary pursuant to Section 2.01 hereof will be transferred to the Beneficial Owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.06 hereof and (A) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or if at any time such Depositary ceases to be a "clearing agency" registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days of such notice, (B) an Event of Default has occurred and is continuing or (C) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes under this Indenture. Any Global Note that is transferable to the Beneficial Owners thereof pursuant to this Section 2.06(c)(v) will be surrendered by the Depositary to the Trustee located at its principal corporate trust office in Chicago, Illinois, to be so transferred, in whole or from time to time in part, without charge, and the Trustee will authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section 2.06(c)(v) will be executed, authenticated and delivered only in denominations of $1,000 principal amount and any integral multiple thereof and registered in such names as the Depositary shall direct. Any Definitive Note delivered in exchange for an interest in the Transfer Restricted Security will, except as otherwise provided by Section 2.06(e) hereof or unless not required by applicable law, bear the Private Placement Legend set forth in Exhibit A hereto. (d) Exchanges Between Regulation S Notes and Rule 144A Notes. Prior to the expiration of the Distribution Compliance Period, beneficial interests in a Regulation S Global Note may be exchanged for beneficial interests in the Rule 144A Note only if (i) such exchange occurs in connection with a transfer of the Notes pursuant to Rule 144A and (ii) the transferor first delivers to the Trustee a written certificate (in the form provided in this Indenture) to the effect that the Notes are being transferred to a Person (A) who the transferor reasonably believes to be a QIB; (B) purchasing for its own account or the account of a QIB in a transaction meeting the requirements of Rule 144A; and (C) in accordance with all applicable securities laws of the states of the United States and other jurisdictions. Beneficial interest in a Rule 144A Global Note may be transferred to a Person who takes delivery in the form of an interest in the Regulation S Global Note, whether before or 30 after the expiration of the Distribution Compliance Period, only if the transferor first delivers to the Trustee a written certificate (in the form provided in this Indenture) to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if such transfer occurs prior to the expiration of the Distribution Compliance Period, the interest transferred will be held immediately thereafter through Euroclear or Clearstream. Transfers involving exchanges of beneficial interests between the Regulation S Global Notes will be effected through the Depositary by means of an instruction originated by the Trustee through the DTC Deposit/Withdraw at Custodian system. Accordingly, in connection with any such transfer, appropriate adjustments will be made to reflect a decrease in the principal amount of the Regulation S Global Note and a corresponding increase in the principal amount of the Rule 144A Global Note or vice versa, as applicable. Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in the other Global Note will, upon transfer, cease to be an interest in such Global Note and will become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to the beneficial interest in such other Global Note for so long as it remains such an interest. The policies and practices of the Depositary may prohibit transfers of beneficial interests in the Regulation S Global Note prior to the expiration of the Distribution Compliance Period. (e) Legend. (i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each Note certificate evidencing the Global Notes (and all Notes issued in exchange therefor or in substitution thereof) will bear the Private Placement Legend in substantially the following form: THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (5) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES 31 ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE BLUE SKY LAWS OF THE STATES OF THE UNITED STATES. Each Global Note will also hear the Global Note Legend in substantially the following form: THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(c) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. Each Definitive Note will also bear the following additional legend: IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Note) pursuant to Rule 144, the Registrar will permit the transferee thereof to exchange such Transfer Restricted Security for a certificated Note that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Note). (iii) After a transfer of any Initial Notes pursuant to and during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Notes, all requirements pertaining to legends relating to the restrictions on transfer relating to the Securities Act on such Initial Note will cease to apply, the requirements requiring that any such Initial Note issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Note or an Initial Note in global form, in each case without restrictive transfer legends, will be available to the transferee of the Holder of such Initial Notes upon exchange of such transferring Holder's certificated Initial Note or appropriate directions to transfer such Holder's interest in the Global Note, as applicable. (iv) Upon the consummation of an Exchange Offer with respect to the Initial Notes, all requirements pertaining to such Initial Notes that Initial Notes issued to certain 32 Holders be issued in global form will still apply with respect to Holders of Such Initial Notes that do not exchange their Initial Notes, and Exchange Notes in certificated or global form, in each case without the restrictive securities legend relating to the restrictions on transfer relating to the Securities Act set forth in Exhibit A hereto will be available to Holders that exchange such Initial Notes in such Exchange Offer. (f) Cancellation or Adjustment of Global Note. At such time as all beneficial interests in a Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, purchased or canceled, each such Global Note will be returned to or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for certificated Notes, redeemed, purchased or canceled, the principal amount of Notes represented by such Global Note will be reduced and an adjustment will be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction. (g) General Provisions Relating to Transfers and Exchanges of Securities. (i) To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Definitive Notes and Global Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar's or co-registrar's request. (ii) No service charge will be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.15 and 9.05 of this Indenture). (iii) Prior to the due presentation for registration of transfer of any Note, the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of, interest, premium and Liquidated Damages, if any, on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar will be affected by notice to the contrary. (iv) Neither the Registrar nor the Company will be required: (A) to issue, to register the transfer of or to Exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection; (B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or 33 (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date. (v) All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture will evidence the same debt and will be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange. (vi) The Trustee will authenticate Definitive Notes and Global Notes in accordance with the provisions of Section 2.02 hereof. (h) No Obligation of the Trustee. (i) The Trustee will have no responsibility or obligation to any Beneficial Owner of a Global Note, a Participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any Participant, with respect to any ownership interest in the Notes or with respect to the delivery to any Participant, Beneficial Owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes will be given or made only to or upon the order of the registered Holders (which will be the Depositary or its nominee in the case of a Global Note). The rights of Beneficial Owners in any Global Note will be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and will be fully protected in relying upon information furnished by the Depositary with respect to its Participants and any Beneficial Owners. (ii) The Trustee will have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or Beneficial Owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Section 2.07 Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company will issue and the Trustee, upon the written order of the Company signed by one Officer of the Company, will authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company and the Trustee may charge for their expenses in replacing a Note. 34 Every replacement Note is an additional obligation of the Company and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08 Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay all principal, interest, premium and Liquidated Damages, if any, on that date with respect to the Notes, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest. Section 2.09 Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that a Trustee knows are so owned will be so disregarded. Section 2.10 Temporary Notes. Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee will authenticate temporary Notes upon a written order of the Company signed by one Officer of the Company. Temporary Notes will be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes and that are reasonably acceptable to the Trustee. Without unreasonable delay, the Company will prepare and the Trustee will authenticate Notes in exchange for temporary Notes. Section 2.11 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for 35 registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will destroy canceled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Notes will be delivered to the Company. The Company may not issue new Notes to replace Notes that it has redeemed, paid or delivered to the Trustee for cancellation. Section 2.12 Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company will fix or cause to be fixed each such special record date and payment date; provided that no such special record date will be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) will mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of defaulted interest to be paid. Section 2.13 CUSIP Numbers. The Company in issuing the Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee will use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption will not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers. Section 2.14 Issuance of Additional Notes. The Company will be entitled, subject to its compliance with Section 4.09 hereof, to issue Additional Notes under this Indenture with identical terms as the Initial Notes issued on the Issue Date, other than with respect to the date of issuance and issue price. The Initial Notes issued on the Issue Date, any Additional Notes and all Exchange Notes issued in exchange therefor will be treated as a single class for all purposes under this Indenture. With respect to any Additional Notes, the Company will set forth in a resolution of the Board of Directors of the Company and an Officers' Certificate, copies of which will be delivered to the Trustee, the following information: (i) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture; (ii) the issue price, the issue date and the CUSIP number of such Additional Notes; provided, however, that no Additional Notes may be issued at a price that would 36 cause such Additional Notes to have "original issue discount" within the meaning of Section 1273 of the Internal Revenue Code of 1986, as amended; and (iii) whether such Additional Notes will be Transfer Restricted Securities or will be issued in the form of Exchange Notes. ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01 Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it will furnish to the Trustee, at least 45 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption will occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption prices. Section 3.02 Selection of Notes to be Redeemed or Purchased. If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee will select Notes for redemption or purchase as follows: (i) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed or (ii) if the Notes are not so listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee deems fair and appropriate; provided that no Notes of $1,000 or less will be redeemed in part. The Trustee will promptly notify the Company in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, will be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase. Section 3.03 Notice of Redemption. Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company will mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Article 8 or 11 hereof. 37 The notice will identify the Notes to be redeemed (including CUSIP Numbers, if any) and will state: (i) the redemption date; (ii) the redemption price; (iii) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note; (iv) the name and address of the Paying Agent; (v) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (vi) that on the redemption date and, if applicable, upon the satisfaction of any conditions to such redemption set forth in such notice of redemption, the redemption price will become due and payable upon each such Note or portion thereof, and that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (vii) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (viii) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee will give the notice of redemption in the Company's name and at its expense; provided, however, that the Company has delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04 Effect of Notice of Redemption. Subject to the immediately following sentence, once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may, at the Company's discretion, be subject to one or more conditions precedent. Section 3.05 Deposit of Redemption or Purchase Price. Prior to 10:00 a.m. on the Business Day prior to the redemption date, the Company will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return to the Company any money 38 deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest on, all Notes to be redeemed or purchased. If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest will be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest will be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.06 Notes Redeemed or Purchased in Part. Upon surrender of a Note that is redeemed or purchased in part, the notice of redemption that relates to that Note will state the portion of the principal amount of that Note that is to be redeemed or purchased. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder upon cancellation of the original Note. Section 3.07 Optional Redemption. (a) At any time prior to April 1, 2007, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under this Indenture at a redemption price of 109.250% of the principal amount, plus accrued and unpaid interest and Liquidated Damages, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings by the Company or from the cash contribution of equity capital (other than Disqualified Stock) to the Company; provided that: (i) at least 65% of the aggregate principal amount of Notes (including Additional Notes, if any) issued under this Indenture remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and (ii) the redemption occurs within 90 days of the date of the closing of such Equity Offering. Notice of any redemption upon an Equity Offering may be given prior to completion of the related Equity Offering, and any such notice or redemption may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent, including, but not limited to, the completion of the related Equity Offering. (b) At any time prior to April 1, 2009, the Company may also redeem all or a part of the Notes, upon not less than 30 nor more than 60 days' notice mailed by first class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount 39 of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption (the "Redemption Date"). (c) Except pursuant to Sections 3.07(a) and 3.07(b) hereof, the Notes will not be redeemable at the Company's option prior to April 1, 2009. (d) After April 1, 2009, the Company may redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, on the Notes redeemed, to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on April 1 of the years indicated below: Year Percentage 2009........................................ 104.625% 2010........................................ 103.083% 2011 ....................................... 101.542% 2012 and thereafter......................... 100.000% (e) Any redemption pursuant to this Section 3.07 will be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. Section 3.08 Mandatory Redemption. The Company is not required to make any mandatory redemption or sinking fund payments with respect to the Notes. Section 3.09 Offer to Purchase by Application: of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Company is required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it will follow the procedures specified below. The Asset Sale Offer will be made to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets. The Asset Sale Offer will remain open for a period of at least 20 Business Days following its commencement and not longer than 30 Business Days, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company will apply all Excess Proceeds (the "Offer Amount") to the purchase of Notes and such other pari passu Indebtedness (on a pro rata basis, if applicable) or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same manner as interest payments are made. 40 If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest and Liquidated Damages, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a notice to the Trustee and each of the Holders. The notice will contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer will be made to all Holders. The notice, which will govern the terms of the Asset Sale Offer, will state: (i) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer will remain open; (ii) the Offer Amount, the purchase price and the Purchase Date; (iii) that any Note not tendered or accepted for payment will continue to accrue interest; (iv) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase Date; (v) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in integral multiples of $1,000 only; (vi) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (vii) that Holders will be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Note purchased; (viii) that, if the aggregate principal amount of Notes and other pari passu Indebtedness surrendered by Holders exceeds the Offer Amount, the Company will select the Notes and other pari passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness surrendered (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, will be purchased); and 41 (ix) that Holders whose Notes were purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof and other pari passu Indebtedness tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes and other pari passu Indebtedness tendered, and will deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, will promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company will promptly issue a new Note and the Trustee, upon written request from the Company, will authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted will be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Asset Sale Offer on the Purchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 will be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4. COVENANTS Section 4.01 Payment of Notes. The Company shall pay or cause to be paid the principal of, interest, premium and Liquidated Damages, if any, on the Notes on the dates and in the manner provided in the Notes. Principal, interest, premium and Liquidated Damages, if any, shall be considered paid on the date due if the Paying Agent. If other than the Company or a Subsidiary thereof holds, as of 10:00 a.m. Eastern Time on the due date, money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, interest and premium, if any, then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1.0% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02 Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, the City of New York or Chicago, Illinois, an office or agency (which may be an office of the Trustee or an affiliate of 42 the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York or in Chicago, Illinois, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof. Section 4.03 Reports. (a) Whether or not required by the rules and regulations of the Commission, so long as any Notes are outstanding, the Company shall furnish to the Trustee for mailing to the Holders, within the time periods specified in the Commission's rules and regulations: (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by the Company's certified independent accountants; and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by clause (i) hereof shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in the "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company. (b) Following the consummation of the Exchange Offer contemplated by the Registration Rights Agreement, whether or not required by the Commission, the Company shall file a copy of all of the information and reports referred to in Sections 4.03(a)(i) and (ii) hereof with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and 43 make such information available to prospective investors upon request. The Company shall at all times comply with TIA ss. 314(a). (c) The Company and the Guarantors shall furnish to the Holders and to prospective investors, upon the request of such Holders, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Notes are not freely transferable under the Securities Act. Section 4.04 Compliance Certificate. (a) The Company and each Guarantor (to the extent that such Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of, interest, premium and Liquidated Damages, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) hereof shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, promptly upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.05 Taxes. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are 44 contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders. Section 4.06 Stay, Extension and Usury Laws. Each of the Company and the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07 Restricted Payments. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution (A) on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or (B) to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such, other than dividends or distributions (1) payable in Equity Interests (other than Disqualified Stock) of the Company or (2) to the Company or a Restricted Subsidiary of the Company; (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness that is subordinated to the Notes or the Subsidiary Guarantees (excluding any intercompany Indebtedness between the Company and any of its Restricted Subsidiaries), except a payment of interest or principal at Stated Maturity thereof; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) hereof being collectively referred to as "Restricted Payments"); unless, at the time of and after giving effect to such Restricted Payment: (A) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; and (B) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; and (C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue 45 Date (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (vi), (vii), (viii), (ix) and (x) of Section 4.07(b) hereof), is less than the sum, without duplication of: (I) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the fiscal quarter in which the Issue Date occurs to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (II) 100% of the fair market value of the aggregate net proceeds received by the Company since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company), provided that such aggregate net proceeds are limited to cash and Cash Equivalents and other assets used or useful in a Permitted Business or the Capital Stock of a Person engaged in a Permitted Business, plus (III) the sum of (1) the aggregate amount returned in cash on or with respect to any Restricted Investment in or to a Person that was made after the Issue Date whether through interest payments, principal payments, dividends or other distributions or payments, plus (2) the net cash proceeds received by the Company or any of its Restricted Subsidiaries from the disposition of all or any portion of such Restricted Investment, provided, however, that the sum of clauses (1) and (2) above shall not exceed the sum of (I) the aggregate amount of all such Restricted Investments made in or to such Person subsequent to the Issue Date and (II) without duplication of clause (I), one half of the gain from any disposition of all or any portion of such Restricted Investments made subsequent to the Issue Date, plus (IV) to the extent that after the Issue Date, any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary or is merged, consolidated or amalgamated with or into or transfers or conveys assets to, or is liquidated into the Company or any of its Restricted Subsidiaries, the lesser of (1) the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation, merger, consolidation or amalgamation (or of the assets transferred or conveyed, as applicable) and (2) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary; plus (V) $7,500,000. (b) The provisions of Section 4.07(a) shall not prohibit: 46 (i) the payment of any dividend or the consummation of any irrevocable redemption of debt that is subordinate to the Notes within 60 days after the date of declaration of the dividend or giving of any such redemption notice, as the case may be, if at said date of declaration or notice the dividend or redemption payment would have complied with the provisions of this Indenture; (ii) the redemption, repurchase, retirement or other acquisition of subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (C)(II) of Section 4.07(a) hereof; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing of Indebtedness; (iv) so long as no Default or Event of Default has occurred and is continuing, the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (v) so long as no Default or Event of Default has occurred and is continuing, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company (A) held by any current or former director, officer or employee of the Company or any of its Restricted Subsidiaries (or permitted transferees of such directors, officers or employees) and (B) in the open market to the extent such shares are acquired to satisfy a current obligation to deliver shares in connection with the exercise of stock options or similar rights or the matching contributions under any 401(k) plan subject to the provisions of Section 401 of the Internal Revenue Code of 1986, as amended, in each case pursuant to the terms of the agreements (including any equity subscription agreement, stock option agreement, shareholders' agreement, employment agreement or similar agreement) or plans (or amendments thereto); provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not in any fiscal year exceed $3,000,000 unless the aggregate amount of such repurchases, redemptions, acquisitions and retirement in any fiscal year was less than $3,000,000 in which case the Company may carry-forward the unused amounts to the immediately succeeding fiscal year; provided, however, the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $6,000,000 in any one fiscal year; (vi) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; (vii) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or preferred stock of any Restricted Subsidiary of 47 the Company issued on or after the Issue Date in accordance with the Fixed Charge Coverage Ratio test described in Section 4.09(a) hereof to the extent such dividends are included in the definition of "Fixed Charges"; provided that no Default or Event of Default shall have occurred and be continuing immediately after making such Restricted Payment; (viii) so long as no Default or Event of Default has occurred and is continuing, the purchase by the Company of fractional shares arising out of stock dividends, splits or combinations or business combinations; (ix) so long as no Default or Event of Default has occurred and is continuing, the repurchase, redemption or other acquisition of the Company's issued and outstanding common stock pursuant to the Company's stock repurchase program as in effect from time to time in an amount not to exceed $10,000,000; and (x) so long as no Default or Event of Default has occurred and is continuing, other Restricted Payments since the Issue Date in an aggregate amount not to exceed $12,500,000. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this Section 4.07 shall be determined by the Board of Directors of the Company, whose good faith determination shall be conclusive and shall be delivered to the Trustee. Such Board of Director's determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment bank firm of national standing if the fair market value exceeds $10,000,000. Not later than the last day of each fiscal quarter in which any Restricted Payment was made, the Company shall deliver to the Trustee an Officers' Certificate stating that each Restricted Payment made in such fiscal quarter is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture. Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (ii) make loans or advances to the Company or any of its Restricted Subsidiaries; or 48 (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. (b) The restrictions in Section 4.08(a) hereof shall not apply to encumbrances or restrictions existing under or by reason of: (i) agreements governing Existing Indebtedness and Credit Facilities as in effect on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, restructurings, replacements or refinancings of those agreements; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, restructurings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Issue Date; (ii) this Indenture, the Notes, the Exchange Notes and the related Subsidiary Guarantees; (iii) applicable law, rule, regulation or order; (iv) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition or assumed by the Company or any of its Restricted Subsidiaries in connection with an acquisition of all or substantially all of the assets of a Person (except to the extent such Indebtedness or Capital Stock was incurred or assumed in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred; (v) customary non-assignment provisions in leases, licenses or other contracts entered into in the ordinary course of business and consistent with past practices; (vi) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations permitted under this Indenture that impose restrictions of the nature described in Section 4.08(a)(iii) hereof on the property purchased or leased; (vii) any agreement for the sale or other disposition of a Restricted Subsidiary of the Company that restricts distributions by that Restricted Subsidiary pending its sale or other disposition; (viii) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; 49 (ix) Liens securing Indebtedness otherwise permitted to be incurred under Section 4.12 hereof that limit the right of the debtor to dispose of the assets subject to such Liens; (x) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; and (xi) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and any Guarantor may incur Indebtedness (including Acquired Debt), the Company may issue Disqualified Stock or any Guarantor may issue preferred stock, if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is to be incurred or such Disqualified Stock or preferred stock is to be issued would have been at least 2.25 to 1.0, if such incurrence is on or prior to October 1, 2005 and 2.50 to 1.0 if such incurrence is after October 1, 2005, determined, in each case, on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. (b) The provisions of Section 4.09(a) shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company and/or any Guarantor of additional Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount, at any one time outstanding under this clause (i) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and the Guarantors thereunder), not to exceed $75,000,000; (ii) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness; (iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Subsidiary Guarantees issued on the Issue Date and Exchange Notes and the related Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement; 50 (iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (iv), not to exceed $5,000,000 at any time outstanding; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clause (ii), (iii) or (v) of this Section 4.09(b); (vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that: (A) if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Subsidiary Guarantee, in the case of a Guarantor; and (B) (I) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (II) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vi); (vii) the incurrence by the Company or any of its Subsidiaries of Hedging Obligations; (viii) the Guarantee by the Company or any of the Guarantors of Indebtedness of the Company or any Guarantor that was permitted to be incurred by another provision of this Section 4.09; (ix) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (ix); (x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers' compensation claims, self-insurance obligations, 51 bankers' acceptances, and performance and surety bonds and completion guarantees in the ordinary course of business; (xi) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; (xii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness consisting of guarantees, indemnities, holdbacks or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets; provided, however, that such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary; and (xiii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xiii), not to exceed $20,000,000. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the accumulation of dividends on Disqualified Stock or preferred stock (to the extent not paid) and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Notwithstanding anything to the contrary in this Section 4.09, in no event will the Company or any of its Restricted Subsidiaries be permitted to refinance the Convertible Senior Subordinated Notes, in whole or in part, with the proceeds of Senior Debt. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness (including Acquired Debt) meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xiii) of Section 4.09(b) hereof, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company shall be permitted to divide and classify (or later classify or reclassify) in whole or in part, in its sole discretion, such item of Indebtedness in any manner that complies with this Section 4.09. Notwithstanding anything to the contrary contained in this Section 4.09, any increase in the amount of Indebtedness solely by reason of currency fluctuation shall not be considered an incurrence of Indebtedness for purposes of this Section 4.09. For purposes of determining compliance with this Section 4.09, the U.S. dollar-equivalent principal amount of Indebtedness denominated in any currency other than U.S. dollars shall be calculated based on the relevant currency exchange rate in effect as of the date such Indebtedness is incurred. 52 Section 4.10 Asset Sales. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the Company (or its Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of; (ii) the fair market value is determined by the Company's Board of Directors and evidenced by resolution of such Board of Directors set forth in an Officer's Certificate delivered to the Trustee; and (iii) at least 75% of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following shall be deemed to be cash: (A) any liabilities, as shown on the Company's or such Restricted Subsidiary's most recent balance sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets as a result of which assumption the Company or such Restricted Subsidiary is released from further liability; (B) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are within 90 days of such Asset Sale converted into cash by the Company or such Restricted Subsidiary, to the extent of the cash received in that conversion; and (C) any stock or assets of the kind referred to in clause (ii) or (iv) of Section 4.10(b) hereof (b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company (or the applicable Restricted Subsidiary, as the case may be) may apply those Net Proceeds, at its option: (i) to repay secured Indebtedness of the Company or any Guarantor under a Credit Facility; (ii) to acquire (or enter into a binding agreement to acquire; provided that such commitment shall be subject only to customary conditions (other than financing) and such acquisition shall be consummated within 90 days after the end of such 360-day period) all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business; (iii) to make a capital expenditure; or 53 (iv) to acquire (or enter into a binding agreement to acquire; provided that such commitment shall be subject only to customary conditions (other than financing) and such acquisition shall be consummated within 90 days after the end of such 360-day period) other long-term assets that are used or useful in a Permitted Business or the minority interest in any Restricted Subsidiary that is not a Wholly-Owned Restricted Subsidiary. Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. (c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.10(b) hereof shall constitute "Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $5,000,000, the Company shall make an Asset Sale Offer to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100% of principal amount plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase, and shall be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with Section 3.09 hereof or this Section 4.10, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under Section 3.09 hereof or this Section 4.10 by virtue of such conflict. Section 4. 11 Transactions with Affiliates. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless: (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with a Person who was not an Affiliate; and 54 (ii) the Company delivers to the Trustee: (A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5,000,000, a resolution of the Board of Directors of the Company set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.11 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company; and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10,000,000, a written opinion from an independent investment banking, accounting or appraisal firm of nationally recognized standing to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or not materially less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm's-length transaction with a Person who was not an Affiliate. (b) The foregoing provisions shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of Section 4.11(a) hereof (i) any employment agreements or arrangements, employee benefit plans or arrangements, officer and director indemnification agreements or arrangements or other similar agreements or arrangements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; (ii) transactions between or among the Company and/or its Restricted Subsidiaries; (iii) transactions with a Person that is an Affiliate of the Company solely because the Company or any of its Restricted Subsidiaries owns an Equity Interest in, or controls, such Person; (iv) payment of reasonable directors' fees and indemnity provided on behalf of officers, directors or employees of the Company or any of its Restricted Subsidiaries; (v) any issuance or sale of Equity Interests (other than Disqualified Stock) to Affiliates of the Company; (vi) Permitted Investments and Restricted Payments that are permitted by the provisions of this Indenture described in Section 4.07 hereof, (vii) the issuance of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or funding of, employment arrangements, stock options and stock ownership plans or similar employee benefit plans approved by the Board of Directors of the Company in good faith and loans to employees of the Company and its Subsidiaries that are approved by the Board of Directors of the Company in good faith; and 55 (viii) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case on ordinary business terms consistent with past practices and otherwise in compliance with the terms of this Indenture, which are fair to the Company or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors or senior management of the Company, or are on terms at least as favorable as could reasonably have been obtained at such time from a Person that is not an Affiliate of the Company or any of its Restricted Subsidiaries. Section 4.12 Liens. The Company shall not and shall not permit any of its Restricted Subsidiaries to create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) securing Indebtedness or trade payables upon any of their property or assets, now owned or hereafter acquired, unless all payments due under this Indenture and the Notes are secured on an equal and ratable basis (or on a senior basis to, in the case of Obligations subordinated in right or payment to the Notes) with the Obligations so secured until such time as such Obligations are no longer secured by a Lien. Section 4.13 Business Activities. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Subsidiaries taken as a whole. Section 4.14 Corporate Existence. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors determines that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders. Section 4.15 Offer to Repurchase upon Change of Control. (a) Upon the occurrence of a Change of Control, each Holder shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, on the Notes repurchased to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 56 60 days from the date such notice is mailed (the "Change of Control Payment Date"). Such notice, which shall govern the terms of the Change of Control Offer, shall state: (i) that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered shall be accepted for payment; (ii) the purchase price and the purchase date; (iii) that any Note not tendered shall continue to accrue interest and Liquidated Damages, if any; (iv) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (v) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer shall be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (vi) that Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase and a statement that such Holder is withdrawing his election to have the Notes purchased; and (vii) that Holders whose Notes are being purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.15, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.15 by virtue of such conflict. (b) On the Change of Control Payment Date, the Company shall, to the extent lawful: (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes that are properly tendered, the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note shall be in a principal amount of $1,000 or an integral multiple of $1,000. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. 57 (c) Notwithstanding anything to the contrary in this Section 4.15, the Company shall not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer or (2) a notice of redemption is outstanding pursuant to Section 3.07 hereof, unless and until there is a default in payment of the applicable redemption price. (d) A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer. Notes repurchased by the Company pursuant to a Change of Control Offer shall have the status of Notes issued but not outstanding or shall be retired and canceled, at the option of the Company. Notes purchased by a third party pursuant to clause (c) of this Section 4.15 shall have the status of Notes issued but not outstanding. (e) The provisions described above that require the Company to make a Change of Control Offer following a Change of Control shall be applicable whether or not any other provisions of this Indenture are applicable. Section 4.16 Payments for Consent. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Section 4.17 Additional Subsidiary Guarantees. If (i) the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary after the Issue Date that Guarantees any Credit Facilities or (ii) any Foreign Subsidiary Guarantees any Credit Facilities, then in each case such Subsidiary shall become a Guarantor and execute a supplemental indenture substantially in the form of Exhibit B hereto (and the form of Notation on Senior Note, attached hereto as Exhibit C) and deliver an Opinion of Counsel satisfactory to the Trustee within 10 Business Days of the date on which such Subsidiary executed the Guarantee with respect to any such Credit Facilities and substantially to the effect that such Guarantee is a legal, valid and binding obligation of such Subsidiary, enforceable in accordance with its terms (subject to customary exceptions); provided, however, that this Section 4.17 shall not apply to any Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with Section 4.18 hereof for so long as such Subsidiary continues to constitute an Unrestricted Subsidiary. Section 4.18 Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default or Event of 58 Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary properly designated shall be deemed to be an Investment made as of the time of the designation and shall reduce the amount available for Restricted Payments under Section 4.07 hereof or under one or more clauses of the definition of Permitted Investments, as determined by the Company. That designation shall only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default. Section 4.19 Changes in Covenants When Notes Rated Investment Grade. (a) During any period of time that the Notes have a rating equal to or greater than BBB- by S&P and Baa3 by Moody's (each such rating, an "Investment Grade Rating") and no Default or Event of Default has occurred and is continuing, the Company and its Subsidiaries shall no longer be subject to the provisions of the following covenants: (i) Section 4.07 hereof; (ii) Section 4.08 hereof; (iii) Section 4.09 hereof; (iv) Section 4.10 hereof; (v) Section 4.11 hereof; (vi) Section 4.13 hereof; (vii) Section 4.15 hereof; (viii) Section 4.16 hereof; and (ix) Section 4.18 hereof. (collectively, the "Suspended Covenants"), provided, however, that the provisions of this Indenture described under the following sections shall not be so terminated: (i) Section 4.03 hereof; (ii) Section 4.12 hereof, (iii) Section 4.17 hereof; and (iv) Section 5.01 hereof, provided, however, the Company shall no longer be subject to clause (iv) of Section 5.01 hereof. 59 (b) In the event that the Company and any of its Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of clause (a) of this Section 4.19 and that subsequently the Notes cease to have an Investment Grade Rating from either S&P or Moody's, as a result of a downgrade, withdrawal of rating or otherwise, then the Company and its Subsidiaries shall from such time and thereafter again be subject to the Suspended Covenants. ARTICLE 5. SUCCESSORS Section 5.01 Merger, Consolidation or Sale of Assets. Neither the Company nor any of its Restricted Subsidiaries shall, directly or indirectly, (a) consolidate or merge with or into another Person (whether or not the Company or a Restricted Subsidiary of the Company is the surviving corporation); or (b) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless: (i) either (A) the Company or any Restricted Subsidiary of the Company is the surviving corporation or (B) the Person formed by or surviving any such consolidation or merger (if other than the Company or any Restricted Subsidiary of the Company) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia; (ii) the Person formed by or surviving any such consolidation or merger (if other than the Company or any Restricted Subsidiary of the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company or its Restricted Subsidiaries, as applicable under the Notes, this Indenture, the Registration Rights Agreement and the Subsidiary Guarantee, if any, pursuant to agreements reasonably satisfactory to the Trustee; (iii) immediately after such transaction, no Default or Event of Default exists; and (iv) in the case of the consolidation or merger of the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition has been made or, in the case of a consolidation or merger of a Restricted Subsidiary of the Company or the sale, assignment, transfer, conveyance or other disposition of the property or assets of the Restricted Subsidiary, shall, in each case, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness under the Fixed Charge Coverage Ratio test in Section 4.09(a) hereof or have a Fixed Charge Coverage Ratio calculated in accordance with Section 4.09(a) hereof that is no less than the Fixed Charge Coverage Ratio of the Company of the Company immediately prior to such transaction. 60 Neither the Company nor any of its Restricted Subsidiaries may, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. Notwithstanding the foregoing: (A) the Company or any of its Restricted Subsidiaries may merge with an Affiliate that has no significant assets or liabilities and was incorporated solely for the purpose of reincorporating the Company or such Restricted Subsidiary in another jurisdiction within the United States; and (B) any Restricted Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties and assets to the Company or to a Subsidiary that is a Guarantor. Section 5.02 Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of, interest, premium and Liquidated Damages, if any, on the Notes except in the case of a sale of all of the Company's assets in a transaction that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01 Events of Default. An "Event of Default" occurs if: (i) the Company defaults in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes and such default continues for a period of 30 days; (ii) the Company defaults in the payment when due of the principal of or premium, if any, on the Notes; (iii) the Company or any of its Restricted Subsidiaries fails to comply with any of the provisions of Section 4.10, 4.15 or 5.01 hereof; 61 (iv) the Company or any of its Restricted Subsidiaries fails to comply with any of the other agreements in this Indenture or the Notes for a period of 60 days after receipt of notice to comply; (v) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, which default: (A) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (B) results in the acceleration of such Indebtedness prior to its Stated Maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which being so accelerated, in either case aggregates $5,000,000 or more; (vi) the Company or any of its Restricted Subsidiaries fails to pay final judgments aggregating in excess of $5,000,000 (exclusive of amounts covered by insurance), which judgments are not paid, discharged or stayed for a period of 60 days; (vii) except as permitted by this Indenture, any Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its Obligations under its Subsidiary Guarantee; (viii) the Company or any of its Restricted Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a custodian of it or for all or substantially all of its property, (D) makes a general assignment for the benefit of its creditors or (E) generally is not paying its debts as they become due; or 62 (ix) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (B) appoints a custodian of the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (C) orders the liquidation of the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days. Section 6.02 Acceleration. In the case of an Event of Default specified in clause (viii) or (ix) of Section 6.01 hereof, with respect to the Company or any Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. However, a Default under clause (iv) or (v) above will not constitute an Event of Default until the Trustee or the Holders of 25% in aggregate principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, an equivalent premium will also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to April 1, 2009 by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to that date, then the premium specified in this Indenture with respect to the first year that the Notes may be redeemed at the Company's option will also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes. Section 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of, interest, premium and Liquidated 63 Damages, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default will not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04 Waiver of Past Defaults. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, interest, premium or Liquidated Damages, if any, on the Notes; provided that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration, if the rescission would not conflict with any judgment or decree or if all existing Events of Default have been cured or waived. Upon any such waiver, such Default will cease to exist, and any Event of Default arising therefrom will be deemed to have been cured for every purpose of this Indenture; but no such waiver will extend to any subsequent or other Default or impair any right consequent thereon. In the event an Event of Default described under (vi)(a) of Section 6.01 hereof has occurred and is continuing, such Event of Default shall be automatically annulled if the Payment Default triggering such Event of Default under (vi) of Section 6.01 (a) hereof will be remedied or cured by the Company or a Restricted Subsidiary of the Company or waived by the holders of the relevant Indebtedness within 60 days of its occurrence and all other Events of Default, if any, under this Indenture have been cured and waived. Section 6.05 Control by Majority. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of other Holders or that may involve the Trustee in personal liability. Section 6.06 Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; 64 (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. Section 6.07 Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal of, interest, premium and Liquidated Damages, if any, on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, will not be impaired or affected without the consent of such Holder. Section 6.08 Collection Suit by Trustee. If an Event of Default specified in Section 6.01(i) or (ii) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, interest, premium and Liquidated Damages, if any, remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as will be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09 Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and will be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee consents to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under 65 Section 7.07 hereof out of the estate in any such proceeding, is denied for any reason, payment of the same will be secured by a Lien on, and will be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained will be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10 Priorities. If the Trustee collects any money pursuant to this Article 6, it will pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders for amounts due and unpaid on the Notes for principal, interest, premium and Liquidated Damages, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, interest, premium and Liquidated Damages, if any, respectively; and Third: to the Company or to such party as a court of competent jurisdiction directs. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. Section 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE Section 7.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of 66 care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations will be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this paragraph does not limit the effect of Section 7.01(b) hereof; (ii) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to Section 7.01(a), (b) and (c) hereof. (e) No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02 Rights of Trustee. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in such document. 