-----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, E/xdZn2vKHhWk9joUtiPxbVZreGkl54CzjVfkTX2TjXzLu+FI3W0scn0Jvbl3KxL FBH16POUZlMYQPcvIV3G2g== 0000912057-01-531858.txt : 20010911 0000912057-01-531858.hdr.sgml : 20010911 ACCESSION NUMBER: 0000912057-01-531858 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20010910 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA FINANCE SHARED SERVICES INC CENTRAL INDEX KEY: 0001157540 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 13414461 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-39 FILM NUMBER: 1734949 BUSINESS ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGOTN AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAGAN MEDIA APPRAISALS INC CENTRAL INDEX KEY: 0001157539 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 77015750 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-10 FILM NUMBER: 1734968 BUSINESS ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGOTN AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAGAN SEMINARS INC CENTRAL INDEX KEY: 0001157537 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 942515843 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-09 FILM NUMBER: 1734969 BUSINESS ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGOTN AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCMULLEN ARGUS PUBLISHING INC CENTRAL INDEX KEY: 0001011512 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 952663753 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-07 FILM NUMBER: 1734971 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 MAIL ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAGAN WORLD MEDIA INC CENTRAL INDEX KEY: 0001157536 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 770225377 STATE OF INCORPORATION: DE FISCAL YEAR END: 1203 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-04 FILM NUMBER: 1734974 BUSINESS ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGOTN AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADAMS INTERACT INTERNATIONAL INC CENTRAL INDEX KEY: 0001157530 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 953549600 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-26 FILM NUMBER: 1734952 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADAMS LAUX CO INC CENTRAL INDEX KEY: 0001157531 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043205143 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-25 FILM NUMBER: 1734953 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENO PRODUCTIONS INC CENTRAL INDEX KEY: 0001157533 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134162379 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-18 FILM NUMBER: 1734960 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GAME & FISH PUBLICATIONS INC CENTRAL INDEX KEY: 0001157534 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134082334 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-16 FILM NUMBER: 1734962 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HACIENDA PRODUCTIONS INC CENTRAL INDEX KEY: 0001157535 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134167234 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-14 FILM NUMBER: 1734964 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIACENTRAL LLC CENTRAL INDEX KEY: 0001157532 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134113602 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-03 FILM NUMBER: 1734975 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA SPECIAL INTEREST PUBLICATIONS INC CENTRAL INDEX KEY: 0001057176 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 521654079 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-36 FILM NUMBER: 1734933 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA WORKPLACE LEARNING INC CENTRAL INDEX KEY: 0001058080 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 752110878 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-35 FILM NUMBER: 1734934 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOWHUNTER MAGAZINE INC CENTRAL INDEX KEY: 0001058677 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232667502 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-34 FILM NUMBER: 1734936 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA ENTHUSIAST PUBLICATIONS INC CENTRAL INDEX KEY: 0001058682 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 231577768 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-33 FILM NUMBER: 1734937 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FORMER COMPANY: FORMER CONFORMED NAME: COWLES ENTHUSIAST MEDIA INC DATE OF NAME CHANGE: 19980327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNICATION CONCEPTS INC CENTRAL INDEX KEY: 0001109111 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 880329261 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-32 FILM NUMBER: 1734938 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COWLES HISTORY GROUP INC CENTRAL INDEX KEY: 0001058683 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232667502 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-31 FILM NUMBER: 1734939 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYMBOL OF EXCELLENCE PUBLISHERS INC CENTRAL INDEX KEY: 0001011518 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 630845698 STATE OF INCORPORATION: AL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-30 FILM NUMBER: 1734940 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2124500100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRTUAL FLYSHOP INC CENTRAL INDEX KEY: 0001058696 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232667502 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-29 FILM NUMBER: 1734941 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GO LO ENTERTAINMENT INC CENTRAL INDEX KEY: 0001057190 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-28 FILM NUMBER: 1734942 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORSE & RIDER INC CENTRAL INDEX KEY: 0001058686 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232667502 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-27 FILM NUMBER: 1734943 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA INC CENTRAL INDEX KEY: 0000884382 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 133647573 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804 FILM NUMBER: 1734944 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 5TH AVE CITY: NEW YORK STATE: NY ZIP: 10151 FORMER COMPANY: FORMER CONFORMED NAME: K III COMMUNICATIONS CORP DATE OF NAME CHANGE: 19930328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAGAN PAUL ASSOCIATES INC CENTRAL INDEX KEY: 0001157541 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134140957 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-43 FILM NUMBER: 1734945 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA ENTERPRISES INC CENTRAL INDEX KEY: 0001157542 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134113525 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-42 FILM NUMBER: 1734946 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA HOLDINGS III INC CENTRAL INDEX KEY: 0001058078 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133617238 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-41 FILM NUMBER: 1734947 