67 (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company will be sufficient if signed by an Officer of the Company. (f) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders will have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (g) The Trustee will not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default is received by the Trustee at the Corporate Trust Office of the Trustee and such notice references the Notes and this Indenture. (h) In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Holders, each representing less than a majority in aggregate principal amount of the Notes outstanding, pursuant to the provisions of this Indenture, the Trustee, in its sole discretion, may determine what action, if any, will be taken. (i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and will be enforceable by, the Trustee in connection with the performance of its duties under this Indenture, and to each agent, custodian and other Person employed to act hereunder. Section 7.03 Individual Rights of Trustee. The Trustee or any Affiliate of the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest, it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as Trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. 68 Section 7.04 Trustee's Disclaimers. The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it will not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05 Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee will mail to Holders a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, interest, premium or Liquidated Damages, if any, on any Note, the Trustee may withhold from Holders the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders. Section 7.06 Reports by Trustee to Holders. (a) Within 60 days after each May 15 beginning with the May 15 following the Issue Date, and for so long as Notes remain outstanding, the Trustee will mail to the Holders a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the 12 months preceding the reporting date, no report need be transmitted). The Trustee also will comply with TIA ss. 313(b)(2). The Trustee will also transmit by mail all reports as required by TIA ss. 313(c). (b) A copy of each report at the time of its mailing to the Holders will be mailed to the Company and filed with the Commission and each stock exchange on which the Notes are listed in accordance with TIA ss. 313(d). The Company will promptly notify the Trustee when the Notes are listed on any stock exchange. Section 7.07 Compensation and Indemnity. (a) The Company will pay to the Trustee from time to time such compensation as the Company and the Trustee from time to time have agreed in writing for its acceptance of this Indenture and services hereunder. The Trustee's compensation will not be limited by any law on compensation of a trustee of an express trust. The Company will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. (b) The Company will indemnify the Trustee or any predecessor Trustee against any and all losses, liabilities or expenses, including taxes (except for taxes based upon the income of the Trustee), incurred by it arising out of or in connection with the acceptance or 69 administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company, the Guarantors, any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence or bad faith. The Trustee will notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company will not relieve the Company or any of its Guarantors of its obligations hereunder. The Company or such Guarantor will defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Company will pay the reasonable fees and expenses of such counsel. The Company or any of the Guarantors need not pay for any settlement made without their consent, which consent will not be unreasonably withheld. (c) The obligations of the Company and the Guarantors under this Section 7.07 will survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee. (d) To secure the Company's payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal of, interest, premium and Liquidated Damages, if any, on particular Notes. Such Lien will survive the satisfaction and discharge of this Indenture. (e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(ix) or (x) hereof occurs, the expenses and the compensation for such services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. (f) The Trustee will comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. Section 7.08 Replacement of Trustee. (a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. (b) The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (i) the Trustee fails to comply with Section 7.10 hereof; (ii) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (iii) a custodian or public officer takes charge of the Trustee or its property; or 70 (iv) the Trustee becomes incapable of acting. (c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. (d) If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Company's expense), the Company, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. (e) If the Trustee, after written request by any Holder of a Note who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee, provided that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee. Section 7.09 Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee. Section 7.10 Eligibility; Disqualification. There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. This Indenture will always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). 71 Section 7. 11 Preferential Collection of Claims against Company. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed will be subject to TIA ss. 311(a) to the extent indicated therein. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors, or evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02 Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its Obligations with respect to all outstanding Notes (including the Subsidiary Guarantees) on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Subsidiary Guarantees), which will thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (i) and (ii) below, and to have satisfied all its other obligations under such Notes, the Subsidiary Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Company, will execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, or interest or premium and Liquidated Damages, if any, on such Notes when such payments are due; (ii) the Company's obligations with respect to such Notes under Sections 2.06, 2.07 and 4.02 hereof and its obligations under the Registration Rights Agreement; (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's and the Guarantors' obligations in connection therewith and (iv) this Section 8.02. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. 72 Section 8.03 Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.18, and 4.19 and Article 5 hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes will thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Subsidiary Guarantees, the Company and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Subsidiary Guarantees will be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(iii) through 6.01(vii) hereof will not constitute Events of Default. Section 8.04 Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03 hereof: (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized investment bank or firm of independent public accountants, to pay the principal of, premium, interest and Liquidated Damages, if any, on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of an election under Section 8.02 hereof, the Company will deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issue Date, there has been a change in the applicable federal income tax law; in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same 73 manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of an election under Section 8.03 hereof, the Company has delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company must deliver to the Trustee an Opinion of Counsel to the effect that, assuming, among other things, no intervening bankruptcy of the Company between the date of deposit and the 91st day following the deposit, and assuming that no Holder is an "insider" of the Company under applicable bankruptcy law, after the 91st day following the deposit, the cash or non-callable Government Securities deposited in trust will not be subject to avoidance and repayment under Sections 547 and 550 of the U.S. Bankruptcy Code; (vii) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (viii) the Company must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to Legal Defeasance or Covenant Defeasance have been complied with. However, the Opinion of Counsel required by clause (ii) hereof will not be required if all Notes not theretofore delivered to the Trustee for cancellation have become due and payable, will become due and payable on their maturity date within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the Company's name, and at the Company's expense. Section 8.05 Deposited Money and Government Securities to be held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in 74 respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, interest, premium and Liquidated Damages, if any, but such money need not be segregated from other funds except to the extent required by law. The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any cash or noncallable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(i) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 8.06 Repayment to Company. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, interest, premium and Liquidated Damages, if any, on any Note and remaining unclaimed for two years after such principal, interest, premium and Liquidated Damages, if any, has become due and payable will be paid to the Company on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Note will thereafter look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as Trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 8.07 Reinstatement. If the Trustee or Paying Agent is unable to apply any cash in United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's and the Guarantors' obligations under this Indenture, the Notes and the Subsidiary Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the 75 Company makes any payment of principal of, interest, premium and Liquidated Damages, if any, on any Note following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01 Without Consent of Holders. Notwithstanding Section 9.02 hereof, the Company, the Guarantors and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: (i) to cure any ambiguity, defect or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) to provide for the assumption of the Company's Obligations to the Holders in the case of a merger or consolidation or sale of all or substantially all of the Company's assets pursuant to Article 5 hereof; (iv) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights hereunder of any Holder of a Note; (v) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; (vi) to comply with the rules of any applicable securities depository; (vii) to comply with the covenant contained in Article 5 hereof; (viii) to add Subsidiary Guarantees with respect to the Notes or to secure the Notes; (ix) to add to the covenants of the Company or any Guarantor for the benefit of the Holders or surrender any right or power conferred upon the Company or any Guarantor; or (x) to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee pursuant to the requirements thereof. The consent of the Holders is not necessary under this Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. 76 After an amendment under this Indenture becomes effective, the Company is required to mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment. Upon (x) the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture and (y) receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. Section 9.02 With Consent of Holders. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including, without limitation, Sections 3.09, 4.10 and 4.15 hereof), the Subsidiary Guarantees and the Notes with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, interest, premium or Liquidated Damages, if any, on the Notes, except a Payment Default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Subsidiary Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes). Upon (x) the request of the Company accompanied by a resolution of the Board of Directors of the Company authorizing the execution of any such amended or supplemental Indenture, (y) the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders as aforesaid and (z) receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture. The Company may, but will not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, will be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; provided, that unless such consent will have become effective by virtue of the requisite percentage having been obtained prior to the date which is 180 days after such record date; any such consent previously given will automatically and without further action by any Holder be canceled and of no further effect. 77 It will not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it will be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company will mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof; (iii) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (iv) waive a Default or Event of Default in the payment of principal of, interest, premium or Liquidated Damages, if any, on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (v) make any Note payable in currency other than that stated in the Notes; (vi) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or interest or premium or Liquidated Damages, if any, on the Notes; (vii) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 and 4.15 hereof); (viii) release any Guarantor from any of its Obligations under its Subsidiary Guarantee or the Indenture, except in accordance with the terms of this Indenture; or (ix) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions. 78 Section 9.03 Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes will be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. Section 9.04 Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. Section 9.05 Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee will authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver. Section 9.06 Trustee to Sign Amendments, etc. The Trustee will sign any amended or supplemental Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee will be entitled to receive, and (subject to Section 7.01 hereof) will be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10. SUBSIDIARY GUARANTEES Section 10.01 Agreement to Guarantee. (a) Each of the Guarantors, jointly and severally, with all other Guarantors, unconditionally Guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, regardless of the validity and enforceability of this Indenture, the Notes or the Obligations of the Company under this Indenture or the Notes, that: 79 (i) the principal of, interest, premium and Liquidated Damages, if any, on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of, interest, premium and Liquidated Damages, if any, on the Notes, to the extent lawful, and all other Obligations of the Company to the Holders or the Trustee under this Indenture or the Notes will be promptly paid in full, all in accordance with the terms hereof or thereof; and (ii) in case of any extension of time for payment or renewal of any Notes or any of such other Obligations, that the same will be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. (b) Notwithstanding the foregoing, in the event that this Subsidiary Guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of the Guarantors under this Indenture will be reduced to the maximum amount permissible under such fraudulent conveyance or similar law. (c) Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. Section 10.02 Execution and Delivery of Subsidiary Guarantees. (a) To evidence its Subsidiary Guarantee set forth in this Indenture, each Guarantor hereby agrees that a notation of such Subsidiary Guarantee substantially in the form attached as Exhibit C to this Indenture will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee on or after the date hereof. (b) Notwithstanding the foregoing, each Guarantor hereby agrees that its Subsidiary Guarantee set forth herein will remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. (c) If an Officer whose signature is on this Indenture or on a Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee will be valid nevertheless. (d) The delivery of any Note by the Trustee, after the authentication thereof under this Indenture, will constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of each Guarantor. (e) Each Guarantor hereby agrees that its obligations hereunder will be unconditional, regardless of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. 80 (f) Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that its Subsidiary Guarantee made pursuant to this Indenture will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. (g) If any Holder or the Trustee is required by any court or otherwise to return to the Company or any Guarantor, or any custodian, Trustee, liquidator or other similar official acting in relation to either the Company or such Guarantor, any amount paid by either to the Trustee or such Holder, the Subsidiary Guarantee made pursuant to this Indenture, to the extent theretofore discharged, will be reinstated in full force and effect. (h) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations Guaranteed hereby until payment in full of all obligations Guaranteed hereby. Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the Holders and the Trustee, on the other hand: (i) the maturity of the Obligations Guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of the Subsidiary Guarantee made pursuant to this Indenture, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations Guaranteed hereby; and (ii) in the event of any declaration of acceleration of such Obligations as provided in Article 6 hereof, such Obligations (whether or not due and payable) will forthwith become due and payable by such Guarantor for the purpose of the Subsidiary Guarantee made pursuant to this Indenture. (i) Each Guarantor will have the right to seek contribution from any other non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders or the Trustee under the Subsidiary Guarantee made pursuant to this Indenture. Section 10.03 Guarantors May Consolidate, etc. on Certain Terms. (a) Except as set forth in Articles 4 and 5 hereof, and notwithstanding Sections 10.03(b) and (c) hereof, nothing contained in this Indenture or in the Notes will prevent any consolidation or merger of any Guarantor with or into the Company or any other Guarantor or will prevent any transfer, sale or conveyance of the property of any Guarantor as an entirety or substantially as an entirety to the Company or any other Guarantor. (b) Except as set forth in Section 10.04 hereof, no Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless: (i) immediately after giving effect to that transaction, no Default or Event of Default exists; and 81 (ii) either: (A) subject to Section 10.04 hereof, the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under this Indenture, the Notes, its Subsidiary Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or (B) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation, Section 4.10 hereof. (c) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee made pursuant to this Indenture and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by such Guarantor, such successor Person will succeed to and be substituted for such Guarantor with the same effect as if it had been named herein as one of the Guarantors. Such successor Person thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon the Notes issuable under this Indenture which theretofore have not been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. Section 10.04 Releases. (a) In connection with any sale or other disposition of all or substantially all of the assets of any Guarantor (including by way of merger or consolidation) or a sale of all of the Capital Stock of any Guarantor, in each case to a Person that is not (either before or after giving effect to such transactions) a Subsidiary of the Company, if the sale or other disposition complies with Section 4.10 and the other applicable provisions of this Indenture, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the Capital Stock of such Guarantor) or the Person acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof and is not in violation of any other provisions under this Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.10 hereof, the Trustee will execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Subsidiary Guarantee. Any Guarantor not released from its obligations under its Subsidiary Guarantee will remain liable for the full amount of principal of, interest, premium and Liquidated 82 Damages, if any, on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 10. (b) If the Company designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture, such Guarantor will be released and relieved of its obligations under its Subsidiary Guarantee. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such designation of such Guarantor as an Unrestricted Subsidiary was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.07 hereof, the Trustee will execute any documents reasonably required in order to evidence the release of such Guarantor from its obligations under its Subsidiary Guarantee. Any Guarantor not released from its obligations under its Subsidiary Guarantee will remain liable for the full amount of principal of, interest, premium and Liquidated Damages, if any, on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 10. (c) In connection with any Legal Defeasance or Covenant Defeasance of the Notes in accordance with, and subject to Article 8 hereof, each Guarantor shall be released and relieved of its obligations under this Indenture in accordance with, and subject to, Article 8 hereof.. (d) In the event a Guarantor no longer Guarantees Obligations under any Credit Facilities of the Company, such Guarantor will be released and relieved of its Obligations under its Subsidiary Guarantee. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such Guarantor no longer Guarantees Obligations under any Credit Facilities of the Company, the Trustee will execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Subsidiary Guarantee. Any Guarantor not released from its obligations under its Subsidiary Guarantee will remain liable for the full amount of principal of, interest, premium and Liquidated Damages, if any, on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 10. ARTICLE 11. SATISFACTION AND DISCHARGE Section 11.01 Satisfaction and Discharge. This Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when: (i) either: (A) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Company, have been delivered to the Trustee for cancellation; or (B) all Notes that have not been delivered to the Trustee for cancellation have become due and payable or will become due and payable within one year 83 by reason of the mailing of a notice of redemption or otherwise and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, accrued interest, premium and Liquidated Damages, if any, to the date of maturity or redemption; (ii) no Default or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the guaranteeing of any Lien securing such borrowing; (iii) the Company or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and (iv) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be. In addition, the Company must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to Section 11.01(i)(B) hereof, the provisions of Section 11.02 hereof and Section 8.06 hereof will survive. In addition, nothing in this Section 11.01 hereof will be deemed to discharge those provisions of Section 7.07 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture. Section 11.02 Application of Trust Money. Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof will be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal, interest, premium and Liquidated Damages, if any, for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by 84 reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's and any Guarantor's obligations under this Indenture and the Notes will be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Company has made any payment of principal of, interest, premium or Liquidated Damages, on any Notes because of the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. ARTICLE 12. MISCELLANEOUS Section 12.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss. 318(c), the imposed duties will control. Section 12.02 Notices. Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the other's address: If to the Company or any Guarantor: MemberWorks Incorporated 680 Washington Boulevard Stamford, Connecticut 06901 Attention: Investor Relations With a copy to: Shearman & Sterling 599 Lexington Avenue New York, New York 10022 Attention: Stephen T. Giove (Fax: 646-848-7325) If to the Trustee: LaSalle Bank National Association 135 South LaSalle Street, Suite 1960 Chicago, Illinois 60603 Attention: Corporate Trust Services Division The Company or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications. 85 All notices and communications (other than those sent to Holders) will be deemed to have been duly given, at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication will also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time. Section 12.03 Communications By Holders with Other Holders. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else will have the protection of TIA ss. 312(c). Section 12.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company will furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which will include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which will include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel (who may rely upon the Officer's Certificate as to matters of fact), all such conditions precedent and covenants have been satisfied. Section 12.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) will comply with the provisions of TIA ss. 314(e) and will include: 86 (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 12.06 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders. No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or any Guarantor under the Notes, the Subsidiary Guarantees or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. Section 12.08 Governing Law. THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Section 12.09 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 12.10 Successors. All agreements of the Company and the Guarantors in this Indenture, the Notes and the Subsidiary Guarantors will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. 87 Section 12.11 Severability. In case any provision in this Indenture or in the Notes will be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. Section 12.12 Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement. Section 12.13 Table of Contents, Headings, etc. The table of contents, cross-reference table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof. [Signatures on following pages] 88 SIGNATURES Dated as of April 13, 2004 MEMBERWORKS INCORPORATED By /s/ --------------------------------- Name: Title: Guarantors: BILLING SERVICES INTERNATIONAL, INC. BEST BENEFITS, INC. IMPAC MARKETING CORP. MYHEALTHYSAVINGS.COM, INC. COUNTRYWIDE DENTAL, INC. MEMBERWORKS CANADA LLC QUOTA PHONE, INC. DISCOUNT DEVELOPMENT SERVICES, LLC UNICARE, INC. COVERDELL & COMPANY INC. MEMBERWORKS CANADA HOLDCO, INC. LAVA LIFE CORP. INTERACTIVE MEDIA GROUP (USA) LTD. INTERACTIVE MEDIA CONSOLIDATED, INC. INTERACTIVE VOICE MEDIA BALTIMORE LLC INTERACTIVE VOICE MEDIA COLORADO LLC INTERACTIVE VOICE MEDIA GEORGIA LLC INTERACTIVE VOICE MEDIA MICHIGAN LLC INTERACTIVE VOICE MEDIA NEW JERSEY LLC INTERACTIVE VOICE MEDIA NEW YORK LLC INTERACTIVE VOICE MEDIA OHIO LLC INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC LAVALIFE WASHINGTON DC LLC INTERACTIVE (TX) VOICE MEDIA CORP. INTERACTIVE LA VOICE MEDIA CORP. INTERACTIVE MEDIA (IL) CORP. INTERACTIVE MEDIA MO CORP. INTERACTIVE SJ VOICE MEDIA CORP. INTERACTIVE VOICE MEDIA (CA) CORP. INTERACTIVE VOICE MEDIA (MN) CORP. INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. BARNES HOLDING CORP. By /s/ --------------------------------- Name: Title: LASALLE BANK NATIONAL ASSOCIATION, as Trustee By /s/ --------------------------------- Name: Title: EXHIBIT A [FORM OF FACE OF NOTE] [Global Note Legend] THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(c) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF MEMBERWORKS INCORPORATED. [Private Placement Legend] THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (5) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE BLUE SKY LAWS OF THE STATES OF THE UNITED STATES. [Definitive Securities Legend] IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. A-1 CUSIP NO._______ ISIN________ No.