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA INFORMATION INC CENTRAL INDEX KEY: 0001057181 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133555670 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-40 FILM NUMBER: 1734948 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA MAGAZINES INC CENTRAL INDEX KEY: 0001058074 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133636344 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-38 FILM NUMBER: 1734950 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA MAGAZINES FINANCE INC CENTRAL INDEX KEY: 0001058075 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133616343 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-37 FILM NUMBER: 1734951 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BACONS INFORMATION INC CENTRAL INDEX KEY: 0000871784 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 364011543 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-24 FILM NUMBER: 1734954 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2124500100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CANOE & KAYAK INC CENTRAL INDEX KEY: 0001058678 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232667502 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-23 FILM NUMBER: 1734955 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHANNEL ONE COMMUNICATIONS CORP CENTRAL INDEX KEY: 0001011521 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ALLIED TO MOTION PICTURE PRODUCTION [7819] IRS NUMBER: 133783276 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-22 FILM NUMBER: 1734956 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2124500100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLIMBING INC CENTRAL INDEX KEY: 0001058679 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232667502 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-21 FILM NUMBER: 1734957 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COVER CONCEPTS MARKETING SERVICES LLC CENTRAL INDEX KEY: 0001057196 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043370389 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-20 FILM NUMBER: 1734958 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSK PUBLISHING CO INC/NY CENTRAL INDEX KEY: 0001057206 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133023395 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-19 FILM NUMBER: 1734959 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FILMS FOR THE HUMANITIES & SCIENCES INC CENTRAL INDEX KEY: 0000884399 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 131932571 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-17 FILM NUMBER: 1734961 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2124500100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAAS PUBLISHING COMPANIES INC CENTRAL INDEX KEY: 0000925505 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 581858150 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-15 FILM NUMBER: 1734963 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2124500100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HPC BRAZIL INC CENTRAL INDEX KEY: 0001157538 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134083040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-13 FILM NUMBER: 1734965 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KITPLANES ACQUISITION CO CENTRAL INDEX KEY: 0001058687 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232667502 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-12 FILM NUMBER: 1734966 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTELLICHOICE INC CENTRAL INDEX KEY: 0000849427 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 770168905 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-11 FILM NUMBER: 1734967 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOWRIDER PUBLISING GROUP INC CENTRAL INDEX KEY: 0001058079 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 954307029 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-08 FILM NUMBER: 1734970 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: SIMPSON THACHER & BARTLETT STREET 2: 425 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIRAMAR COMMUNICATIONS INC CENTRAL INDEX KEY: 0001082243 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 952845391 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-06 FILM NUMBER: 1734972 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: PRIMEDIA INC STREET 2: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMBA INFORMATION CENTRAL INDEX KEY: 0001058684 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 061281600 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-05 FILM NUMBER: 1734973 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: BOWHUNTER MAGAZINE INC STREET 2: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FORMER COMPANY: FORMER CONFORMED NAME: COWLES SIMBA INFORMATION INC DATE OF NAME CHANGE: 19980327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERTEC PUBLISHING CORP CENTRAL INDEX KEY: 0000884398 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 481071277 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-02 FILM NUMBER: 1734976 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 FORMER COMPANY: FORMER CONFORMED NAME: PRIMEDIA INTERTEC CORP DATE OF NAME CHANGE: 19990319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA CO INC CENTRAL INDEX KEY: 0001157659 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134177687 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-67804-01 FILM NUMBER: 1734977 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10151 S-4/A 1 a2058770zs-4a.txt FORM S-4/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 10, 2001 REGISTRATION NO. 333-67804 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ PRIMEDIA INC. (Exact name of Registrant as specified in its charter) DELAWARE 2721 13-3647573 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number)
------------------------ 745 FIFTH AVENUE NEW YORK, NEW YORK 10151 (212) 745-0100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------ BEVERLY C. CHELL, ESQ. PRIMEDIA INC. 745 FIFTH AVENUE NEW YORK, NEW YORK 10151 (212) 745-0100 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------ WITH A COPY TO: GARY I. HOROWITZ, ESQ. SIMPSON THACHER & BARTLETT 425 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 455-2000 ------------------------ Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: / / If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration 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: / / ______________ ------------------------ THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANT GUARANTORS