__________________ $_________________ 9 1/4% Senior Notes Due 2014 MemberWorks Incorporated, a Delaware corporation, promises to pay to [ ], or registered assigns, the principal sum of ______________ ($_______) on April 1, 2014. Interest Payment Dates: April 1 and October 1. Record Dates: March 15 and September 15. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect if set forth at this place. A-2 Additional provisions of this Note are set forth on the other side of this Security. Dated: MEMBERWORKS INCORPORATED By:___________________________________ Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION LASALLE BANK NATIONAL ASSOCIATION as Trustee, certifies that this is one of the Notes referred to in the Indenture. By:______________________________________ Authorized Signatory A-3 [FORM OF REVERSE SIDE OF NOTE] 9 1/4% Senior Note due 2014 Capitalized terms used herein will have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST MemberWorks Incorporated, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 9 1/4% per annum from April 13, 2004 until maturity and will pay the Liquidated Damages payable pursuant to Section 4 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages, if any, semiannually on April 1 and October 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from April 13, 2004; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest will accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date will be October 1, 2004. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1.0% per annum in excess of the then applicable interest rate on this Note to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT The Company will pay principal of, interest and premium (except defaulted interest) and Liquidated Damages, if any, on the Notes to the Persons who are registered Holders at the close of business on the record date immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, interest, premium and Liquidated Damages, if any, at the office or agency of the paying agency or registrar maintained for such purpose within The City and State of New York or Chicago, Illinois, or, at the option of the Company, payments of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their respective addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, interest, premium and Liquidated Damages, if any, on, all Global Notes and all other Notes the Holders of which have provided wire transfer instructions to the Company or the Paying Agent if such Holders are registered Holders of at least $1,000,000 in principal amount of the Notes. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. A-4 3. PAYING AGENT AND REGISTRAR Initially, LaSalle Bank National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may appoint one or more co-registrars and one or more additional paying agents. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Restricted Subsidiaries may act in any such capacity. 4. INDENTURE The Company issued the Notes under an Indenture dated as of April 13, 2004 ("Indenture") among the Company, the Guarantors named therein and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture will govern and be controlling. 5. OPTIONAL REDEMPTION. (a) Except as set forth in clause (b) and (c) of this paragraph 5, the Notes will not be redeemable at the Company's option prior to April 1, 2009. After April 1, 2009, the Company may redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, on the Notes redeemed, to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on April 1 of the years indicated below: Year Percentage 2009................................... 104.625% 2010................................... 103.083% 2011................................... 101.542% 2012 and thereafter.................... 100.000% (b) Notwithstanding the foregoing, at any time prior to April 1, 2007, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of the Notes issued under the Indenture at a redemption price of 109.250% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings by the Company or from the cash contribution of equity capital (other than Disqualified Stock) to the Company; provided that at least 65% of the aggregate principal amount of Notes (including Additional Notes, if any) issued under the Indenture remains outstanding immediately after the occurrence of each such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that any such redemption occurs within 90 days of the date of the closing of such Equity Offering. Notice of any redemption upon an Equity Offering may be given prior to completion of the related Equity Offering and any such notice or redemption A-5 may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent, including, but not limited to, the completion of the related Equity Offering. (c) At any time prior to April 1, 2009, the Company may also redeem all or a part of the Notes, upon not less than 30 nor more than 60 days' notice, at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. (d) A notice of redemption may, at the Company's discretion, be subject to one or more conditions precedent. 6. MANDATORY REDEMPTION. The Company is not required to make mandatory redemption payments with respect to the Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Company shall be required to make a Change of Control Offer to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at an offer price equal to 101% of aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, on the Notes repurchased to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. (b) When the aggregate amount of Excess Proceeds resulting from an Asset Sale exceeds $5,000,000, the Company shall commence an Asset Sale Offer to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets pursuant to the Indenture to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase and shall be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. 8. NOTICE OF REDEMPTION Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered A-6 address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture pursuant to the terms thereof. 9. DENOMINATIONS, TRANSFER, EXCHANGE The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS The registered holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER Subject to certain exceptions, the Indenture, the Subsidiary Guarantees and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), and any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, interest, premium or Liquidated Damages, if any, on the Notes, except a Payment Default resulting from an acceleration that has been rescinded) or compliance with any provision of the Indenture, the Notes or the Subsidiary Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes). Without the consent of any Holder, the Indenture, the Notes or the Subsidiary Guarantees may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's Obligations to Holders in case of a merger or consolidation or sale of all or substantially all of the Company's assets pursuant to the Indenture, to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the Indenture of any Holder of a Note, to comply with the rules of any applicable securities depository, to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA, to comply with the covenant contained in Article 5 of the Indenture, to add Subsidiary Guarantees with respect to the Notes or to secure the Notes, to add to the covenants of the Company or any Guarantor for the benefit of the Holders or surrender any right or power conferred upon the Company or any Guarantor, or to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the procedures set forth in the Indenture. A-7 12. DEFAULTS AND REMEDIES An "Event of Default" occurs if: (i) the Company defaults in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes and such default continues for a period of 30 days; (ii) the Company defaults in the payment when due of the principal of or premium, if any, on the Notes; (iii) the Company or any of its Restricted Subsidiaries fails to comply with any of the provisions of Sections 4.10, 4.15 or 5.01 of the Indenture; (v) the Company or any of its Restricted Subsidiaries fails to comply with any other agreement in the Indenture or the Notes for a period of 60 days after receipt of notice to comply; (vi) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the date of the Indenture, which default (A) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (B) results in the acceleration of such Indebtedness prior to its Stated Maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which being so accelerated, in either case, aggregates $5,000,000 or more; (vii) the Company or any of its Restricted Subsidiaries fails to pay final judgments aggregating in excess of $5,000,000 (exclusive of amounts covered by insurance), which judgments are not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the Indenture, any Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its Obligations under its Subsidiary Guarantee; or (ix) certain events of bankruptcy or insolvency described in the Indenture with respect to the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary. In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any Significant Subsidiary, all outstanding Notes shall become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all outstanding Notes to be due and payable immediately. Notwithstanding the foregoing, Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal of, interest, premium or Liquidated Damages, if any on any Note) if a committee of its Responsible Officers in good faith determines that withholding notice is in their interest, except with respect to a Default or Event of Default relating to the payment of principal of, or interest or premium of Liquidated Damages, if any, on, the Notes. Certain Events of Defaults relating to Payment Defaults described in clause (vi) of the proceeding paragraph may be annulled if remedied, cured or waived as set forth in the Indenture. A-8 In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to April 1, 2009 by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to that date, then the premium specified in the Indenture with respect to the first year that the Notes may be redeemed at the Company's option shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture, except a continuing Default or Event of Default in the payment of principal of, interest, premium or Liquidated Damages, if any, on, the Notes; provided that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration, if the rescission would not conflict with any judgment or decree or if all existing Events of Default have been cured or waived. Upon such waive, such Default will cease to exist, and any Event of Default arising therefrom will be deemed to have been cured for every purpose of this Indenture; but no such waiver will extend to any subsequent or other Default or impair any right consequent thereon. 13. TRUSTEE DEALINGS WITH COMPANY The Trustee or any Affiliate of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes, and may otherwise deal with the Company or any Affiliates, as if it were not the Trustee. 14. No RECOURSE AGAINST OTHERS No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or any Guarantor under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION This Note will not be valid until authenticated by the manual or facsimile signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS A-9 Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (tenants in common), TEN ENT (tenants by the entireties), JT TEN (joint tenants with right of survivorship and not as tenants in common), CUST (custodian), and U/G/M/A (Uniform Gifts to Minors Act). 17. ADDITI0NAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES In addition to the rights provided to Holders under the Indenture, Holders of Transferred Restricted Securities will have all the rights set forth in the Registration Rights Agreement. 18. CUSIP NUMBERS Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 19. GOVERNING LAW This Note will be governed by, and construed in accordance with, the laws of the State of New York. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: MemberWorks Incorporated 680 Washington Boulevard Stamford, Connecticut 06901 Attention: Investor Relations A-10 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date:______________________ Your Signature:_______________________________ (Sign exactly as your name appears on the face of this Note) Reference is hereby made to the Indenture, dated as of April 13, 2004 (the "Indenture"), among MemberWorks Incorporated, as issuer (the "Company"), the Guarantors party thereto and LaSalle Bank National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act of 1933, as amended (the "Securities Act"), after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Notes are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) [ ] to the Company; or (2) [ ] pursuant to an effective registration statement under the Securities Act; or (3) [ ] inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such A-11 transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act; or (4) [ ] outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act; or (5) [ ] pursuant to the exemption from registration provided by Rule 144 under the Securities Act. If such transfer is being made pursuant to an offshore transaction in accordance with Rule 904 under the Securities Act, the undersigned further certifies that: (i) the transfer is not being made to a person in the United States; (ii) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (iii) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; (iv) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; (v) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person for the account or benefit of a U.S. Person (other than an Initial Purchaser); (vi) we have advised the transferee of the transfer restrictions applicable to the Notes; and (vii) if the circumstances set forth in Rule 904(b) under the Securities Act are applicable, we have complied with the additional conditions therein, including (if applicable) sending a confirmation or other notice stating that the Notes may be offered and sold during the distribution compliance period specified in Rule 903 of Regulation S, pursuant to registration of the Notes under the Securities Act or pursuant to an available exemption from the registration requirements under the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the Trustee will be entitled to require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration A-12 requirements of the Securities Act, such as the exemption provided by Rule 144 under the Securities Act. -------------------------------- Signature Signature Guarantee: - ----------------------------------- -------------------------------- Signature must be guaranteed Signature Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. - -------------------------------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated:______________ ________________________________ NOTICE: To be executed by an executive officer A-13 Option of Holder to Elect Purchase If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_________________ Date:_______________ Your Signature:___________________________________ (Sign exactly as your name appears on the Note) Tax Identification No.:___________________________ Signature Guarantee. ______________________________ Signature must be guaranteed Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-14 Schedule of Exchanges of Interests in the Global Note This Note was initially made in the amount of US$150,000,000. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount of this Global Note Signature of Amount of Decrease Amount of Increase following such Authorized Officer in Principal Amount in Principal Amount Decrease of Trustee or Note Date of Exchange of this Global Note of this Global Note (or Increase) Custodian - ---------------- ------------------- ------------------- ------------------- -------------------
A-15 EXHIBIT B FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSIDIARY GUARANTOR SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of ________________, among_________________________________ (the "Subsidiary Guarantors"), each a direct or indirect subsidiary of MemberWorks Incorporated (or its permitted successor), a Delaware corporation (the "Company"), the Company and LaSalle Bank National Association, as trustee under the indenture referred to below (the "Trustee"). WITNESSETH WHEREAS, the Company and certain of its Subsidiaries have heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of April 13, 2004 providing for the issuance of an unlimited amount of 9 1/4% Senior Notes due 2014 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances the Subsidiary Guarantors will execute and deliver to the Trustee a supplemental indenture pursuant to which the Subsidiary Guarantors will unconditionally guarantee all of the Company's Obligations (as defined in the Indenture) under the Notes and the Indenture on the terms and conditions set forth herein (the "Subsidiary Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition will have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. Each Subsidiary Guarantor hereby agrees as follows: (a) Such Subsidiary Guarantor, jointly and severally with all other current and future guarantors of the Notes (collectively, the "Guarantors" and each, a "Guarantor"), unconditionally guarantees to each Holder authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, regardless of the validity and enforceability of the Indenture, the Notes or the Obligations of the Company under the Indenture or the Notes, that: (i) the principal of, interest, premium and Liquidated Damages, if any, on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on B-1 the overdue principal of, interest, premium and Liquidated Damages, if any, on the Notes, to the extent lawful, and all other Obligations of the Company to the Holders or the Trustee thereunder or under the Indenture will be promptly paid in full, all in accordance with the terms thereof; and (ii) in case of any extension of time for payment or renewal of any Notes or any of such other Obligations, that the same will be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. (b) Notwithstanding the foregoing, in the event that this Subsidiary Guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of such Subsidiary Guarantor under this Supplemental Indenture and its Subsidiary Guarantee shall be reduced to the maximum amount permissible under such fraudulent conveyance or similar law. 3. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES. (a) To evidence its Subsidiary Guarantee set forth in this Supplemental Indenture, such Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee substantially in the form of Exhibit C to the Indenture will be endorsed by an officer of such Subsidiary Guarantor on each Note authenticated and delivered by the Trustee after the date hereof. (b) Notwithstanding the foregoing, such Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee set forth herein will remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. (c) If an Officer whose signature is on this Supplemental Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee will be valid nevertheless. (d) The delivery of any Note by the Trustee, after the authentication thereof under the Indenture, will constitute due delivery of the Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of each Subsidiary Guarantor. (e) Each Subsidiary Guarantor hereby agrees that its Obligations hereunder will be unconditional, regardless of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which B-2 might otherwise constitute a legal or equitable discharge or defense of a guarantor. (f) Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that its Subsidiary Guarantee made pursuant to this Supplemental Indenture will not be discharged except by complete performance of the Obligations contained in the Notes and the Indenture. (g) If any Holder or the Trustee is required by any court or otherwise to return to the Company or any Subsidiary Guarantor, or any custodian, Trustee, liquidator or other similar official acting in relation to either the Company or such Subsidiary Guarantor, any amount paid by either to the Trustee or such Holder, the Subsidiary Guarantee made pursuant to this Supplemental Indenture, to the extent theretofore discharged, will be reinstated in full force and effect. (h) Each Subsidiary Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby until payment in full of all Obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between such Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the other hand: (i) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of the Subsidiary Guarantee made pursuant to this Supplemental Indenture, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby; and (ii) in the event of any declaration of acceleration of such Obligations as provided in Article 6 of the Indenture, such Obligations (whether or not due and payable) will forthwith become due and payable by such Subsidiary Guarantor for the purpose of the Subsidiary Guarantee made pursuant to this Supplemental Indenture. (i) Each Subsidiary Guarantor will have the right to seek contribution from any other non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders or the Trustee under the Subsidiary Guarantee made pursuant to this Supplemental Indenture. B-3 4. SUBSIDIARY GUARANTOR MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) Except as set forth in Articles 4 and 5 of the Indenture, nothing contained in the Indenture, this Supplemental Indenture or in the Notes will prevent any consolidation or merger of any Subsidiary Guarantor with or into the Company or any other Guarantor or will prevent any transfer, sale or conveyance of the property of any Subsidiary Guarantor as an entirety or substantially as an entirety to the Company or any other Guarantor. (b) Except as set forth in Section 10.04 of the Indenture, no Subsidiary Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless: (i) immediately after giving effect to such transaction, no Default or Event of Default exists and (ii) either (A) subject to Section 10.04 of the Indenture, the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger unconditionally assumes all the obligations of that Subsidiary Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Indenture and the Subsidiary Guarantee on the terms set forth in the Indenture or such Subsidiary Guarantee, as the case may be, and (B) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation, Section 4.10 thereof. (c) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee made pursuant to this Supplemental Indenture and the due and punctual performance of all of the covenants and conditions of the Indenture and this Supplemental Indenture to be performed by such Subsidiary Guarantor, such successor Person will succeed to and be substituted for such Subsidiary Guarantor with the same effect as if it had been named herein as the Subsidiary Guarantor. Such successor Person thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon the Notes issuable under the Indenture which theretofore have not been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued will in all respects have the same legal rank and benefit under the Indenture and this Supplemental Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture and this Supplemental Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. B-4 5. RELEASES. (a) In the event of any sale or other disposition of all or substantially all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Capital Stock of any Guarantor, in each case to a Person that is not (either before or after giving effect to such transactions) a Subsidiary of the Company, if the sale or other disposition complies with Section 4.10 and the other applicable provisions of this Indenture, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the Capital Stock of such Guarantor) or the Person acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any Obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof and is not in violation of any other provisions under this Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.10 hereof, the Trustee will execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Subsidiary Guarantee. Any Subsidiary Guarantor not released from its obligations under its Subsidiary Guarantee will remain liable for the full amount of principal of, interest, premium and Liquidated Damages, if any, on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 10 thereof. (b) Upon the designation of a Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with the terms of this Indenture, such Guarantor will be released and relieved of its Obligations under its Subsidiary Guarantee. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such designation of such Guarantor as an Unrestricted Subsidiary was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.07 hereof, the Trustee will execute any documents reasonably required in order to evidence the release of such Guarantor from its obligations under its Subsidiary Guarantee. Any Guarantor not released from its obligations under its Subsidiary Guarantee will remain liable for the full amount of principal of, interest, premium and Liquidated Damages, if any, on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 10. (c) Each Subsidiary Guarantor will be released and relieved of its obligations under this Supplemental Indenture in accordance with, and subject to, Article 8 of the Indenture. B-5 (d) In the event a Guarantor no longer Guarantees Obligation under any Credit Facility of the Company, such Guarantor will be released and relieved of its Obligations under its Subsidiary Guarantee. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such Guarantor no longer Guarantees Obligations under any Credit Facilities of the Company, the Trustee will execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Subsidiary Guarantee 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of any Subsidiary Guarantor, as such, will have any liability for any Obligations of the Company or any Subsidiary Guarantor under the Notes, any Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such Obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy will be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and will not affect the construction hereof. 10. THE TRUSTEE. The Trustee will not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Subsidiary Guarantors and the Company. B-6 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated:___________________, _____ MEMBERWORKS INCORPORATED By:______________________________________ Name: Title: Subsidiary Guarantors: [EXISTING GUARANTORS] [ADDITIONAL GUARANTORS] By:_______________________ Name: Title: LASALLE BANK NATIONAL ASSOCIATION, as Trustee By:_______________________ Name: Title: B-7 EXHIBIT C FORM OF NOTATION ON SENIOR NOTE RELATING TO SUBSIDIARY GUARANTEE Pursuant to the Indenture (the "Indenture") dated as of April 13, 2004 among MemberWorks Incorporated, the Guarantors party thereto (each a "Guarantor" and collectively the "Guarantors") and LaSalle Bank National Association, as trustee (the "Trustee"), each Guarantor (i) has jointly and severally unconditionally guaranteed (a) the due and punctual payment of the principal of, interest, premium and Liquidated Damages, if any, on the Notes, whether at maturity or on an interest payment date, by acceleration, call for redemption or otherwise, (b) the due and punctual payment of interest on the overdue principal of, interest, premium and Liquidated Damages, if any, on the Notes, (c) the due and punctual payment of all other Obligations of the Company to the Holders or the Trustee under the Indenture or the Notes and (d) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same will be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise and (ii) has agreed to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under the Subsidiary Guarantee (as defined in the Supplemental Indenture). Notwithstanding the foregoing, in the event that the Subsidiary Guarantee of any Guarantor would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of such Guarantor under its Subsidiary Guarantee will be reduced to the maximum amount permissible under such fraudulent conveyance or similar law. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agreed that this is a guarantee of payment and not a guarantee of collection. The Subsidiary Guarantee will be binding upon each Guarantor and its successors and assigns and will inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party will automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. The Subsidiary Guarantee will not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which the Subsidiary Guarantee is noted has been executed by the Trustee under the Indenture by the manual or facsimile signature of one of its authorized officers. Capitalized terms used herein have the meaning assigned to them in the Indenture. C-1 *By:___________________________ Name: Title: __________________________ * Please add signature lines for guarantors as required. C-2 EX-4.2 68 ex4-2_043004.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT by and among MemberWorks Incorporated as the Company, each of the Guarantors party hereto and Lehman Brothers Inc., UBS Securities LLC and ABN AMRO Incorporated as the Initial Purchasers Dated as of April 13, 2004 TABLE OF CONTENTS Page 1. Definitions...........................................................1 2. Registered Exchange Offer.............................................4 3. Shelf Registration....................................................6 4. Liquidated Damages....................................................7 5. Registration Procedures...............................................8 6. Registration Expenses................................................18 7. Indemnification and Contribution.....................................18 8. Rule 144A and Rule 144...............................................21 9. Future Subsidiary Guarantees.........................................21 10. Miscellaneous........................................................22 This Registration Rights Agreement (this "Agreement") is dated as of April 13, 2004, by and among MemberWorks Incorporated, a Delaware corporation (together with any successor entity, herein referred to as the "Company"), Billing Services International, Inc., Best Benefits, Inc., Impac Marketing Corp., MyHealthySavings.com, Inc., CountryWide Dental, Inc., MemberWorks Canada Holdco, Inc., Interactive Media Consolidated, Inc., and Interactive Media Group (USA) Ltd., each a Delaware corporation; MemberWorks Canada LLC, Interactive Voice Media Baltimore LLC, Interactive Voice Media Colorado LLC, Interactive Voice Media Georgia LLC, Interactive Voice Media Michigan LLC, Interactive Voice Media New Jersey LLC, Interactive Voice Media New York LLC, Interactive Voice Media Ohio LLC, Interactive Voice Media Pennsylvania LLC, Lavalife Washington DC LLC, each a Delaware limited liability company; Quota Phone, Inc. and Barnes Holding Corp., each a New York corporation; Interactive LA Voice Media Corp., Interactive SJ Voice Media Corp., Interactive Voice Media (CA) Corp., Interactive Voice Media (Sacramento) Corp., each a California corporation; Discount Development Services, LLC, an Illinois limited liability company, Unicare, Inc., an Illinois corporation, Interactive Media (IL) Corp., an Illinois corporation, Coverdell & Company Inc., a Georgia corporation, Interactive Media MO Corp., a Missouri corporation, Interactive Voice Media (MN) Corp., a Minnesota corporation, Interactive (TX) Voice Media Corp., a Texas corporation and Lavalife Corp., a Nova Scotia unlimited liability company ("Lavalife") (each of the foregoing, collectively referred to as the "Guarantors") and Lehman Brothers Inc., UBS Securities LLC and ABN AMRO Incorporated (the "Initial Purchasers"). This Agreement is made pursuant to the Purchase Agreement, dated April 7, 2004, by and among the Company, the Guarantors and the Initial Purchasers (the "Purchase Agreement"), the Initial Purchasers have agreed to purchase from the Company $150,000,000 aggregate principal amount of 9 1/4% Senior Notes due 2014 (the "Notes"). The Notes are being issued pursuant to an indenture (the "Indenture"), dated the date hereof, among the Company, the Guarantors and LaSalle Bank National Association, as Trustee (the "Trustee"). The Notes will have terms and provisions as described in the Indenture and will be unconditionally guaranteed on a senior unsecured basis (the "Subsidiary Guarantees" and together with the Notes, collectively referred to as the "Securities" ) by the Guarantors and certain subsidiaries that guarantee the Company's Credit Facilities in the future. To induce the Initial Purchasers to purchase the Securities, the Company and the Guarantors have agreed to provide the registration rights set forth in this Agreement pursuant to the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Indenture. The parties hereby agree as follows: 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: Affiliate: As such term is defined in Rule 144 under the Securities Act. Agreement: This Registration Rights Agreement, as amended, modified or otherwise supplemented from time to time in accordance with the terms hereof. Blackout Period: As defined in Section 4 hereof. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Business Day: A day other than a Saturday or Sunday or any day on which banking institutions in The City of New York are authorized or obligated by law to close. Closing Date: The date of this Agreement. Commission: The U.S. Securities and Exchange Commission. Company: As defined in the preamble hereto. Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 2(b) hereof and (c) the delivery by the Company and the Guarantors to the Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Securities tendered by Holders thereof pursuant to the Exchange Offer. Consummation Deadline: As defined in Section 2(b) hereof. Effectiveness Deadline: As defined in Section 2(a)(ii) and 3(a) hereof. Exchange Act: The U.S. Securities Exchange Act of 1934, as amended. Exchange Guarantees: The Subsidiary Guarantees, registered under the Securities Act, to be issued pursuant to the Indenture (a) in the Exchange Offer or (b) as contemplated by Section 3 hereof. Exchange Notes: The Company's 9 1/4% Senior Notes due 2014, registered under the Securities Act, to be issued pursuant to the Indenture (a) in the Exchange Offer or (b) as contemplated by Section 3 hereof. Exchange Offer: The exchange and issuance by the Company and the Guarantors of a principal amount of Exchange Securities (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Securities that are tendered by such Holders in connection with such exchange and issuance. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exchange Securities: collectively refers to the Exchange Notes and the related Exchange Guarantees. Filing Deadline: As defined in Sections 2(a)(i) and 3(a) hereof. 2 Guarantors: As defined in the preamble hereto. Holder: A Person who owns, beneficially or otherwise, Transfer Restricted Securities. Indenture: The Indenture, dated as of April 13, 2004, by and among the Company, the Guarantors and LaSalle Bank National Association, as trustee (the "Trustee"), pursuant to which the Securities are to be issued, as such Indenture is amended, modified or supplemented from time to time in accordance with the terms thereof. Initial Purchasers: As defined in the preamble hereto. Interest Payment Date: Each April 1 and October 1 of each year, commencing October 1, 2004. Majority of Holders: Holders holding more than 50% of the aggregate principal amount of Notes outstanding. Notes: As defined in the preamble hereto. Person: Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, or government or other entity. Prospectus: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Purchase Agreement: As defined in the preamble hereto. Recommencement Date: As defined in Section 5(e) hereof. Registration Default: As defined in Section 4 hereof. Registration Statement: Any registration statement of the Company and the Guarantors relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Securities: As defined in the preamble hereto. Securities Act: The U.S. Securities Act of 1933, as amended. Shelf Registration Statement: As defined in Section 3(a) hereof. 3 Subsidiary Guarantee: As defined in the preamble hereto. Suspension Notice: As defined in Section 5(e) hereof. TIA: The Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission thereunder, in each case, as in effect on the date the Indenture is qualified under the TIA. Transfer Restricted Securities: (a) Each Security, until the earliest to occur of (i) the date on which such Security has been exchanged by a Person other than a Broker-Dealer for an Exchange Security in the Exchange Offer and entitled to be resold to the public by such Person without complying with the prospectus delivery requirements of the Securities Act, (ii) the date on which such Security has been effectively registered under the Securities Act and sold or otherwise disposed of in accordance with a Shelf Registration Statement or (iii) the date on which such Security is eligible to be distributed to the public pursuant to Rule 144(k) under the Securities Act; and (b) each Exchange Security acquired by the Broker-Dealer in the Exchange Offer of a Security for such Exchange Security, until the date on which such Exchange Security is sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the Prospectus contained in the Exchange Offer Registration Statement. Underwritten Registration or Underwritten Offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public. 2. Registered Exchange Offer. (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Sections 5(a)(i) hereof have been complied with), the Company and the Guarantors shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 120 days after the Closing Date (such 120th day being the "Filing Deadline"), (ii) use their reasonable best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 210 days after the Closing Date (such 210th day being the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Exchange Securities to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer Registration Statement shall be on the appropriate form permitting (I) registration of the Exchange Securities to be offered in exchange for the Securities that are Transfer Restricted Securities and (II) resales of Exchange Securities by Broker-Dealers that tendered into the Exchange Offer Securities that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Securities acquired directly from the Company or any of its Affiliates) as contemplated by Section 2(c) hereof. 4 (b) The Company and the Guarantors shall use their reasonable best efforts to cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company and the Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement. The Company and the Guarantors shall use their reasonable best efforts to cause the Exchange Offer to be Consummated on or prior to 30 Business Days, or longer, if required by the federal securities laws, after the Exchange Offer Registration Statement has become effective (the "Consummation Deadline") and to issue Exchange Securities in exchange for all Securities tendered prior thereto in the Exchange Offer. (c) The Company and the Guarantors shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Securities acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with its initial sale of any Exchange Securities received by such Broker-Dealer in the Exchange Offer, the Company and the Guarantors shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the prospectus contained in the Exchange Offer Registration Statement is available for sales of Exchange Securities by Broker-Dealers, the Company and the Guarantors agree to use their reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by and subject to the provisions of Sections 5(a) and 5(c) hereof and in conformity with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 270 days from the date on which the Exchange Offer Registration Statement is declared effective or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request at any time during such 270-day period (or shorter as provided in the foregoing sentence) in order to facilitate resales. 5 3. Shelf Registration. (a) If: (i) the Company and the Guarantors are not required to file the Exchange Offer Registration Statement, (ii) the Exchange Offer is not permitted by applicable law or Commission policy (after the Company and the Guarantors have complied with the procedures set forth in Section 5(a)(i) hereof), or (iii) any Holder of Transfer Restricted Securities notifies the Company prior to the 20th Business Day following the Consummation of the Exchange Offer that (x) such Holder was prohibited by applicable law or Commission policy from participating in the Exchange Offer, (y) such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (z) such Holder is a Broker-Dealer and holds Securities acquired directly from the Company or any of its Affiliates, then the Company and the Guarantors shall: (I) use their reasonable best efforts to cause to be filed not later than 30 days after the earlier of, (x) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) of this Section or (y) the date on which the Company receives the notice specified in clause (a)(ii) of this Section (such earlier date, the "Filing Deadline"), a shelf registration statement pursuant to Rule 415 under the Securities Act (which may be an amendment to the Exchange Offer Registration Statement (in either event, together with any amendments thereto, and including any documents incorporated by reference therein, the "Shelf Registration Statement")), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities held by Holders that have provided the information required pursuant to the terms of Section 3(b) hereof; and (II) use their reasonable best efforts to cause such Shelf Registration Statement to become effective at the earliest time, but in no event later than on or prior to the later of 210 days after the Closing Date or 120 days after the Filing Deadline for the Shelf Registration Statement (such later date, the "Effectiveness Deadline"). If, after the Company and the Guarantors have filed an Exchange Offer Registration Statement that satisfies the requirements of Section 2(a) hereof, the Company and the Guarantors are required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) of this Section), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (I) above; provided that, in such event, the Company and the Guarantors shall remain obligated to meet the Effectiveness Deadline set forth in clause (II) above. To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 3(a) and the other securities required to be registered therein pursuant to Section 5(b)(ii) hereof, the Company and the Guarantors shall use their reasonable best efforts to keep any Shelf Registration Statement required by this Section 3(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 5(b) and (c) hereof and in conformity with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a 6 period of at least two years (as extended pursuant to Section 5(c)(i)hereof) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. (b) No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 Business Days after receipt of a request therefor, such information as the Company may reasonably request in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein, including, but not limited to, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Securities Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 4 hereof unless and until such Holder shall have provided all such information. By its acceptance of Transfer Restricted Securities, each Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. 4. Liquidated Damages. If (a) any Registration Statement required by this Agreement is not filed with the Commission prior to or on the applicable Filing Deadline, (b) any such Registration Statement has not been declared effective by the Commission prior to or on the applicable Effectiveness Deadline, (c) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline, or (d) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within two Business Days by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective within five Business Days of filing such post-effective amendment, except in the case of this clause (d) under the circumstances set forth in the following paragraph (each such event referred to in clauses (a) through (d), a "Registration Default"); then the Company and the Guarantors hereby jointly and severally agree to pay to each Holder, liquidated damages in the form of an increase in the interest rate borne by the Transfer Restricted Securities in an amount equal to, with respect to the first 90 day-period immediately following the occurrence of the first Registration Default, to 0.50% per annum per $1,000 principal amount of Notes held by such Holder; and the amount of the liquidated damages will increase by an additional 0.50% per annum per $1,000 principal amount of Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages for all Registration Defaults equal to 1.0% per annum; provided that the Company and the Guarantors shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease. Notwithstanding anything to the contrary set forth herein, (i) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (a) above, (ii) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (b) above, (iii) upon Consummation of the Exchange Offer, in the case of (c) above, or (iv) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the 7 Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable, in the case of (d) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (a), (b), (c) or (d), as applicable, shall cease. A Registration Default referred to in clause (d) above shall be deemed not to have occurred and be continuing in respect of a Shelf Registration Statement or the related Prospectus if (A) such period of time during which the Shelf Registration Statement is not effective or such Shelf Registration Statement or the related Prospectus is not useable ( the "Blackout Period") occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company and the Guarantors where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related Prospectus or (y) the occurrence of other material events with respect to the Company and the Guarantors that would need to be described in such Shelf Registration Statement or the related Prospectus and (B) in the case of clause (y), the Company and the Guarantors are proceeding promptly and in good faith to amend or supplement (including by way of filing documents under the Exchange Act which are incorporated by reference into the Shelf Registration Statement) such Shelf Registration Statement and the related Prospectus to describe such events; provided, however, that in the event a Blackout Period exceeds an aggregate of 60 days in any 90-day period, a Registration Default shall be deemed to have occurred on the 61st day of such Blackout Period and liquidated damages shall be payable in accordance with the above paragraph from the day such Shelf Registration Default occurs until such Registration Default is cured or until the Company and the Guarantors are no longer required pursuant to this Agreement to keep such Shelf Registration Statement effective or such Registration Statement or the related Prospectus usable; provided that in the event a disclosure under clause (y) above relates to a previously undisclosed proposed or pending material transaction, the disclosure of which would impede the Company's or such Guarantors ability to consummate such transaction, the Blackout Period may be extended from 60 days to 90 days; provided, however, that Blackout Period shall not exceed an aggregate of 120 days in any 360-day period. All accrued liquidated damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indenture, the Notes and the Exchange Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company and the Guarantors to pay liquidated damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. 5. Registration Procedures. (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company and the Guarantors shall (i) comply with all applicable provisions of Section 5(c) hereof and Section 5(d) hereof with respect to certain exchange offer prospectuses as described therein, below, (ii) use their reasonable best efforts to effect such exchange and to permit the resale of Exchange Securities by any Broker-Dealer that tendered Securities in the Exchange Offer that such Broker-Dealer acquired for its own account as a result of its market 8 making activities or other trading activities (other than Securities acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof; and (iii) comply with all of the following provisions: (A) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a question as to whether the Exchange Offer is permitted by applicable federal law, the Company and the Guarantors hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for such Transfer Restricted Securities. The Company and the Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level, but shall not be required to take commercially unreasonable action to effect a change of Commission policy. The Company and the Guarantors hereby agree to: (I) participate in telephonic conferences with the Commission staff, (II) deliver to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (III) diligently pursue a resolution by the Commission staff. (B) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker-Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company and the Guarantors (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (I) it is not an Affiliate of the Company, (II) it is not engaged in, does not intend to engage in and has no arrangement or understanding with any Person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer, (III) it is acquiring the Exchange Securities in its ordinary course of business and (IV) if such Holder is a Broker-Dealer, that it will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market-making activities or other trading activities and that it will deliver a Prospectus in connection with any resale of such Exchange Securities. Each Holder shall be required to make such other representations as may be reasonably necessary under applicable Commission rules, regulations or interpretations to render the use of Form S-4 or another appropriate form under the Securities Act available and will be required to agree to comply with their agreements and covenants set forth in this Agreement. Each Holder using the Exchange Offer to participate in a distribution of the Exchange Securities will be required to acknowledge and agree that, if the resales are of Exchange Securities obtained by such Holder in exchange for Securities acquired directly from the Company or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including, 9 if applicable, any no-action letter obtained pursuant to clause (A) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective Registration Statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. (C) Prior to effectiveness of the Exchange Offer Registration Statement, the Company and the Guarantors shall, if requested by the Commission, provide a supplemental letter to the Commission (I) stating that the Company and the Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action letter obtained pursuant to clause (A) above, (II) including a representation that neither the Company nor any Guarantor has entered into any arrangement or understanding with any Person to distribute the Exchange Securities to be received in the Exchange Offer and that, to the best of the Company's and each Guarantor's information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Securities in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Securities received in the Exchange Offer and (III) including any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (A) above. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Company and the Guarantors shall: (i) comply with all the provisions of Section 5(c) and (d) below and shall use its reasonable best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto, shall prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof; and (ii) issue, upon request of any Holder or purchaser of Securities covered by any Shelf Registration Statement contemplated by this Agreement, Exchange Securities, having an aggregate principal amount equal to the aggregate principal amount of Securities sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; and the Company and the Guarantors shall register Exchange Securities on the Shelf Registration Statement for this purpose and issue the Exchange Securities to the purchaser(s) of securities 10 subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate. (c) General Provisions. In connection with any Registration Statement and any related Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities, the Company and the Guarantors shall: (i) use their reasonable best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 2 or 3 hereof, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein (and, in the case of a Prospectus, in the light of the circumstances under which it was made) not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company and the Guarantors shall file promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use their reasonable best efforts to cause such amendment to be declared effective as soon as practicable. If at any time the Commission shall issue any stop order suspending the effectiveness of any Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company and the Guarantors shall use their reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (ii) use their reasonable best efforts to prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 2 or 3 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Securities Act in a timely manner, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be registered in such denominations and such names as the selling Holders may 11 request at least two Business Days prior to such sale of Transfer Restricted Securities; (iv) use its reasonable best efforts to cause the disposition of the Transfer Restricted Securities covered by such Registration Statement to be registered with or approved by such other U.S. governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities; provided, however, that neither the Company nor any Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (v) provide CUSIP numbers for all Transfer Restricted Securities or Exchange Securities, as the case may be, not later than the effective date of such Registration Statement covering such Transfer Restricted Securities or Exchange Securities, as the case may be, and provide the Trustee under the Indenture with certificates for the Transfer Restricted Securities or Exchange Securities, as the case may be, which are in a form eligible for deposit with The Depository Trust Company; (vi) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to Holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve month period beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement (as such term is defined in paragraph (c) Rule 158 under the Securities Act; and (vii) cause the Indenture to be qualified under the TIA not later than the effectiveness date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its reasonable best efforts to cause the Trustee thereunder to execute all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner. (d) Additional Provisions Applicable to Shelf Registration Statements and Certain Exchange Offer Prospectuses. In connection with (1) each Shelf Registration Statement, and (2) each Exchange Offer Registration Statement if and to the extent that an Initial Purchaser has notified the Company that it is a holder of Exchange Securities that are Transfer Restricted Securities (for so long as such Exchange Securities are Transfer Restricted Securities 12 or for the period provided in Section 2 hereof, whichever is shorter); the Company and the Guarantors shall: (i) advise each Holder promptly (but in any event within two Business Days) and, if requested by such Persons, to confirm such advice in writing (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, or (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which it was made, not misleading; and if at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company and Guarantors shall use their reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time and will provide to the Initial Purchasers and each Holder who is named in the Registration Statement prompt notice of the withdrawal of any such order; (ii) subject to 5(c)(i), if any fact or event contemplated by Section 5(d)(i)(D) hereof shall exist or have occurred, use their reasonable best efforts to prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (iii) furnish to each Holder in connection with such exchange or sale, if any (or, in connection with any Exchange Offer Registration Statement, furnish to counsel for the Initial Purchasers), before filing with the Commission, copies of any Registration Statement or any Prospectus included therein (except the Prospectus