EXACT NAME STATE OR OTHER I.R.S. ADDRESS INCLUDING ZIP CODE AND REGISTRANT GUARANTOR JURISDICTION OF EMPLOYER TELEPHONE NUMBER INCLUDING AREA AS SPECIFIED INCORPORATION OR IDENTIFICATION CODE OF REGISTRANT GUARANTOR'S IN ITS CHARTER ORGANIZATION NUMBER PRINCIPAL EXECUTIVE OFFICES -------------------- ---------------- -------------- ------------------------------- Adams/Intertec International, Inc. Delaware 95-3549600 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Adams/Laux Company, Inc. Delaware 04-3250143 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Bacon's Information, Inc. Delaware 36-4011543 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Canoe & Kayak, Inc. Delaware 41-1895510 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Channel One Communications Corporation Delaware 13-3783278 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Climbing, Inc. Delaware 41-1885204 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Cover Concepts Marketing Services, LLC Delaware 04-3370389 745 Fifth Avenue New York, New York 10151 (212) 745-0100 CSK Publishing Company, Inc. Delaware 13-3023395 745 Fifth Avenue New York, New York 10151 (212) 745-0100 ENO Productions, Inc. Delaware 13-4162379 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Films for the Humanities & Sciences, Delaware 13-1932571 745 Fifth Avenue Inc. New York, New York 10151 (212) 745-0100 Game & Fish Publications, Inc. Delaware 13-4082334 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Haas Publishing Companies, Inc. Delaware 58-1858150 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Hacienda Productions, Inc. Delaware 13-4167234 745 Fifth Avenue New York, New York 10151 (212) 745-0100 HPC Brazil, Inc. Delaware 13-4083040 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Business Magazines & Media Inc. Delaware 48-1071277 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Kitplanes Acquisition Company Delaware 95-4617433 745 Fifth Avenue New York, New York 10151 (212) 745-0100
EXACT NAME STATE OR OTHER I.R.S. ADDRESS INCLUDING ZIP CODE AND REGISTRANT GUARANTOR JURISDICTION OF EMPLOYER TELEPHONE NUMBER INCLUDING AREA AS SPECIFIED INCORPORATION OR IDENTIFICATION CODE OF REGISTRANT GUARANTOR'S IN ITS CHARTER ORGANIZATION NUMBER PRINCIPAL EXECUTIVE OFFICES -------------------- ---------------- -------------- ------------------------------- Paul Kagan Associates, Inc. Delaware 13-4140957 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Enterprises, Inc. Delaware 13-4113525 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Finance Shared Services, Inc. Delaware 13-4144616 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Holdings III, Inc. Delaware 13-3617238 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Information, Inc. Delaware 13-3555670 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Magazines, Inc. Delaware 13-3616344 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Magazine Finance, Inc. Delaware 13-3616343 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Special Interest Publications, Delaware 52-1654079 745 Fifth Avenue Inc. New York, New York 10151 (212) 745-0100 PRIMEDIA Workplace Learning LP Delaware 13-4119787 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Bowhunter Magazine, Inc. Pennsylvania 23-2667502 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Enthusiast Publications, Inc. Pennsylvania 23-1577768 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Communication Concepts, Inc. Nevada 88-0329261 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Cowles History Group, Inc. Virginia 54-1606227 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Symbol of Excellence Publishers, Inc. Alabama 63-0845698 745 Fifth Avenue New York, New York 10151 (212) 745-0100 The Virtual Flyshop, Inc. Colorado 84-1318377 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Go Lo Entertainment, Inc. California 95-4301031 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Horse & Rider, Inc. California 33-0480523 745 Fifth Avenue New York, New York 10151 (212) 745-0100
EXACT NAME STATE OR OTHER I.R.S. ADDRESS INCLUDING ZIP CODE AND REGISTRANT GUARANTOR JURISDICTION OF EMPLOYER TELEPHONE NUMBER INCLUDING AREA AS SPECIFIED INCORPORATION OR IDENTIFICATION CODE OF REGISTRANT GUARANTOR'S IN ITS CHARTER ORGANIZATION NUMBER PRINCIPAL EXECUTIVE OFFICES -------------------- ---------------- -------------- ------------------------------- IntelliChoice, Inc. California 77-0168905 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Kagan Media Appraisals, Inc. California 77-0157500 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Kagan Seminars, Inc. California 94-2515843 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Low Rider Publishing Group, Inc. California 95-4307029 745 Fifth Avenue New York, New York 10151 (212) 745-0100 McMullen Argus Publishing, Inc. California 95-2663753 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Miramar Communications, Inc. California 95-2845391 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Simba Information, Inc. Connecticut 06-1281600 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Kagan World Media, Inc. Delaware 77-0225377 745 Fifth Avenue New York, New York 10151 (212) 745-0100 MediaCentral LLC Delaware 13-4113602 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Companies Inc. Delaware 13-4177687 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Leisure Group Inc. Delaware 51-0386031 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Membership Clubs Inc. California 33-0759805 745 Fifth Avenue New York, New York 10151 (212) 745-0100 PRIMEDIA Specialty Group Inc. Delaware 36-4099296 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Liberty Management Corporation Pennsylvania 23-2241870 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Liberty Productions, Inc. Pennsylvania 23-2075682 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Pro Associates, Inc. Pennsylvania 25-1587282 745 Fifth Avenue New York, New York 10151 (212) 745-0100 New Car Shows, Inc. Pennsylvania 23-2965172 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Auto Dealer Services, Inc. Pennsylvania 23-2257923 745 Fifth Avenue New York, New York 10151 (212) 745-0100
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 2001 PROSPECTUS [LOGO] OFFER TO EXCHANGE $500,000,000 8 7/8% SENIOR NOTES DUE 2011 FOR $500,000,000 8 7/8% SENIOR NOTES DUE 2011, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 UNCONDITIONALLY GUARANTEED ON A SENIOR BASIS BY ALL OUR DOMESTIC WHOLLY-OWNED RESTRICTED SUBSIDIARIES, OTHER THAN SECURITIZATION SUBSIDIARIES THE EXCHANGE OFFER - - We will exchange all old notes that are validly tendered and not validly withdrawn for an equal principal amount of new notes that are freely tradeable, except in limited circumstances described below. - - You may withdraw tenders of old notes at any time before the expiration of the exchange offer. - - The exchange offer expires at 5:00 p.m., New York City time, on , 2001, unless extended. We do not currently intend to extend the expiration date. - - The exchange of old notes for new notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. - - We will not receive any proceeds from the exchange offer. THE NEW NOTES - - The new notes are being offered in order to satisfy certain of our obligations under the registration rights agreement entered into in connection with the placement of the old notes. - - The terms of the new notes to be issued in the exchange offer are substantially identical to the old notes, except that the new notes will be freely tradeable, except in limited circumstances described below. RESALES OF NEW NOTES - - The new notes may be sold in the over-the-counter market, in negotiated transactions or through a combination of those methods. If you are a broker-dealer and you receive new notes for your own account, you