included in the Exchange Offer Registration Statement at the time it 13 was declared effective) or any amendments or supplements to any such Registration Statement or Prospectus (but excluding any documents incorporated by reference as a result of the Company's or the Guarantors' periodic reporting requirements under the Exchange Act), which documents will be subject to the reasonable review and comment of such Holders (and counsel, as the case may be) in connection with such sale, if any, for a period of at least four Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (excluding all such documents incorporated by reference as a result of the Company's or the Guarantors' periodic reporting requirements under the Exchange Act) to which such Holders (or counsel, as the case may be) shall reasonably object within five Business Days after the receipt thereof. A Holder shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which it was made, not misleading or fails to comply with the applicable requirements of the Securities Act; (iv) prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Holder (or, in connection with any Exchange Offer Registration Statement, furnish to counsel for the Initial Purchasers) in connection with such exchange or sale, if any, make the Company's and the Guarantors' representatives available as may be reasonably necessary for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such Holders (and counsel, as the case may be) may reasonably request; (v) make available, at reasonable times, for inspection by each Holder in connection with any Shelf Registration Statement or Exchange Offer Registration Statement and any attorney or accountant retained by such Holders in connection with such Registration Statement, all relevant financial and other records, pertinent corporate documents of the Company and the Guarantors, subject to customary confidentiality agreements, and cause the Company's and the Guarantors' officers, directors and employees to supply all information reasonably requested by any such Holder, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness and which is customarily furnished in transactions of the type contemplated by such Registration Statement; provided, however, that the foregoing inspection and information gathering (A) shall be coordinated on behalf of the selling Holders, underwriters or any representative thereof by one counsel, who shall be Milbank, Tweed, Hadley & McCloy LLP or such other counsel as may be chosen by the Holders of a majority in principal amount of Transfer Restricted Securities and (B) shall not be available to any such Holder who does not agree to hold such information in confidence; 14 (vi) if requested by any Holders (or, in connection with any Exchange Offer Registration Statement, the Initial Purchasers and their counsel) in connection with such exchange or sale, use their reasonable best efforts to include promptly in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Holders may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (vii) furnish to each Holder (or, in connection with any Exchange Offer Registration Statement, counsel for the Initial Purchasers) in connection with such exchange or sale without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, and upon request all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (viii) deliver to each Holder (or, in connection with any Exchange Offer Registration Statement, the Initial Purchasers and their counsel) without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Holder (or, in connection with any Exchange Offer Registration Statement, the Initial Purchasers and their counsel) reasonably may request; the Company and the Guarantors hereby consent to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; provided that such use of the Prospectus and any amendment or supplement thereto and such offering and sale conforms to the Plan of Distribution set forth in the Prospectus and complies with the terms of this Agreement and all applicable laws and regulations thereunder; (ix) upon the request of any Holder in connection with any Registration Statement, enter into such customary agreements (including an underwriting agreement) and make such customary representations and warranties and take all such other customary actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Company and the Guarantors shall have no obligation to enter into an underwriting agreement or permit an underwritten offering unless a request therefore shall have been received from Holders of not less than 33% of the aggregate principal amount of Transfer Restricted Securities then outstanding; and whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, the Company and the Guarantors shall: 15 (A) upon request of the underwriters in connection with any Underwritten Registration under any Registration Statement, furnish (or in the case of paragraphs (2) and (3) below, use their reasonable best efforts to cause to be furnished) to each Holder, upon the effectiveness of the such Registration Statement: (1) a certificate, dated such date, signed on behalf of the Company and each Guarantor by (x) a senior officer and (y) a principal financial or accounting officer of the Company and such Guarantor, confirming, as of the date thereof, the matters set forth in Sections 7(m) and (o) of the Purchase Agreement and such other similar matters as such Holders may reasonably request; (2) in connection with any Underwritten Registration or Underwritten Offering, an opinion, dated the date of the closing of the Underwritten Offering, of counsel for the Company and the Guarantors covering the matters set forth in Sections 7(c) and 7(d) of the Purchase Agreement and such other matters as such Holder may reasonably request, as well as a letter from counsel including a representation to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, representatives of the independent public accountants for the Company and the Guarantors and has considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time the Shelf Registration Statement or any post-effective amendment thereto became effective and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation of the Exchange Offer, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in the Shelf Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) in connection with any Underwritten Registration or Underwritten Offering, customary comfort letters, dated as of the date of 16 the closing of the Underwritten Offering, from the Company's and Lavalife's independent accountant (to the extent separate financial statements or other financial data of Lavalife are included in the applicable Registration Statement), in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 7(f) and 7(g) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in any agreement entered into by the Company and the Guarantors pursuant to this clause (ix); (x) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that neither the Company nor any Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xi) provide promptly to each Holder, upon written request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act; and (xii) if requested by the Underwriter(s), make appropriate officers of the Company and the Guarantors available to the Underwriter(s) for meetings with prospective purchasers of the Transfer Restricted Securities and prepare and present to potential investors customary "road show" or marketing materials in a manner consistent with new issuances of securities similar to the Transfer Restricted Securities. (e) Each Holder's acquisition of a Transfer Restricted Security constitutes such Holder's agreement that, upon receipt of the notice referred to in Section 5(d)(i)(C) or any notice from the Company of the existence of any fact of the kind described in Section 5(d)(i)(D) hereof (in each case, a "Suspension Notice"), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 5(d)(ii) hereof, or (ii) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings 17 that are incorporated by reference in the Prospectus (the "Advice"). Each Holder receiving a Suspension Notice shall be required to either (I) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession that have been replaced by the Company with a more recently dated Prospectus or (II) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectuses covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 2 or 3 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Advice. 6. Registration Expenses. (a) All expenses incident to the Company's and each Guarantor's performance of or compliance with this Agreement shall be borne, jointly and severally, by the Company and the Guarantors regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including certificates for the Exchange Securities to be issued in the Exchange Offer and printing the Prospectuses) and the Company's expenses for messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company and the Guarantors, and one counsel for the Holders of Transfer Restricted Securities as described in Section 6(b) below; and (v) all fees and disbursements of independent certified public accountants of the Company, the Guarantors and Lavalife, if applicable (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company shall bear its and each Guarantor's internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal, accounting or other duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantors. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), including any amendment or supplement thereto, and any other documents delivered to any Holders, the Company and the Guarantors shall reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Securities in the Exchange Offer and/or selling or reselling Securities or Exchange Securities pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel (who shall be Milbank, Tweed, Hadley & McCloy LLP unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared). 7. Indemnification and Contribution. (a) The Company and the Guarantors agree, jointly and severally, to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities 18 or judgments (including without limitation, any reasonable legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto) provided by the Company to any Holder or any prospective purchaser of Exchange Securities or registered Securities, or caused by any omission alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the Company by any of the Holders. (b) By its acquisition of Transfer Restricted Securities, each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company and the Guarantors, and their respective directors and officers, and each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company or the Guarantors to the same extent as the foregoing indemnity from the Company and the Guarantors set forth in Section 7(a) hereof, but only with reference to information relating to such Holder furnished in writing to the Company by such Holder expressly for use in any Registration Statement or in any amendment or supplement thereto. In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement. (c) In case any action shall be commenced involving any Person in respect of which indemnity may be sought pursuant to Section 7(a) or (b) hereof (the "indemnified party") the indemnified party shall promptly notify the Person against whom such indemnity may be sought (the "indemnifying person") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 7(a) and (b) hereof, a Holder shall not be required to assume the defense of such action pursuant to this Section 7(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be 19 liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified, pursuant to Section 7(a) hereof, and by the Company and the Guarantors, in the case of parties indemnified, pursuant to Section 7(b) hereof. The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (A) effected with its written consent or (B) effected without its written consent if the settlement is entered into more than 20 Business Days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (I) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (II) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent that the indemnification provided for in this Section 7 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand, and the Holders, on the other hand, from their initial sale of Transfer Restricted Securities (or in the case of Exchange Securities that are Transfer Restricted Securities, the sale of the Securities for which such Exchange Securities were exchanged) or (ii) if the allocation provided by clause 7(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause 7(d)(i) but also the relative fault of the Company and the Guarantors, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or such Guarantor, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include, subject to the limitations set forth in Section 7(c) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. 20 The Company, the Guarantors and, by its acquisition of Transfer Restricted Securities, each Holder agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 7, no Holder, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the total amount received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 7(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. 8. Rule 144A and Rule 144. The Company and each Guarantor agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to use its reasonable best efforts to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. 9. Future Subsidiary Guarantees. If, prior to the Consummation of the Exchange Offer or prior to the effectiveness of the Shelf Registration Statement, as the case may be, any subsidiary of the Company executes a Subsidiary Guarantee in accordance with the terms and provisions of the Indenture, the Company shall cause such subsidiary to execute and deliver to the parties hereto a counterpart signature page to this Agreement and such subsidiary shall be bound by all the provisions of this Agreement as a "Guarantor." 10. Miscellaneous. (a) Remedies. The Company and the Guarantors acknowledge and agree that monetary damages (including the liquidated damages contemplated by Section 4hereof) would not be adequate compensation for any loss incurred by reason of a breach by the Company or the 21 Guarantors of the provisions of this Agreement and the Company and the Guarantors hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate; provided that the liquidated damages contemplated by Section 4 hereof shall be the exclusive remedy for any such breach of Section 2 or 3 of this Agreement. (b) Actions Affecting Transfer Restricted Securities. The Company and the Guarantors shall not, directly or indirectly, take any action with respect to the Transfer Restricted Securities as a class that would adversely affect the ability of the Holders of Transfer Restricted Securities to include such Transfer Restricted Securities in a registration undertaken pursuant to this Agreement. (c) No Inconsistent Agreements. The Company and the Guarantors will not, on or after the date of this Agreement, enter into any agreement with respect to their respective securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. In addition, the Company and the Guarantors shall not grant to any of its security holders (other than the Holders of Transfer Restricted Securities in such capacity) the right to include any of its securities in the Registration Statement provided for in this Agreement other than the Transfer Restricted Securities. The Company has not previously entered into any agreement (which has not expired or been terminated) granting any registration rights with respect to its securities to any Person which rights conflict with the provisions hereof. (d) Amendments and Waivers. This Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, unless (i) in the case of Section 4 hereof and this Section 11(d)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of a Majority of Holders (excluding Transfer Restricted Securities held by the Company and its Affiliates) or such greater percentage of the Holders as required by the Indenture. Notwithstanding the foregoing, a waiver or consent to depart from the provisions of this Agreement with respect to a matter that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer and thereby does not directly or indirectly affect the rights of other Holders may be given by a majority of Holders of the Transfer Restricted Securities being tendered or registered pursuant to such Exchange Offer. (e) Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company and the Guarantors, on the one band, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights hereunder. (f) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, facsimile transmission, or air courier guaranteeing overnight delivery: 22 (i) if to a Holder, at the address set forth on the records of the registrar under the Indenture, as the case may be; and (ii) if to the Company or any of the Guarantors: MemberWorks Incorporated 680 Washington Boulevard Stamford, CT 06901 Attention: George W.M. Thomas Fax: (203) 674-7026 Telephone: (203) 674-7069 All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if transmitted by facsimile; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (g) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that (i) this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder and (ii) nothing contained herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities, in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (h) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (i) Securities Held by the Company or Its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Transfer Restricted Securities is required hereunder, Transfer Restricted Securities held by the Company or its Affiliates shall not be 23 counted in determining whether such consent or approval was given by the Holders of such required percentage. (j) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (k) Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York. (l) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (m) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 24 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. MEMBERWORKS INCORPORATED By /s/ ---------------------------- Name: Title: BILLING SERVICES INTERNATIONAL, INC. BEST BENEFITS, INC. IMPAC MARKETING CORP. MYHEALTHYSAVINGS.COM, INC. COUNTRYWIDE DENTAL, INC. MEMBERWORKS CANADA LLC QUOTA PHONE, INC. DISCOUNT DEVELOPMENT SERVICES, LLC UNICARE, INC. COVERDELL & COMPANY INC. MEMBERWORKS CANADA HOLDCO, INC. LAVALIFE CORP. INTERACTIVE MEDIA GROUP (USA) LTD. INTERACTIVE MEDIA CONSOLIDATED, INC. INTERACTIVE VOICE MEDIA BALTIMORE LLC INTERACTIVE VOICE MEDIA COLORADO LLC INTERACTIVE VOICE MEDIA GEORGIA LLC INTERACTIVE VOICE MEDIA MICHIGAN LLC INTERACTIVE VOICE MEDIA NEW JERSEY LLC INTERACTIVE VOICE MEDIA NEW YORK LLC INTERACTIVE VOICE MEDIA OHIO LLC INTERACTIVE VOICE MEDIA PENNSYLVANIA LLC LAVALIFE WASHINGTON DC LLC INTERACTIVE (TX) VOICE MEDIA CORP. INTERACTIVE LA VOICE MEDIA CORP. INTERACTIVE MEDIA (IL) CORP. INTERACTIVE MEDIA MO CORP. INTERACTIVE SJ VOICE MEDIA CORP. INTERACTIVE VOICE MEDIA (CA) CORP. INTERACTIVE VOICE MEDIA (MN) CORP. INTERACTIVE VOICE MEDIA (SACRAMENTO) CORP. BARNES HOLDING CORP. By /s/ ---------------------------- Name: Title: Accepted and agreed by: LEHMAN BROTHERS INC. UBS SECURITIES LLC ABN AMRO INCORPORATED By: LEHMAN BROTHERS INC. By /s/ -------------------------- Authorized Representative EX-12.1 69 ex12-1_043004.txt COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges (In Thousands)
Six Months Ended December 31, Fiscal Year ended June 30, ----------------------------- ---------------------------------------------- 2003 2002 2003 2002 2001 2000 1999 ----------------------------- ---------------------------------------------- Earnings: Pre-tax income from continuing operations before adjustment for minority interests in consolidated $ 19,266 $ 26,306 $ 40,595 $ 43,918 $(26,757) $ 10,333 $ 6,036 subsidiaries or income or loss from equity investees Less: Losses from Minority interest -- -- -- (450) (9,106) (2,027) -- Less: Equity investment income/(loss) -- -- -- -- 83 19 (1,912) ---------------------------------------------------------------------------- $ 19,266 $ 26,306 $ 40,595 $ 43,468 $(35,946) $ 8,287 $ 7,948 Total Earnings ---------------------------------------------------------------------------- Fixed Charges: Interest Expense 1,570 57 238 435 1,263 133 55 Estimated interest component of rent Expense (1) 1,099 1,465 2,557 2,169 2,517 1,308 991 ---------------------------------------------------------------------------- Total Fixed Charges $ 2,669 $ 1,522 $ 2,795 $ 2,604 $3,780 $ 1,441 $1,046 ---------------------------------------------------------------------------- Ratio of earnings to fixed charges ---------------------------------------------------------------------------- 8.22 18.28 15.52 17.69 <0 6.75 8.60 ============================================================================ (1) The ratio of earnings to fixed charges is computed by dividing pre-tax income from continuing operations (before adjustment for minority interests in consolidated subsidiaries and loss from equity investees) by fixed charges. Fixed charges consist of interest charges, whether expensed or capitalized, and that portion of rental expense we believe to be representative of interest. For the year ended June 30, 2001, earnings were insufficient to cover fixed charges by $32.2 million.
EX-21.1 70 ex21-1_043004.txt SUBSIDIARIES OF MEMBERWORKS INC. Exhibit 21.1 SUBSIDIARIES OF MEMBERWORKS INCORPORATED State or Other Jurisdiction of Incorporation Name or Organization - ---- --------------- Interactive Voice Media Baltimore LLC DE Interactive Voice Media Colorado LLC DE Interactive Voice Media Georgia LLC DE Interactive Voice Media Michigan LLC DE Interactive Voice Media New Jersey LLC DE Interactive Voice Media New York LLC DE Interactive Voice Media Ohio LLC DE Interactive Voice Media Pennsylvania LLC DE Lavalife Washington D.C., L.L.C. DE Interactive Media Group (USA) Ltd. DE Interactive Media Consolidated, Inc. DE Interactive (TX) Voice Media Corp. TX Interactive L.A. Voice Media Corp. CA Interactive Media (IL) Corp. IL Interactive Media MO Corp. MO Barnes Holding Corp. NY Interactive S.J. Voice Media Corp. CA Interactive Voice Media (CA) Corp. CA Interactive Voice Media (MN) Corp. MN Interactive Voice Media (Sacramento) Corp. CA Coverdell & Company, Inc. GA Discount Development Services, L.L.C. IL MemberWorks Canada LLC DE Impaq Marketing Corporation DE Best Benefits, Inc. DE Uni-Care, Inc. IL Quota-Phone, Inc. NY Countrywide Dental, Inc. DE MemberWorks Canada Holdco, Inc. DE Lavalife Corp. Nova Scotia MyHealthSavings.com, Inc. DE Billing Services International, Inc. DE MemberWorks Canada Corporation Nova Scotia 3087739 Nova Scotia Co. Nova Scotia IMC Interactive Media Corporation Pty Ltd. Australia Interactive Media Group (Australia) Pty Ltd. Australia MemberWorks Canada Services, Inc. Ontario MemberWorks Canada Travel Services, Inc. Quebec 1 EX-23.1 71 ex23-1_043004.txt CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in this Registration Statement on Form S-4 of MemberWorks Incorporated of our report dated July 28, 2003 except for Note 21, as to which the date is March 31, 2004, relating to the financial statements and financial statement schedule of MemberWorks Incorporated, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement. PricewaterhouseCoopers LLP New York, New York May 10, 2004 EX-23.2 72 ex23-2_043004.txt CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.2 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" and to the use of our report dated November 12, 2003 (except Notes 21 and 22, as to which the date is March 19, 2004) in the Registration Statement (Form S-4 No. XX-XXXXX) and the related prospectus of MemberWorks Incorporated for the registration of US$150 million of 9 1/4% Senior Notes due 2014. Toronto, Canada /s/ Ernst & Young LLP May 14, 2004 Chartered Accountants EX-25.1 73 ex25-1_043004.txt FORM T-1 STATEMENT OF ELIGIBILITY SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ----------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) |_| LASALLE BANK NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 36-0884183 (I.R.S. Employer Identification No.) 135 South LaSalle Street, Chicago, Illinois 60603 (Address of principal executive offices) (Zip Code) ----------------------- Willie J. Miller, Jr. Group Senior Vice President Chief Legal Officer and Secretary Telephone: (312) 904-2018 135 South LaSalle Street, Suite 925 Chicago, Illinois 60603 (Name, address and telephone number of agent for service) ----------------------- MEMBERWORKS INCORPORATED (Exact name of obligor as specified in its charter) Delaware 06-1276882 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 680 Washington Boulevard, Suite 1100 Stamford, CT 06901 (Address of principal executive offices) (Zip Code) ----------------------- 9 1/4% Senior Notes due 2014 Subsidiary Guarantees of 9 1/4% Senior Notes due 2014 (Title of the indenture securities) ITEM 1. GENERAL INFORMATION* Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. 1. Comptroller of the Currency, Washington D.C. 2. Federal Deposit Insurance Corporation, Washington, D.C. 3. The Board of Governors of the Federal Reserve Systems, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. Not Applicable *Pursuant to General Instruction B, the trustee has responded only to items 1, 2 and 16 of this form since to the best knowledge of the trustee the obligor is not in default under any indenture under which the trustee is a trustee. ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as part of this statement of eligibility and qualification. 1. A copy of the Articles of Association of LaSalle Bank National Association now in effect. (incorporated herein by reference to Exhibit 1 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 2. A copy of the certificate of authority to commence business (incorporated herein by reference to Exhibit 2 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 3. A copy of the authorization to exercise corporate trust powers (incorporated herein by reference to Exhibit 3 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 4. A copy of the existing By-Laws of LaSalle Bank National Association (incorporated herein by reference to Exhibit 4 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 5. Not applicable. 6. The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939 (incorporated herein by reference to Exhibit 6 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, LaSalle Bank National Association, a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago, State of Illinois, on the 7th day of May, 2004. LASALLE BANK NATIONAL ASSOCIATION By: /s/ John W. Porter ------------------------------ John W. Porter Vice President
LaSalle Bank N.A. Call Date: 3/31/2004 ST-BK: 17-1520 EXHIBIT 7 135 South LaSalle Street Page RC-1 Chicago, IL 60603 CERT: 15407
Transit Number: 71000505 Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for March 31, 2004 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC - Balance Sheet
Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD ---- a. Noninterest-bearing balances and currency and coin (1) 0081 1,634,318 b. Interest-bearing balances (2) 0071 10,784 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 127,803 b. Available-for-sale securities (from Schedule RC-B, column D) 1773 23,757,044 3. Federal funds sold and securities purchased under agreements to resell a. Federal funds sold in domestic offices B987 1,274,530 b. Securitites purchased under agreements to resell (3) B989 118,823 4. Loans and lease financing receivables (from schedule RC-C) a. Loans and leases held for sale 5369 518,931 b. Loans and leases, net of unearned income B528 34,169,827 c. LESS: Allowance for loan and lease losses 3123 681,686 d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) B529 33,488,141 5. Trading assets (from Schedule RC-D) 3545 610,978 6. Premises and fixed assets (including capitalized leases) 2145 260,528 7. Other real estate owned (from Schedule RC-M) 2150 20,464 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 0 9. Customers' liability to this bank on acceptances outstanding 2155 15,566 10. Intangible assets (from Schedule RC-M) a. Goodwill 3163 181,613 b. Other Intangible assets 0426 3,553 11. Other assets (from Schedule RC-F) 2160 3,074,642 12. Total assets (sum of items 1 through 11) 2170 65,097,718 - -------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. (3) Includes all securites resale agreements in domestic and foreign offies, regardless of maturity.