must acknowledge that you will deliver a prospectus in connection with any resale of the new notes. By making that acknowledgment, you will not be deemed to admit that you are an underwriter under the Securities Act of 1933. Broker-dealers may use this prospectus in connection with any resale of new notes received in exchange for old notes where the old notes were acquired by the broker-dealer as a result of market-making activities or trading activities. We will make this prospectus available to any broker-dealer for use in any such resale for a period of up to 180 days from the date on which the exchange offer is consummated, subject to limited exceptions. A broker-dealer may not participate in the exchange offer with respect to old notes acquired other than as a result of market-making activities or trading activities. See "Plan of Distribution." If you are an affiliate of ours or are engaged in, or intend to engage in, or have an agreement or understanding to participate in, a distribution of the new notes, you cannot rely on the applicable interpretations of the Securities and Exchange Commission and you must comply with the registration requirements of the Securities Act in connection with any resale transaction. YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 13 OF THIS PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 2001. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS. TABLE OF CONTENTS
PAGE -------- Where You Can Find More Information......................... ii Incorporation of Certain Documents by Reference............. ii Summary..................................................... 1 Risk Factors................................................ 13 Forward-Looking Statements.................................. 21 Use of Proceeds............................................. 21 The Exchange Offer.......................................... 22 Description of Other Indebtedness and Preferred Stock....... 32 Description of New Notes.................................... 36 Certain United States Federal Income Tax Consequences....... 75 Plan of Distribution........................................ 79 Legal Matters............................................... 80 Experts..................................................... 80
i WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and file reports, proxy and information statements and other information with the Securities and Exchange Commission which we refer to as the "Commission" or the "SEC". Those reports, proxy and information statements and other information may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and at the Commission's Regional Offices located at Seven World Trade Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of those materials also can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates. The Commission also maintains a web site at http://www.sec.gov, which contains reports, proxy statements and other information regarding registrants that file electronically with the Commission. In addition, reports, proxy statements and other information concerning us may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE We incorporate by reference into this prospectus the following documents filed with the Commission: (a) our annual report on Form 10-K for the fiscal year ended December 31, 2000; (b) our quarterly reports on Form 10-Q for the quarters ended March 31, 2001 and June 30, 2001; (c) our current reports on Form 8-K or Form 8-K/A dated March 1, 2001, July 6, 2001, July 26, 2001, August 1, 2001, August 16, 2001, August 24, 2001 and August 31, 2001; and (d) About.com, Inc.'s consolidated financial statements and accompanying notes as of and for the year ended December 31, 2000 and our unaudited pro forma consolidated financial statements and accompanying notes giving effect to the About.com merger included in our current report on Form 8-K/A dated April 26, 2001. All documents that we file with the Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus will be deemed to be incorporated by reference in this prospectus and to be a part of this prospectus from the date of the filing of those documents. You may obtain copies of those documents from us, free of cost, by contacting us at the following address or telephone number: Corporate Secretary PRIMEDIA Inc. 745 Fifth Avenue New York, New York 10151 (212) 745-0100 Information that we file later with the Commission and that is incorporated by reference in this prospectus will automatically update and supersede information contained in this prospectus. You will be deemed to have notice of all information incorporated by reference in this prospectus as if that information was included in this prospectus. ii SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED BY REFERENCE IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE INDICATES, THE TERM "WE" OR "PRIMEDIA" MEANS THE COMBINED BUSINESS OPERATIONS OF PRIMEDIA INC. AND ITS SUBSIDIARIES. YOU SHOULD CAREFULLY CONSIDER THE RISKS INCLUDED UNDER THE CAPTION "RISK FACTORS." MARKET SHARE DATA CONTAINED IN THIS PROSPECTUS ARE BASED UPON A PRODUCT'S SHARE OF ADVERTISING OR CIRCULATION, DEPENDING ON THE PRODUCT, AS COMPARED TO ITS DIRECT COMPETITION. OUR COMPANY PRIMEDIA is the new tradition in media, combining traditional and new media. We are a targeted media company with leading positions in consumer and business-to-business markets. Our properties, which are delivered to over 200 million users, utilize the full media arsenal to deliver content via print (magazines and directories), video (digital broadband, satellite and cable), live events (trade and consumer shows) and the Internet. As of December 31, 2000, approximately 78% of our traditional media products ranked first or second in advertising pages, advertising revenue, circulation or other competitive metrics in their respective markets. We believe that in 2000 we sold the most advertising pages of any magazine publisher in the United States and ranked third in terms of revenue derived from sales of magazine copies at the newsstand in the United States. Our Internet businesses rank seventh in unique visitors in the United States as measured by MEDIA METRIX for June 2001. In 2000, we had net sales of approximately $1.7 billion and EBITDA of approximately $256.7 million. For the six months ended June 30, 2001, we had net sales of approximately $872.3 million and EBITDA of approximately $86.2 million. In 2000, our net loss was approximately $346.8 million, and for the six months ended June 30, 2001, our net loss was approximately $225.5 million. OUR GROWTH STRATEGY We believe that as technology has created a flood of information, it has shifted the role of the media from making information broadly available across all audiences to sifting out and qualifying information for the benefit of specific audiences. As a result, we have organized our business into two operating segments: consumer and business-to-business. Our consumer segment is the largest publisher of specialty magazines and apartment rental guides and one of the largest producers and distributors of special interest videos in the United States. Through the About.com merger, we acquired a network of highly-targeted, topic-specific web sites