LaSalle Bank N.A. Call Date: 3/31/2004 ST-BK: 17-1520 FFIEC 031 135 South LaSalle Street Page RC-2 Chicago, IL 60603 Vendor ID: D CERT: 15407
Transit Number: 71000505 Schedule RC - Continued
Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of RCON ---- columns A and C from Schedule RC-E, part I) 2200 28,107,482 RCON ---- (1) Noninterest-bearing (1) 6631 7,674,198 (2) Interest-bearing 6636 20,433,284 RCFN ---- b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) 2200 8,614,464 RCFN ---- (1) Noninterest-bearing 6631 0 (2) Interest-bearing 6636 8,614,464 RCON ---- 14. Federal funds purchased and securities sold under agreements to repurchase: a. Federal funds purchased in domestic offices (2) B993 2,773,411 RCFD ---- b. Securities sold under agreements to repurchase (3) B995 2,249,364 15. Trading liabilities (from Schedule RC-D) 3548 263,024 16. Other borrowed money (includes mortgage indebtedness and obligations 3190 10,601,714 under capitalized leases): From schedule RC-M 17. Not applicable. 18. Bank's liability on acceptances executed and outstanding 2920 15,566 19. Subordinated notes and debentures (4) 3200 540,000 20. Other liabilities (from Schedule RC-G) 2930 6,988,713 21. Total liabilities (sum of items 13 through 20) 2948 60,153,738 22. Minority Interest in consolidated subsidiaries 3000 69,310 EQUITY CAPITAL RCFD ---- 23. Perpetual preferred stock and related surplus 3838 635,410 24. Common stock 3230 41,234 25. Surplus (exclude all surplus related to preferred stock) 3839 2,000,163 26. a.Retained Earnings 3632 2,068,864 b. Accumulated Other Comprehensive income.(5) B530 128,999 27. Other Equity capital components (6) 3284 0 28. Total equity capital (sum of items 23 through 27) 3210 4,874,670 29. Total liabilities, minority interest, and equity capital (sum of items 3300 65,097,718 21, 22, and 28) Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external auditors as of any RCFD Number date during 2001 ---- ------ 6724 2
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank conducted in with generally accepted auditing standards by a accordance with generally accepted auditing certified public accounting firm which submits a standards by a certified accounting firm. report on the bank (may be required by state chartering authority) 2 = Independent audit of the bank's parent holding company 5 = Directors' examination of the bank performed by conducted in accordance with generally accepted other external auditors (may be required by state auditing standards by a certified public accounting chartering authority) firm which submits a report on the consolidated 6 = Review of the bank's financial statements by holding company (but not on the bank separately) external auditors 3 = Attestation on bank managements assertion on the 7 = Compilation of the bank's financial statements by effectiveness of the banks internal control over external auditors financial reporting by a certified public accounting 8 = Other audit procedures (excluding tax preparation firm. work) 9 = No exernal audit work
- -------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Report overnight Federal Home Loan Bank advances in Schedule RC, item 16 "other borrowed money." (3) Includes all securities repurchased agreements in domestic and foreign offices, regardless of maturity. (4) Includes limited-life preferred stock and related surplus. (5) Includes net unrealized holding gains(losses) on available for sale securities, accumulated net gains (losses) on cash flow hedges, (6) Includes treasury stock and unearned Employee Stock Ownership plan shares. EX-99.1 74 ex99-1_043004.txt FORM OF LETTER TO BROKERS, DEALERS ETC. OFFER TO EXCHANGE ALL OUTSTANDING 9 1/4% SENIOR NOTES DUE 2014 WHICH HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT FOR 9 1/4% SENIOR NOTES DUE 2014 REGISTERED UNDER THE SECURITIES ACT OF MEMBERWORKS INCORPORATED --------------- , 2004 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We are enclosing herewith an offer by MemberWorks Incorporated, a Delaware corporation (the "Company"), to exchange (the "Exchange Offer") its 9 1/4% Senior Notes due 2014 (the "New Notes") which are registered under the Securities Act of 1933, as amended (the "Securities Act") for all outstanding 9 1/4% Senior Notes due 2014 of the Company (the "Old Notes") which are not registered under the Securities Act, upon the terms and conditions set forth in the accompanying Prospectus dated , 2004 (the "Prospectus") and related Letter of Transmittal and instructions thereto (the "Letter of Transmittal"). A Letter of Transmittal is being circulated to holders of Old Notes with the Prospectus. Holders may use it to effect valid tenders of Old Notes. The Exchange Offer also provides a procedure for holders to tender the Old Notes by means of guaranteed delivery. Based on an interpretation of the Securities and Exchange Commission (the "Commission"), New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than (i) a broker-dealer who purchased such Old Notes directly from the Company for resale pursuant to Rule 144A or any other available exemption under the Securities Act or (ii) a person that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holder is acquiring the New Notes in its ordinary course of business and is not participating, and has no arrangement or understanding with any person to participate, in the distribution of the New Notes. Holders of Old Notes wishing to accept the Exchange Offer must represent to the Company that such conditions have been met. Each broker-dealer that receives New Notes in exchange for Old Notes held for its own account, as a result of market making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Prospectus, as it may be amended or supplemented from time to time, may be used by such broker-dealer in connection with the resales of New Notes received in exchange for Old Notes. The Company has agreed that, for a period of one year after the date of the Prospectus, it will make the Prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any such resale. Notwithstanding any other term of the Exchange Offer, the Company may terminate or amend the Exchange Offer as provided in the Prospectus and will not be required to accept for exchange, or exchange New Notes for, any Old Notes not accepted for exchange prior to such termination. The Company reserves the right not to accept tendered Old Notes from any tendering holder if the Company determines, in its sole and absolute discretion, that such acceptance could result in a violation of applicable securities laws. We are asking you to contact your clients for whom you hold Old Notes registered in your name or in the name of your nominee. In addition, we ask you to contact your clients who, to your knowledge, hold Old Notes registered in their own names. The Company will not pay any fees or commissions to any broker, dealer or other person (other than the Exchange Agent as described in the Prospectus) in connection with the solicitation of tenders of Old Notes pursuant to the Exchange Offer. You will, however, be reimbursed by the Company for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Company will pay any transfer taxes applicable to the tender of Old Notes to it or its order, except as otherwise provided in the Prospectus and the Letter of Transmittal. Enclosed is a copy of each of the following documents: 1. The Prospectus. 2. A Letter of Transmittal for your use in connection with the Exchange Offer and for the information of your clients. 3. A form of letter that may be sent to your clients for whose accounts you hold Old Notes registered in your name or the name of your nominee, with space provided for obtaining the clients' instructions with regard to the Exchange Offer. 4. A form of Notice of Guaranteed Delivery. 5. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 6. A return envelope addressed to LaSalle Bank National Association as Exchange Agent at LaSalle Bank N.A., 135 LaSalle Street, Suite 1960, Chicago, IL 60603 Your prompt action is requested. The Exchange Offer will expire at 5:00 p.m., New York City time, on , 2004 unless extended (the "Expiration Date"). Old Notes tendered pursuant to the Exchange Offer may be withdrawn, subject to the procedures described in the Prospectus, at any time prior to 5:00 p.m., New York City time, on the business day prior to the Expiration Date. The Exchange Offer is not conditioned on any minimum principal amount of Old Notes being tendered. To tender Old Notes in the Exchange Offer, certificates for Old Notes (or confirmation of a book-entry transfer into the Exchange Agent's account at The Depository Trust Company of Old Notes tendered electronically) and a duly executed and properly completed Letter of Transmittal or a facsimile thereof, together with any other required documents, must be received by the Exchange Agent as indicated in the Prospectus. If holders desire to tender Old Notes pursuant to the Exchange Offer and (i) certificates representing such Old Notes are not lost but are not immediately available, (ii) time will not permit the Letter of Transmittal, certificates evidencing such Old Notes or other required documents to reach the Exchange Agent prior to the Expiration Date or (iii) the procedures for book-entry transfer cannot be completed prior to the Expiration Date, such holders may effect a tender of such Old Notes in accordance with the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedure." Holders following the guaranteed delivery procedure must still fully complete, execute and deliver the Letter of Transmittal or facsimile thereof. The Exchange Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of the Old Notes in any jurisdiction in which the making of the Exchange Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction or would otherwise not be in compliance with any provision of any applicable securities law. Additional copies of the enclosed material may be obtained from the Exchange Agent by calling (312) 904-5532. 2 NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE COMPANY, THE TRUSTEE OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER OR THE SOLICITATION, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL. Very truly yours, 3 EX-99.2 75 ex99-2_043004.txt FORM OF LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL FOR 9 1/4% SENIOR NOTES DUE 2014 OF MEMBERWORKS INCORPORATED PURSUANT TO THE EXCHANGE OFFER IN RESPECT OF ALL OF ITS OUTSTANDING 9 1/4% SENIOR NOTES DUE 2014 WHICH HAVE NOT REGISTERED UNDER THE SECURITIES ACT FOR 9 1/4% SENIOR NOTES DUE 2014 REGISTERED UNDER THE SECURITIES ACT --------------------- PURSUANT TO THE PROSPECTUS DATED , 2004 --------------------- - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM., NEW YORK CITY TIME, , 2004 UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE. - -------------------------------------------------------------------------------- THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: LaSalle Bank National Association
By Mail: By Overnight Courier and By Hand: LaSalle Bank N.A. LaSalle Bank N.A. 135 LaSalle Street, Suite 1960 135 LaSalle Street, Suite 1960 Chicago, IL 60603 Chicago, IL 60603 Attention Christine Linde, Vice President Attention Christine Linde, Vice President
By Facsimile: (312) 904-2236 For Eligible Institutions Only To Confirm by Telephone: (312) 904-5532 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. By execution hereof, the undersigned acknowledges receipt of the prospectus dated , 2004 (the "Prospectus") of MemberWorks Incorporated, a Delaware corporation (the "Company"), which, together with this letter of transmittal and the instructions thereto (the "Letter of Transmittal"), constitute the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of its 9 1/4% Senior Notes due 2014 (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a registration statement of which the Prospectus constitutes a part, for each $1,000 principal amount of its outstanding 9 1/4% Senior Notes due 2014 (the "Old Notes") which have not been registered under the Securities Act, upon the terms and subject to the conditions set forth in the Prospectus. This Letter of Transmittal is to be used by Holders (as defined below) if: (i) certificates representing Old Notes are to be physically delivered to the Exchange Agent herewith by Holders; (ii) tender of the Old Notes is to be made by book-entry transfer to the Exchange Agent's account at The Depository Trust Company ("DTC") pursuant to the procedures set forth in the Prospectus under "The Exchange Offer--Procedure for Tendering" by any financial institution that is a participant in DTC and whose name appears on a security position listing as the owner of Old Notes (such participants, acting on behalf of Holders are referred to herein, together with such Holders, as "Acting Holders"); or (iii) tender of the Old Notes is to be made according to the guaranteed delivery procedures set forth in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedure," and, in each case, instructions are being transmitted through the DTC Automated Tender Offer Program ("ATOP"). Delivery of documents to DTC does not constitute delivery to the Exchange Agent. The term "Holder" with respect to the Exchange Offer means any person: (i) in whose name Old Notes are registered on the books of the Registrar or any other person who has obtained a properly completed bond power from the registered Holder; or (ii) whose Old Notes are held of record by DTC and who desires to deliver such Old Notes by book-entry transfer at DTC. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY. All capitalized terms used herein and not defined shall have the meaning ascribed to them in the Prospectus. The instructions included with this Letter of Transmittal must be followed. Questions and requests for assistance or for additional copies of the Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Exchange Agent. See Instruction 8 herein. List below the Old Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, list the certificate numbers and principal amounts on a separately executed schedule and affix the schedule to this Letter of Transmittal. Tenders of Old Notes will be accepted only in principal amounts equal to $1,000 or integral multiples thereof. - -------------------------------------------------------------------------------- DESCRIPTION OF OLD NOTES - -------------------------------------------------------------------------------- Certificate Aggregate Number(s)* Principal Amount Name(s) and Address(es) of Holder(s) (Attach signed list Tendered (if less (Please fill in if blank) if necessary) than all)** - -------------------------------------------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- - -------------------------------------------------------------------------------- Total Principal Amount of Old Notes Tendered - -------------------------------------------------------------------------------- * Need not be completed by Holders tendering by book-entry transfer. ** Need not be completed by Holders who wish to tender with respect to all Old Notes listed. See Instruction 2. - -------------------------------------------------------------------------------- 2 |_| CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution: -------------------------------------------------- DTC Book-Entry Account No.: ----------------------------------------------------- Transaction Code No.: ----------------------------------------------------------- If Holders desire to tender Old Notes pursuant to the Exchange Offer and (i) certificates representing such Old Notes are not lost but are not immediately available, (ii) time will not permit this Letter of Transmittal, certificates representing such Old Notes or other required documents to reach the Exchange Agent prior to the Expiration Date or (iii) the procedures for book-entry transfer cannot be completed prior to the Expiration Date, such Holders may effect a tender of such Old Notes in accordance with the guaranteed delivery procedures set forth in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedure." DTC participants may also accept the Offer by submitting the notice of guaranteed delivery through ATOP. |_| CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Holder(s) of Old Notes: ---------------------------------------------- Window Ticket No. (if any): ----------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: ----------------------------- Name of Eligible Institution that Guaranteed Delivery: -------------------------- If Delivered by Book-Entry Transfer: Name of Tendering Institution: -------------------------------------------------- DTC Book-Entry Account No.: ----------------------------------------------------- Transaction Code No.: ----------------------------------------------------------- |_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: --------------------------------------------------------------------------- Address: ------------------------------------------------------------------------ |_| CHECK HERE IF TENDERED NOTES ARE ENCLOSED HEREWITH. 3 Ladies and Gentlemen: Subject to the terms of the Exchange Offer, the undersigned hereby tenders to the Company the principal amount of Old Notes indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Old Notes tendered in accordance with this Letter of Transmittal, the undersigned sells, assigns and transfers to, or upon the order of the Company all right, title and interest in and to the Old Notes tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent its agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company and as Trustee under the Indenture for the Old Notes and the New Notes) with respect to the tendered Old Notes with full power of substitution to (i) deliver certificates for such Old Notes to the Company, or transfer ownership of such Old Notes on the account books maintained by DTC together, in either such case, with all accompanying evidences of transfer and authenticity to, or upon the order of, the Company and (ii) present such Old Notes for transfer on the books of the Registrar and receive all benefits and otherwise exercise all rights of beneficial ownership of such Old Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed irrevocable and coupled with an interest. The undersigned hereby represents and warrants that he or she has full power and authority to tender, sell, assign and transfer the Old Notes tendered hereby and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim, when the same are acquired by the Company. The undersigned also acknowledges that this Exchange Offer is being made in reliance upon an interpretation by the staff of the Securities and Exchange Commission that the New Notes issued in exchange for the Old Notes pursuant to the Exchange Offer may be offered for sale, resold and otherwise transferred by any holder thereof (other than (i) a broker-dealer who purchased such Old Notes directly from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act or (ii) a person that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holder is acquiring the New Notes in its ordinary course of business and is not participating, and has no arrangement or understanding with any person to participate in the distribution of the New Notes. The undersigned represents and warrants that: (a) the New Notes acquired pursuant to the Exchange Offer are being acquired in the ordinary course of business of the person receiving the New Notes, whether or not the person is the Holder, (b) neither the undersigned nor any other recipient of the New Notes (if different than the Holder) is engaged in, intends to engage in, or has any arrangement or understanding with any person to participate in, the distribution of the Old Notes or New Notes, (c) neither the undersigned nor any other recipient is an "affiliate" of the Company within the meaning of Rule 405 promulgated under the Securities Act or, if the Holder or such recipient is an affiliate, that the Holder or such recipient represents and agrees that it may not rely on the applicable interpretations of the staff of the Securities and Exchange Commission and it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (d) if the undersigned is a broker-dealer, it has not entered into any arrangement or understanding with the Company or any "affiliate" of the Company within the meaning of Rule 405 promulgated under the Securities Act to distribute the New Notes, (e) if the undersigned is a broker-dealer, the undersigned further represents and warrants that, if it will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, it will deliver a prospectus meeting the requirements of the Securities Act (for which purposes, the delivery of the Prospectus, as the same may 4 be hereafter supplemented or amended, shall be sufficient) in connection with any resale of New Notes received in the Exchange Offer; and (f) the undersigned is not acting on behalf of any person or entity that could not truthfully make these representations. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the assignment and transfer of the Old Notes tendered hereby. For purposes of the Exchange Offer, the Company shall be deemed to have accepted validly tendered Old Notes when the Company has given oral or written notice (such notice, if given orally to be confirmed in writing) thereof to the Exchange Agent. If any tendered Old Notes are not accepted for exchange pursuant to the Exchange Offer for any reason, certificates for any such unaccepted Old Notes will be returned (except as noted below with respect to tenders through DTC), without expense, to the undersigned at the address shown below or at a different address as may be indicated under "Special Issuance Instructions" promptly after the Expiration Date. All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death, incapacity or dissolution of the undersigned and every obligation under this Letter of Transmittal shall be binding upon the undersigned's heirs, personnel, representatives, successors and assigns. The undersigned understands that tenders of Old Notes pursuant to the procedures described under the caption "The Exchange Offer--Procedure for Tendering" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. All questions as to form, validity, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Notes will be determined by the Company in its sole discretion, which determination will be final and binding. Unless otherwise indicated under "Special Issuance Instructions," please issue the certificates representing the New Notes issued in exchange for the Old Notes accepted for exchange and return any Old Notes not tendered or not exchanged, in the name(s) of the undersigned (or in either such event in the case of Old Notes tendered by DTC, by credit to the account at DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions," please send the certificates representing the New Notes issued in exchange for the Old Notes accepted for exchange and any certificates for Old Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signatures, unless, in either event, tender is being made through DTC. In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the New Notes issued in exchange for the Old Notes accepted for exchange and return any Old Notes not tendered or not exchanged in the name(s) of, and send said certificates to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Old Notes from the name of the registered holder(s) thereof if the Company does not accept for exchange any of the Old Notes so tendered. 5 TENDERING HOLDER SIGNATURE (To Be Completed by All Tendering Holders of Old Notes Regardless of Whether Old Notes Are Being Physically Delivered Herewith) (Please Complete Substitute Form W-9 Herein) This Letter of Transmittal must be signed by the Holder(s) of Old Notes exactly as their name(s) appear(s) on certificate(s) for Old Notes or, if tendered by a participant in DTC, exactly as such participant's name appears on a security position listing as the owner of Old Notes, or by person(s) authorized to become registered Holder(s) by endorsements and documents transmitted with this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below under "Capacity" and submit evidence satisfactory to the Company of such person's authority to so act. See Instruction 3 herein. If the signature appearing below is not of the registered Holder(s) of the Old Note, then the registered Holder(s) must sign a valid proxy. Please sign here X Date: ------------------------------- ---------------------------------- X Date: ------------------------------- ---------------------------------- Signature(s) of Holder(s) or Authorized Signatory Name(s): Address: -------------------------- --------------------------------- - ---------------------------------- ----------------------------------------- (Please Print) (including Zip Code) Capacity: Area Code and Telephone No.: ------------------------- ------------- Taxpayer Identification No.: ------ MEDALLION SIGNATURE GUARANTEE (If Required--See Instruction 3 herein) - -------------------------------------------------------------------------------- (Name of Eligible Institution Guaranteeing Signatures) - -------------------------------------------------------------------------------- (Address (including zip code) and Telephone Number (including area code) of Firm) - -------------------------------------------------------------------------------- (Authorized Signature) - -------------------------------------------------------------------------------- (Printed Name) - -------------------------------------------------------------------------------- (Title) Date: ----------------------------- 6
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instruction 1, 3, 4 and 5 herein) (See Instruction 1, 3, 4 and 5 herein) To be completed ONLY if certificates for Old Notes in a To be completed ONLY if certificates for Old Notes principal amount not tendered are to be issued in the in a principal amount not tendered or not accepted name of, or the New Notes issued pursuant to the for purchase or the New Notes issued pursuant to the Exchange Offer are to be issued to the order of, Exchange Offer are to be sent to someone other than someone other than person or persons whose signature(s) the person or persons whose signature(s) appear(s) appear(s) within this Letter of Transmittal or issued within this Letter of Transmittal or issued to an to an address different from that shown in the box address different from that shown in the box entitled "Description of Old Notes" within this Letter entitled "Description of Old Notes" within this of Transmittal, or if Old Notes tendered by book-entry Letter of Transmittal. transfer that are not accepted for purchase are to be credited to an account maintained at DTC. Name: Name: ------------------------------------------ ----------------------------------------------- (Please Print) (Please Print) Address: Address: ------------------------------------------ ----------------------------------------------- (Please Print) (Please Print) - --------------------------------------------------- ----------------------------------------------- - --------------------------------------------------- ----------------------------------------------- (Zip Code) (Zip Code) - -------------------------------------------------- ----------------------------------------------- (Taxpayer Identification Number) (Taxpayer Identification Number) (See Substitute Form W-9) (See Substitute Form W-9)