and the leading producer of original content on the Internet. Our business-to-business segment is a leading publisher of business-to-business magazines, books, directories and databases, addressing the specialized information needs of professionals. Our growth strategy is to deliver information over multiple traditional and new media platforms to highly specific niches in both the consumer and business-to-business markets, thereby attracting both dedicated users of information and the advertisers determined to reach them. We expect to derive our revenue principally from lead generation advertising as well as from subscriptions to our products and brand awareness advertising. Lead generation advertising is advertising focused on triggering a purchase decision by the reader or viewer. We believe lead generation advertising is less susceptible to general economic conditions than general brand awareness advertising. In 2000, we embarked on an initiative to integrate our operating units. One aspect of the integration was to improve productivity through cost reduction as we entered into a strategic sourcing initiative to leverage our purchasing power across all spending for certain manufacturing and non-manufacturing commodities. Significant cost savings were achieved through consolidating the procurement of goods and services, such as paper and printing, and centralizing support services, such as accounting and payroll. During 2000, the strategic sourcing initiative generated approximately $10.5 million in savings. With the About.com merger, we will continue our integration and sourcing efforts and expect to reduce Internet development costs. 1 After the About.com merger, we formed the PRIMEDIA Integrated Sales and Marketing Group to sell integrated marketing packages across all our traditional and new media vehicles. We also formed the PRIMEDIA Internet Resource and Technology Group to centralize and standardize our technology. RECENT DEVELOPMENTS EMAP USA On August 24, 2001, we acquired all of the outstanding capital stock of EMAP, Inc. (formerly known as Petersen Publishing) from an affiliate of EMAP plc. In this prospectus, we refer to EMAP, Inc. as EMAP USA. EMAP USA has more than 60 consumer titles reaching over 75 million enthusiasts through a combination of magazines, network and cable television shows, web sites and live consumer events. The acquisition did not include the United States edition of FOR HIM MAGAZINE published by EMAP USA. The total consideration we paid for the acquisition of EMAP USA was $505 million in cash and a warrant to acquire 2,000,000 shares of our common stock. We have partially financed the acquisition of EMAP USA by (1) issuing $125 million of Series J convertible exchangeable preferred stock at a price per share equal to $125 to KKR 1996 Fund L.P., an affiliate of Kohlberg Kravis Roberts & Co. L.P. or KKR, and (2) drawing upon our revolving credit facility in an amount of approximately $255 million. In addition, KKR 1996 Fund purchased from us $125 million of (a) our common stock and (b) our Series K convertible preferred stock at a price per share equal to $4.70. The Series K convertible preferred stock is non-voting but otherwise the economic equivalent of our common stock. The shares of Series K convertible preferred stock will be automatically converted into an equal number of shares of our common stock upon receipt of approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, for KKR 1996 Fund to acquire additional shares of our common stock and 20 days after we send out an information statement describing the financing pursuant to the Commission's proxy rules. Dividends on the Series J convertible exchangeable preferred stock accrue at an annual rate of 12.5% and are payable quarterly in kind. The Series J convertible exchangeable preferred stock is perpetual and ranks pari passu with our existing series of outstanding preferred stock. We have the option to redeem any or all of the shares of Series J convertible exchangeable preferred stock at any time for cash at 100% of the liquidation preference of each share being redeemed. The Series J convertible exchangeable preferred stock may be converted into shares of our common stock at any time after the first anniversary of the issue date at a conversion price of $7 per share, subject to adjustments. On any dividend payment date, we have the option to exchange the Series J convertible exchangeable preferred stock into our subordinated debt. Our ability to redeem or exchange the Series J convertible exchangeable preferred stock into debt is subject to the approval of a majority of our independent directors. In connection with the equity financing by KKR 1996 Fund, we paid KKR 1996 Fund a commitment fee consisting of warrants to purchase 1.25 million shares of our common stock and granted to KKR as a funding fee for the securities additional warrants to purchase 2.62 million shares of our common stock. The warrants will be exercisable at any time after the first anniversary of the grant date at an exercise price of $7 per share, subject to adjustments. The warrants constituting the commitment fee and the funding fee vest on the grant date. If the Series J convertible exchangeable preferred stock is outstanding for three, six, nine or 12 months from the date of issuance, KKR 1996 Fund will receive additional warrants that vest on the grant date to purchase 250,000, 1 million, 1.25 million and 1.5 million shares of our common stock, respectively. NEW CREDIT AGREEMENT On June 20, 2001, we entered into a new credit agreement with commitments of $1 billion, of which $558 million was outstanding as of June 30, 2001. The debt under the credit agreement (as well as certain of our other equally and ratably secured indebtedness) is secured by a pledge of the stock of PRIMEDIA Companies Inc., an intermediate holding company that we own directly. 2 The following chart summarizes the businesses of our two segments: PRIMEDIA CONSUMER SEGMENT CONSUMER MAGAZINES AND INTERNET GROUP - Over 100 titles (including Seventeen, New York, American Baby, Modern Bride, Automobile, Fly Fisherman, Equus, Popular Hot Rodding, McCalls Quilting, Crafts Magazines) - Seventeen.com, Americanbaby.com - Over 60 EMAP USA titles (including Motor Trend, Hot Rod, Teen and Stereophile) CONSUMER GUIDES - 76 local apartment guides - 16 new home guides - 6 travel information guides - Apartmentguide.com CONSUMER INTERNET - About.com (including over 700 niche sites) CONSUMER VIDEO - Channel One - Films for the Humanities and Sciences - PRIMEDIA Digital Video BUSINESS-TO-BUSINESS SEGMENT BUSINESS-TO-BUSINESS MAGAZINES AND MEDIA GROUP - 82 trade publications (including Telephony, Wireless Review, Electrical Construction and Maintenance, Broadcast Engineering, Soybean Digest, Beef, American Trucker) - Trade Shows (25 trade shows, including Telecom Business, Waste Age, Lighting Dimensions International) INFORMATION - Over 500 books, directories and databases (including Machinery Information Division, Federal Sources, Media Central) - Trade Shows PRIMEDIA WORKPLACE LEARNING - Accreditation-oriented - Vocational trining in 7 fields (including automotive, law, healthcare and government) - Trade Shows We were incorporated on November 22, 1991 in the State of Delaware. Our principal executive offices are located at 745 Fifth Avenue, New York, New York, 10151; telephone number (212) 745-0100. Our domain name is "primedia.com." Our common stock is publicly traded on the New York Stock Exchange under the symbol "PRM." The information on our web site is not part of this prospectus. 3 SUMMARY OF TERMS OF THE EXCHANGE OFFER On May 8, 2001, we completed the private offering of the old notes. On that date, we and our domestic wholly-owned restricted subsidiaries, other than securitization subsidiaries, which we refer to as the guarantors, entered into a registration rights agreement with the initial purchasers in the private offering in which we and the guarantors agreed to deliver to you this prospectus as part of the exchange offer and we agreed to complete the exchange offer within 230 days after the date of original issuance of the old notes. You are entitled to exchange in the exchange offer your old notes for new notes which are identical in all material respects to the old notes except: - the new notes have been registered under the Securities Act of 1933; and - the liquidated damages which would be payable on the old notes in specified circumstances are no longer applicable. The Exchange Offer................... We are offering to exchange up to $500,000,000 aggregate principal amount of old notes for up to $500,000,000 aggregate principal amount of new notes. Old notes may be exchanged only in integral multiples of $1,000. Resale............................... Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties, including Exxon Capital Holdings Corporation and Morgan Stanley & Co. Incorporated, we believe that the new notes issued in the exchange offer in exchange for old notes may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act, so long as you: - are not an affiliate of ours within the meaning of Rule 405 under the Securities Act; and - are acquiring the new notes in the ordinary course of your business and have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the new notes. Each participating broker-dealer that receives new notes for its own account in the exchange offer in exchange for old notes that were acquired as a result of market-making or other trading activity must acknowledge that it will deliver a prospectus in connection with any resale of the new notes. See "Plan of Distribution." Any holder of old notes who: - is an affiliate of ours within the meaning of Rule 405 under the Securities Act; - does not acquire new notes in the ordinary course of its business; or - tenders in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of new notes
4 cannot rely on the position of the staff of the SEC enunciated in EXXON CAPITAL HOLDINGS CORPORATION, MORGAN STANLEY & CO. INCORPORATED or similar no-action letters and, in the absence of an exemption from the registration and prospectus delivery requirements of the Securities Act, must comply with those requirements in connection with the resale of the new notes. Expiration Date; Withdrawal of Tender............................... The exchange offer will expire at 5:00 p.m., New York City time, on , 2001, or on a later date and time if we decide to extend the exchange offer. We refer to the date on which the exchange offer will expire as the expiration date. We do not currently intend to extend the expiration date. A tender of old notes in the exchange offer may be withdrawn at any time before the expiration date. Any old notes not accepted for exchange for any reason will be returned without expense to the tendering holder promptly after the expiration or termination of the exchange offer. Material Conditions to the Exchange Offer................................ The exchange offer is subject to customary conditions, which we may waive. Please read the section captioned "The Exchange Offer--Material Conditions to the Exchange Offer" of this prospectus for more information regarding the conditions to the exchange offer. Procedures for Tendering Outstanding Notes................................ If you wish to accept the exchange offer, you must: - complete, sign and date the accompanying letter of transmittal, or a facsimile of the letter of transmittal according to the instructions contained in this prospectus and the letter of transmittal; - mail or otherwise deliver the letter of transmittal, or a facsimile of the letter of transmittal, together with the old notes and any other required documents, to the exchange agent at the address indicated on the cover page of the letter of transmittal; or - if you hold old notes through The Depository Trust Company, or DTC, and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC, by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things: - any new notes that you receive will be acquired in the ordinary course of your business; - you have no arrangement or understanding with any person or entity to participate in a distribution of the new notes;
5 - if you are a broker-dealer that will receive new notes for your own account in exchange for old notes that were acquired as a result of market-making activities, that you will deliver a prospectus, as required by law, in connection with any resale of those new notes; and - you are not an affiliate, as defined in Rule 405 of the Securities Act, of ours or, if you are an affiliate, you will comply with any applicable registration and prospectus delivery requirements of the Securities Act. Special Procedures for Beneficial Owners............................... If you are a beneficial owner of old notes which are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes in the exchange offer, you should contact that registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed before the expiration date. Guaranteed Delivery Procedures........................... If you wish to tender your old notes and your old notes are not immediately available or you cannot deliver your old notes, the letter of transmittal or any other documents required by the letter of transmittal or to comply with the applicable procedures under DTC's Automated Tender Offer Program before the expiration date, you must tender your old notes according to the guaranteed delivery procedures set forth in this prospectus under "The Exchange Offer--Guaranteed Delivery Procedures." Effect on Holders of Outstanding Notes.................... Once we complete the exchange of all validly tendered old notes pursuant to the terms of the exchange offer, we will have fulfilled a covenant contained in the registration rights agreement and, accordingly, there will be no liquidated damages paid on the old notes under the circumstances described in the registration rights agreement. If you are a holder of old notes and you do not tender your old notes in the exchange offer, you will continue to hold the old notes and you will be entitled to all the rights and limitations applicable to the old notes in the indenture, except for any rights under the registration rights agreement that by their terms terminate upon the completion of the exchange offer. We expect that the exchange of new notes for old notes will have a material adverse effect on the trading market for old notes.