7 INSTRUCTIONS Forming Part of the Terms and Conditions of the Exchange Offer 1. Delivery of this Letter of Transmittal and Old Notes. The certificates for the tendered Old Notes (or a confirmation of a book-entry transfer into the Exchange Agent's account at DTC of all Old Notes delivered electronically), as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. The method of delivery of the tendered Old Notes, this Letter of Transmittal and all other required documents is at the election and risk of the Holder and, except as otherwise provided below, the delivery will be deemed made only when actually received by the Exchange Agent. Instead of delivery by mail, it is recommended that the Holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. No Letter of Transmittal or Old Notes should be sent to the Company. Holders who wish to tender their Old Notes and (i) whose certificates representing such Old Notes are not immediately available, (ii) who cannot deliver their certificates representing such Old Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date or (iii) who cannot complete the procedure for book-entry transfer on a timely basis, must tender their Old Notes and follow the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder of the Old Notes, the certificate number or numbers of such Old Notes and the principal amount of Old Notes tendered, stating that the tender is being made by guaranteed delivery and guaranteeing that, within five business days after the Expiration Date, this Letter of Transmittal (or facsimile hereof) together with the certificate(s) representing the Old Notes (or a confirmation of electronic delivery of book-entry delivery into the Exchange Agent's account at DTC) and any of the required documents will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or facsimile hereof), as well as all other documents required by this Letter of Transmittal and the certificate(s) representing all tendered Old Notes in proper form for transfer (or a confirmation of book-entry delivery into the Exchange Agent's account at DTC), must be received by the Exchange Agent within five business days after the Expiration Date, all as provided in the Prospectus under the caption "Guaranteed Delivery Procedure". Any Holder of Old Notes who wishes to tender his Old Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration Date. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Old Notes not properly tendered or any Old Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Old Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Old Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned without cost by the Exchange Agent to the tendering Holders of Old Notes, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. 2. Partial Tenders. Tenders of Old Notes will be accepted only in principal amounts equal to $1,000 and integral multiples thereof. If less than the entire principal amount of any Old Notes is tendered, the tendering Holder should fill in the principal amount tendered in the third column of the chart entitled "Description of Old Notes." The 8 entire principal amount of Old Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Old Notes is not tendered, Old Notes for the principal amount of Old Notes not tendered and a certificate or certificates representing New Notes issued in exchange for any Old Notes accepted will be sent to the Holder at his or her registered address, unless a different address is provided in the appropriate box on this Letter of Transmittal or unless tender is made through DTC, promptly after the Old Notes are accepted for exchange. 3. Signatures on the Letter of Transmittal; Bond Powers and Endorsements; Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is signed by the registered Holder(s) of the Old Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the Old Notes without alteration, enlargement or any change whatsoever. If this Letter of Transmittal (or facsimile hereof) is signed by the registered Holder(s) of Old Notes tendered and the certificate(s) for New Notes issued in exchange therefor is to be issued (or any untendered principal amount of Old Notes is to be reissued) to the registered Holder, such Holder need not and should not endorse any tendered Old Note, nor provide a separate bond power. In any other case, such Holder must either properly endorse the Old Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal, with the signatures on the endorsement or bond power guaranteed by a recognized member of the Medallion Signature Guarantee Program. If this Letter of Transmittal (or facsimile hereof) is signed by a person other than the registered Holder(s) of any Old Notes listed, such Old Notes must be endorsed or accompanied by appropriate bond powers signed as the name of the registered Holder(s) appears on the Old Notes. If this Letter of Transmittal (or facsimile hereof) or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, or officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with this Letter of Transmittal. Endorsements on Old Notes or signatures on bond powers required by this Instruction 3 must be guaranteed by a recognized member of the Medallion Signature Guarantee Program. Signatures on this Letter of Transmittal (or facsimile hereof) must be guaranteed by a recognized member of the Medallion Signature Guarantee Program unless the Old Notes tendered pursuant thereto are tendered (i) by a registered Holder (including any participant in DTC whose name appears on a security position listing as the owner of Old Notes) who has not completed the box set forth herein entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" or (ii) for the account of a member of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States (each of the foregoing being referred to as an "Eligible Institution"). 4. Special Issuance and Delivery Instructions. Tendering Holders should indicate, in the applicable spaces, the name and address to which New Notes or substitute certificates representing Old Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal (or in the case of tender of the Old Notes through DTC, if different from DTC). In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. 5. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange Offer. If, however, certificates representing New Notes or Old Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered Holder of the Old Notes tendered hereby, or if tendered Old Notes are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other person) will be payable by the 9 tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder. Except as provided in this Instruction 5, it will not be necessary for transfer tax stamps to be affixed to the Old Notes listed in this Letter of Transmittal. 6. Waiver of Conditions. The Company reserves the absolute right to amend, waive or modify specified conditions in the Exchange Offer in the case of all Old Notes tendered. 7. Mutilated, Lost, Stolen or Destroyed Old Notes. Any tendering Holder whose Old Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated in this Letter of Transmittal for further instruction. 8. Requests for Assistance or Additional Copies. Questions and requests for assistance and requests for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address specified in this Letter of Transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 9. Withdrawal. Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the Prospectus under the caption "The Exchange Offer--Withdrawal of Tenders". 10 IMPORTANT TAX INFORMATION Under U.S. federal income tax laws, a Holder who tenders Old Notes in the Exchange Offer is required to provide the Exchange Agent (as payer) with such Holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 below or otherwise establish a basis for exemption from backup withholding. If such Holder is an individual, the TIN is his or her social security number. If the Exchange Agent is not provided with the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service, and payments made with respect to New Notes acquired pursuant to the Exchange Offer may be subject to backup withholding. Certain Holders (including, among others, all corporations and certain foreign persons) are not subject to these backup withholding and reporting requirements. Exempt Holders should indicate their exempt status on Substitute Form W-9. A foreign person may qualify as an exempt recipient by submitting to the Exchange Agent a properly completed Internal Revenue Service Form W-8 BEN, Form W-ECI or other appropriate form signed under penalties of perjury, attesting to that Holder's exempt status. Form W-8 BEN and Form W-ECI can be obtained from the Exchange Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. If backup withholding applies, the Exchange Agent is required to withhold 28% of any payments made to the Holder or other payee. Backup withholding is not an additional U.S. federal income tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may be obtained provided that the required information is furnished to the Internal Revenue Service. Purpose of Substitute Form W-9 To prevent backup withholding, a tendering Holder is required to provide the Exchange Agent with either: (i) the Holder's correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such Holder is awaiting a TIN) and that (A) the Holder has not been notified by the Internal Revenue Service that the Holder is subject to backup withholding as a result of failure to report all interest or dividends or (B) the Internal Revenue Service has notified the Holder that the Holder is no longer subject to backup withholding; or (ii) an adequate basis for exemption. What Number to Give the Exchange Agent The Holder is required to give the Exchange Agent the TIN (i.e., social security number or employer identification number) of the registered Holder of the Old Notes. If the Old Notes are held in more than one name or are not held in the name of the beneficial owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 11
- ----------------------------------------------------------------------------------------------------------------------------------- REQUESTER'S NAME: LaSalle Bank National Association SUBSTITUTE Part 1-- PLEASE PROVIDE YOUR TIN IN THE Social Security Number BOX AT THE RIGHT AND CERTIFY BY SIGNING OR Form W-9 AND DATING BELOW Employer Identification Number Part 2 -- Certification -- Under Penalties of Perjury, I certify that: Part 3 -- Department of the Treasury Internal Revenue Service (1) The number shown on this form is Awaiting TIN |_| my correct Taxpayer Identification Payer's Request for Number (or I am waiting for a Taxpayer Identification number to be issued to me), and Number (TIN) (2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, - -------------------------------------- (b) I have not been notified by Please fill-in your the Internal Revenue Service Name and Address: ("IRS") that I am subject to backup withholding as a result of failure to report all interest or - -------------------------------------- dividends, or (c) the IRS has Name notified me that I am no longer subject to backup withholding, and (3) I am a U.S. person (including a U.S. resident alien). - -------------------------------------- Address (Number and Street) Certification Instructions -- You must cross out item (2) in Part 2 above if - --------------------------------------- you have been notified by the IRS that you are subject to backup withholding City, State and Zip Code because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you arc no longer subject to backup withholding, do not cross out item (2). SIGNATURE: DATE: ----------------------------- ----------------------- - ---------------------------------------- ------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING ON ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. - -------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that until I provide a taxpayer identification number, all reportable payments made to me will be subject to backup withholding. Signature: Date: ------------------------------- -------------------- - -------------------------------------------------------------------------------- 12 The Exchange Agent for the Exchange Offer Is: LaSalle Bank National Association
By Mail: By Overnight Courier and By Hand: LaSalle Bank N.A. LaSalle Bank N.A. 135 LaSalle Street, Suite 1960 135 LaSalle Street, Suite 1960 Chicago, IL 60603 Chicago, IL 60603 Attention: Christine Linde, Vice President Attention: Christine Linde, Vice President By Facsimile: (312) 904-2236 For Eligible Institutions Only To Confirm by Telephone: (312) 904-5532
13 EX-99.3 76 ex99-3_043004.txt FORM OF LETTER TO CLIENTS OFFER TO EXCHANGE ALL OUTSTANDING 9 1/4% SENIOR NOTES DUE 2014 WHICH HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT FOR 9 1/4% SENIOR NOTES DUE 2014 REGISTERED UNDER THE SECURITIES ACT OF MEMBERWORKS INCORPORATED --------------- , 2004 To Our Clients: Enclosed for your consideration are the Prospectus dated , 2004 (the "Prospectus") and the related letter of transmittal and instructions thereto (the "Letter of Transmittal") in connection with the offer by MemberWorks Incorporated, a Delaware corporation (the "Company") to exchange (the "Exchange Offer") its 9 1/4% Senior Notes due 2014 (the "New Notes") which are registered under the Securities Act of 1933, as amended (the "Securities Act") for all outstanding 9 1/4% Senior Notes due 2014 of the Company (the "Old Notes") which are not registered under the Act, upon the terms and subject to the conditions set forth in the Prospectus and Letter of Transmittal. We are the registered holder (the "Registered Holder") of Old Notes held by us for your account. An exchange of the Old Notes can be made only by us as the Registered Holder and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to exchange the Old Notes held by us for your account. The Prospectus and related Letter of Transmittal provide a procedure for holders to tender their Old Notes by means of guaranteed delivery. We request information as to whether you wish us to exchange any or all of the Old Notes held by us for your account upon the terms and subject to the conditions of the Exchange Offer. Your attention is directed to the following: 1. The New Notes will be exchanged for the Old Notes at the rate of $1,000 principal amount of New Notes for each $1,000 principal amount of Old Notes. The New Notes will bear interest from April 13, 2004. Holders of Old Notes whose Old Notes are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on the Old Notes accrued from April 13, 2004 to the date of issuance of the New Notes. The form and terms of the New Notes are identical in all material respects to the form and terms of the Old Notes, except that the New Notes have been registered under the Securities Act. 2. Based on an interpretation of the Securities and Exchange Commission (the "Commission"), New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than (i) a broker-dealer who purchased Old Notes directly from the Company for resale pursuant to Rule 144A or any other available exemption under the Securities Act or (ii) a person that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holder is acquiring New Notes in its ordinary course of business and is not participating, and has no arrangement or understanding with any person to participate, in the distribution of the New Notes. Holders of Old Notes wishing to accept the Exchange Offer must represent to the Company that such conditions have been met. 3. The Exchange Offer is not conditioned on any minimum principal amount of Old Notes being tendered. 4. Notwithstanding any other term of the Exchange Offer, the Company may terminate or amend the Exchange Offer as provided in the Prospectus and will not be required to accept for exchange, or exchange New Notes for, any Old Notes not accepted for exchange prior to such termination. 5. The Exchange Offer will expire at 5:00 p.m., New York City time, on , 2004 unless extended (the "Expiration Date"). Tendered Old Notes may be withdrawn, subject to the procedures described in the Prospectus, at any time prior to 5:00 p.m., New York City time, on the business day prior to the Expiration Date. 6. Any transfer taxes applicable to the exchange of the Old Notes pursuant to the Exchange Offer will be paid by the Company, except as otherwise provided in Instruction 5 of the Letter of Transmittal. If you wish to have us tender any or all of your Old Notes, please so instruct us by completing, detaching and returning to us the instruction form attached hereto. An envelope to return your instructions is enclosed. If you authorize a tender of your Old Notes, the entire principal amount of Old Notes held for your account will be tendered unless otherwise specified on the instruction form. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf by the Expiration Date. The Exchange Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of the Old Notes in any jurisdiction in which the making of the Exchange Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction or would otherwise not be in compliance with any provision of any applicable securities law. 2 OFFER TO EXCHANGE ALL OUTSTANDING 9 1/4% SENIOR NOTES DUE 2014 WHICH HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT FOR 9 1/4% SENIOR NOTES DUE 2014 REGISTERED UNDER THE SECURITIES ACT OF MEMBERWORKS INCORPORATED ------------------ The undersigned acknowledge(s) receipt of your letter and the enclosed Prospectus and the related Letter of Transmittal, in connection with the offer by the Company to exchange the Old Notes for the New Notes. This will instruct you to tender the principal amount of Old Notes indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, and the undersigned hereby makes the applicable representations set forth in such Letter of Transmittal. SIGN HERE Dated: ----------------------- --------------------------------- Signature --------------------------------- Signature Principal amount of Old Notes to be tendered*: $ ----------------------------------------------- (Must be in the principal amount of $1,000 or an integral multiple thereof.) - ------------------------------------------------- Name(s) (Please Print) - ------------------------------------------------- Address - ------------------------------------------------- Zip Code - ------------------------------------------------- Area Code and Telephone Number - ----------------- * Unless otherwise indicated, signature(s) hereon by beneficial owner(s) shall constitute an instruction to the nominee to tender all Old Notes of such beneficial owner(s). EX-99.4 77 ex99-4_043004.txt FORM OF NOTICE OF GUARANTEED DELIVERY NOTICE OF GUARANTEED DELIVERY FOR 9 1/4% SENIOR NOTES DUE 2014 OF MEMBERWORKS INCORPORATED As set forth in the Prospectus dated , 2004 (the "Prospectus") of MemberWorks Incorporated, a Delaware corporation (the "Company") and in the accompanying letter of transmittal and instructions thereto (the "Letter of Transmittal"), this form or one substantially equivalent hereto must be used to accept the Company's exchange offer (the "Exchange Offer") to exchange all of its outstanding 9 1/4% Senior Notes due 2014 (the "Old Notes") if (i) certificates representing such Old Notes to be tendered for exchange are not lost but are not immediately available, (ii) time will not permit the Letter of Transmittal, certificates representing such Old Notes or other required documents to reach the Exchange Agent prior to the Expiration Date or (iii) procedures for book-entry transfer cannot be completed prior to the Expiration Date. This form may be delivered by an Eligible Institution by mail or hand delivery or transmitted, via facsimile, to the Exchange Agent as set forth below. All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Prospectus. - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, , 2004 UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE. - -------------------------------------------------------------------------------- The Exchange Agent for the Exchange Offer is: LaSalle Bank National Association
By Mail: By Overnight Courier and By Hand: LaSalle Bank N.A. LaSalle Bank N.A. 135 LaSalle Street, Suite 1960 135 LaSalle Street, Suite 1960 Chicago, IL 60603 Chicago, IL 60603 Attention: Christine Linde, Vice President Attention: Christine Linde, Vice President
By Facsimile: (312) 904-2236 For Eligible Institutions Only To Confirm by Telephone: (312) 904-5532 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tender(s) to the Company, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal, receipt of which is hereby acknowledged, the aggregate principal amount of Old Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedure". The undersigned understands that tenders of Old Notes will be accepted only in principal amounts equal to $1,000 or integral multiples thereof. The undersigned understands that tenders of Old Notes pursuant to the Exchange Offer may not be withdrawn after 5:00 p.m., New York City time on the business day prior to the Expiration Date. Tenders of Old Notes may also be withdrawn if the Exchange Offer is terminated without any such Old Notes being purchased thereunder or as otherwise provided in the Prospectus under the caption "The Exchange Offer--Withdrawal of Tenders". All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned, and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. - -------------------------------------------------------------------------------- PLEASE SIGN AND COMPLETE Signature(s) of Registered Owner(s) or Authorized Signatory: Name of Registered Holder(s): - ---------------------------------------- ------------------------------------- - ---------------------------------------- ------------------------------------- Address: - ---------------------------------------- ---------------------------- Principal Amount of Old Notes Tendered: ------------------------------------- - ---------------------------------------- ------------------------------------- Certificate No(s). of Old Notes Area Code and Telephone No.: (if available): --------- - ---------------------------------------- If Old Notes will be delivered by book-entry transfer at The Depository - ---------------------------------------- Trust Company, insert Depository Account No. - ---------------------------------------- ------------------------- Date: ---------------------------------- ------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Notice of Guaranteed Delivery must be signed by the registered Holder(s) of Old Notes exactly as its (their) name(s) appear on certificates for Old Notes or on a security position listing as the owner of Old Notes, or by person(s) authorized to become registered Holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information: Please print name(s) and address(es): Name(s): ------------------------------------------------------------------- Capacity: ------------------------------------------------------------------- Address(es): ------------------------------------------------------------------- ------------------------------------------------------------------- ------------------------------------------------------------------- Do not send Old Notes with this form. Old Notes should be sent to the Exchange Agent together with a properly completed and duly executed Letter of Transmittal. - -------------------------------------------------------------------------------- 2 GUARANTEE OF DELIVERY - -------------------------------------------------------------------------------- The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or a correspondent in the United States or is otherwise an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees that, within five business days from the date of this Notice of Guaranteed Delivery, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with certificates representing the Old Notes covered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Old Notes into the Exchange Agent's account at The Depository Trust Company, pursuant to the procedure for book-entry transfer set forth in the Prospectus) and required documents will be deposited by the undersigned with the Exchange Agent. The undersigned acknowledges that it must deliver the Letter of Transmittal and Old Notes tendered hereby to the Exchange Agent within the time period set forth and that failure to do so could result in financial loss to the undersigned. Name of Firm: ---------------------------- ---------------------------------- Authorized Signature Address: Name: ---------------------------- -------------------------- ---------------------------- Title: -------------------------- Area Code and Telephone No.: Date: ------------- -------------------------- - -------------------------------------------------------------------------------- 3 EX-99.5 78 ex99-5_043004.txt GUIDELINES FOR CERTIFICATION OF TAXPAYER ID NO. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer. The taxpayer identification number for an individual is the individual's Social Security number. Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. The taxpayer identification number for an entity is the entity's employer identification number. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. - ---------------------------------------------------------------------------------------------------------------------------------- Give the EMPLOYER For this type of Give the SOCIAL IDENTIFICATION NUMBER account: SECURITY NUMBER of: For this type of account: of: - ---------------------------------------------------------------------------------------------------------------------------------- l. An individual's account The individual 6. Sole proprietorship or The owner(3) single-owner LLC 2. Two or more individuals The actual owner of the 7. A valid trust, estate or The legal entity(4) (joint account) account or, if combined pension trust funds, the first individual on the account(1) 3. Custodian account of a The minor(2) 8. Corporate or LLC electing The corporation minor (Uniform Gift to corporate status on Minors Act) Form 8832 4. a. The usual revocable The grantor-trustee(1) 9. Association, club, The organization savings trust (grantor is religious, charitable, also trustee) educational, or other tax-exempt organization b. So-called trust account The actual owner(l) 10. Partnership or multi-member The partnership that is not a legal or LLC valid trust under State law 5. Sole proprietorship or The owner(3) 11. A broker or registered The broker or nominee single-owner LLC nominee 12. Account with the Department The public entity of Agriculture in the name of a public entity (such as a State or local government, school district or prison) that receives agriculture program payments. - -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------- 1 List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security number, that person's number must be furnished. 2 Circle the minor's name and furnish the minor's Social Security number. 3 You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your Social Security number or Employer Identification Number (if you have one). 4 List first and circle the name of the legal trust, estate or pension trust. (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title). NOTE: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed. Obtaining a Number: If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. All Section references below are to the Internal Revenue Code of 1986, as amended. Payees exempt from backup withholding: o An organization exempt from tax under Section 501(a), or an individual retirement plan, or a custodial account under Section 403(b)(7) if the account satisfies the requirements of Section 401(f)(2). o The United States or any agency or instrumentality thereof. o A state, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof. o A foreign government or any political subdivision, agency or instrumentality thereof. o An international organization or any agency or instrumentality thereof. Other payees that may be exempt from backup withholding: o A corporation. o A foreign central bank of issue. o A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. o A futures commission merchant registered with the Commodity Futures Trading Commission. o A real estate investment trust. o An entity registered at all times during the tax year under the Investment Company Act of 1940. o A common trust fund operated by a bank under Section 584(a). o A financial institution. o A middleman known in the investment community as a nominee or custodian. o A trust exempt from tax under Section 664 or described in Section 4947. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: o Payments to nonresident aliens subject to withholding under Section 1441 o Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner. o Payments made by certain foreign organizations. o Payments of patronage dividends not paid in money. o Section 404(k) distributions made by an ESOP. Payments of interest not generally subject to backup withholding include the following: o Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. o Payments of tax-exempt interest (including exempt-interest dividends under Section 852). o Payments described in Section 6049(b)(5) to nonresident aliens. o Payments on tax-free covenant bonds under Section 1451. o Payments made by certain foreign organizations. o Mortgage or student loan interest paid to you. Exempt payees described above should file Substitute Form W-9 to avoid possible erroneous backup withholding. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N. Privacy Act Notice. Section 6109 requires you to provide your correct taxpayer identification number to persons who must file information returns with the IRS to report interest, dividends and certain other income paid to you. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this information to the Department of Justice for civil and criminal litigation, and to cities, states and the District of Columbia to carry out their tax laws. The IRS may also disclose this information to other countries under a tax treaty, or to Federal and state agencies to enforce Federal nontax criminal laws and to combat terrorism. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 28% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payee. Certain penalties may also apply. Penalties: (1) Penalty for failure to furnish Taxpayer Identification Number. If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil penalty for false information with respect to withholding. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) Criminal penalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. -----END PRIVACY-ENHANCED MESSAGE-----