6 Consequences of Failure to Exchange............................. All untendered old notes will continue to be subject to the restrictions on transfer provided for in the old notes and in the indenture. In general, the old notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the old notes under the Securities Act. Material Income Tax Considerations... The exchange of old notes for new notes in the exchange offer will not be a taxable event for United States federal income tax purposes. See "Certain United States Federal Income Tax Consequences." Use of Proceeds...................... We will not receive any cash proceeds from the issuance of new notes in connection with the exchange offer. Exchange Agent....................... The Bank of New York is the exchange agent for the exchange offer. The address and telephone number of the exchange agent are provided in the section captioned "The Exchange Offer--Exchange Agent" of this prospectus.
7 SUMMARY OF TERMS OF THE NEW NOTES Maturity............................. May 15, 2011. Interest Payment Dates............... May 15 and November 15 of each year, commencing November 15, 2001. Optional Redemption.................. At any time on or after May 15, 2006, we may redeem all or a part of the new notes at the redemption price specified in this prospectus under "Description of Notes--Optional Redemption." At any time before May 15, 2004, we may redeem up to 35% of the new notes with the net proceeds of certain equity offerings at a redemption price of 108.875%, as long as at least 65% of the aggregate principal amount of the new notes remains outstanding after the redemption. See "Description of Notes--Optional Redemption." In addition, we may redeem all or a part of the new notes if we become subject to a change of control at any time, at the redemption price described under "Description of Notes--Change of Control--Optional Redemption Upon Change of Control." Change of Control.................... If we become subject to a change of control, we will be required to make an offer to purchase any new notes that we do not redeem as provided under "Optional Redemption" above, at a purchase price of 101% of the principal amount of those new notes, plus accrued and unpaid interest to the date of purchase. Guarantees........................... The new notes will be fully and unconditionally guaranteed, on a senior basis, jointly and severally, by each of our wholly-owned domestic restricted subsidiaries, other than securitization subsidiaries. Ranking.............................. The new notes will be senior obligations secured as described below and will rank PARI PASSU in right of payment to all our existing and future senior indebtedness and senior to any future subordinated indebtedness of ours. The guarantees of the new notes will rank PARI PASSU in right of payment with all existing and future senior indebtedness of our subsidiary guarantors, including those subsidiaries' guarantees of our obligations under our bank credit facilities and our other outstanding senior notes. As of June 30, 2001, we had approximately $1,698.9 million of senior indebtedness consisting of $558.0 million of borrowings under our bank credit facilities, $100.0 million of our 10 1/4% senior notes due 2004, $299.3 million of our 8 1/2% senior notes due 2006, $248.9 million of our 7 5/8% senior notes due 2008 and $492.7 million of the old notes, all of which was guaranteed on a senior basis by our subsidiaries guaranteeing the new notes. All of our senior indebtedness, including the new notes, is secured by a pledge of the stock of PRIMEDIA Companies Inc., an intermediate holding company we own directly. PRIMEDIA Companies Inc. owns all of our operating subsidiaries.
8 As of June 30, 2001, there was $420.4 million available for borrowing under our bank credit facilities. As a result of the concurrent transactions, we expect to draw upon our revolving credit facility in an amount of $270 million. As of June 30, 2001, we had no subordinated indebtedness outstanding. Subject to the financial covenants in our bank credit facilities, we have the option at any time to exchange our outstanding series of preferred stock into subordinated indebtedness in an aggregate principal amount of $562.1 million. Restrictive Covenants................ We will issue the new notes under an indenture containing covenants for your benefit. These covenants restrict our ability and the ability of our subsidiaries, with exceptions, to: - incur additional debt; - create or permit to exist certain liens; - pay dividends on or repurchase or retire capital stock; - make investments in certain subsidiaries; - sell assets or equity interests in subsidiaries; - enter into transactions with affiliates; and - consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications.
9 SELECTED CONSOLIDATED FINANCIAL INFORMATION The selected consolidated operating and balance sheet data are derived in part from our audited consolidated financial statements contained in our annual reports on Form 10-K for each of the years in the five-year period ended December 31, 2000 and from our unaudited condensed consolidated financial statements contained in our quarterly report on Form 10-Q for the quarter ended June 30, 2001. The historical data are only a summary and should be read in conjunction with the historical consolidated financial statements and related notes contained in the Form 10-K for the year ended December 31, 2000 and the Form 10-Q for the quarter ended June 30, 2001, which have been incorporated by reference in this prospectus. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial position and results of operations for such periods. The results of operations as of and for the six months ended June 30, 2001 are not necessarily indicative of our results for any other interim period or for the full year.
SIX MONTHS ENDED YEARS ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------------------ --------------------------- 1996 1997 1998 1999 2000 2000 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) OPERATING DATA: Sales, net.............. $1,374,449 $1,487,595 $1,573,573 $1,716,102 $1,690,952 $829,977 $872,284 Depreciation of property and equipment......... 38,233 37,334 42,214 47,653 52,920 26,906 30,845 Amortization of intangible assets, excess of purchase price over net assets acquired and other.... 152,469 146,831 176,755 176,361 128,355 66,422 117,738 Other (income) charges(1)............ -- 138,640 (7,216) 62,208 41,570 12,780 29,030 Operating income (loss)(2)............. 85,901 (20,793) 118,157 54,332 33,834 22,190 (91,436) Provision for the impairment of investments(3)........ -- -- -- -- 188,526 -- 30,807 Interest expense........ 124,601 136,625 144,442 164,909 143,988 75,319 66,854 Income tax benefit (expense)(4).......... 53,300 1,685 -- (6,500) (41,200) -- -- Income (loss) before extraordinary charge................ 17,597 (157,439) (37,736) (120,113) (346,826) (46,499) (225,488) Extraordinary charge-- extinguishment of debt(5)............... 9,553 15,401 -- -- -- -- -- Net income (loss)(2).... 8,044 (172,840) (37,736) (120,113) (346,826) (46,499) (225,488) Preferred stock dividends and related accretion(6).......... 43,526 65,073 63,285 53,062 53,063 26,531 27,347 Loss applicable to common shareholders... 35,482 237,913 101,021 173,175 399,889 73,030 252,835 Basic and diluted loss applicable to common shareholders per common share: Loss before extraordinary charge.............. $0.20 $1.72 $0.71 $1.19 $2.48 $0.47 $1.28 Net loss.............. $0.27 $1.84 $0.71 $1.19 $2.48 $0.47 $1.28 Basic and diluted common shares outstanding.... 128,781,518 129,304,900 142,529,024 145,418,441 161,104,053 155,145,878 198,271,477
10
SIX MONTHS ENDED YEARS ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------------------ --------------------------- 1996 1997 1998 1999 2000 2000 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) OTHER DATA: EBITDA(7)............... $276,603 $302,012 $329,910 $340,554 $256,679 $128,298 $86,177 Additions to property, equipment and other, net................... 28,790 31,108 55,238 69,488 77,579 35,442 26,114 Net cash provided by (used in) operating activities............ 150,192 125,360 140,804 107,298 52,546 (22,277) (139,757) Net cash provided by (used in) investing activities............ (721,709) (185,725) (609,621) 186,081 (54,644) 35,436 57,206 Net cash provided by (used in) financing activities............ 580,946 46,688 470,377 (289,256) (2,873) (10,592) 72,161 Deficiency of earnings to fixed charges(8)(9)......... 35,703 159,124 37,736 113,613 295,489 45,775 196,183 Deficiency of earnings to fixed charges and preferred stock dividends and related accretion(8)(9)....... 79,229 224,197 101,021 166,675 348,552 72,306 223,530 BALANCE SHEET DATA: Cash and cash equivalents........... $36,655 $22,978 $24,538 $28,661 $23,690 $31,228 $13,300 Working capital(10)..... (44,705) (146,245) (234,045) (200,458) (346,447) (128,685) (142,946) Total assets............ 2,552,215 2,485,990 3,041,074 2,714,552 2,677,479 2,660,970 3,060,323 Long-term debt(11)...... 1,577,469 1,682,224 1,956,997 1,732,896 1,503,188 1,557,435 1,720,207 Exchangeable preferred stock................. 442,729 470,280 557,841 559,689 561,324 560,508 562,141 Total shareholders' equity (deficiency)... 81,557 (162,223) (83,703) (144,238) (236,026) (32,338) 149,716
- ------------------------------ (1) Represents non-cash compensation and non-recurring charges of $35,210 for the year ended December 31, 2000 and $24,544 and $12,727 for the six months ended June 30, 2000 and 2001, respectively, a provision for severance, closures and integration costs of $22,000 and $20,798 for the years ended December 31, 1999 and 2000, respectively, and $16,718 and $12,502 for the six months ended June 30, 2000 and 2001, respectively, other integration costs related to the About.com merger and other company-wide integration efforts of $4,304 for the six months ended June 30, 2001, (gain) loss on the sales of businesses and other, net of $138,640, $(7,216), $(235,580) and $(14,438) for the years ended December 31, 1997, 1998, 1999 and 2000, respectively, and $(28,482) and $(503) for the six months ended June 30, 2000 and 2001, respectively, and a provision for the impairment of long-lived assets of $275,788 for the year ended December 31, 1999. (2) The adoption of a change in method of accounting for internal use software costs effective January 1, 1998 resulted in an increase in operating income and an equal decrease in net loss of approximately $12,450, $9,000 and $12,500 for the years ended December 31, 1998, 1999 and 2000, respectively. (3) Represents a provision for the impairment of our investment in CMGI, Inc. of approximately $155,500, a provision for the impairment of our investment in Liberty Digital, Inc. of approximately $21,900 and a provision for the impairment of various PRIMEDIA Ventures' investments of approximately $11,200 for the year ended December 31, 2000 and a provision for the impairment of various of our investments of approximately $30,800 for the six months ended June 30, 2001. (4) At December 31, 1997, 1998 and 1999, our management determined that no adjustment to net deferred income tax assets was required. In prior years, management determined that a portion of the net deferred income tax assets would likely be realized and accordingly, we recorded an income tax benefit of $53,300 in 1996. For the year ended December 31, 1997, we recorded an income tax carryback claim of $1,685. In 1999, we recorded income tax expense of $6,500 related to a provision for current state and local taxes incurred as a result of the gain on the sale of the supplemental education group. During 2000, we increased our valuation allowance due to historical operating losses and the impairment of investments, resulting in a provision for income taxes of $41,200. At December 31, 2000, we 11 had aggregate net operating and capital loss carryforwards of approximately $1,028,000 which will be available to reduce future taxable income. (5) Represents the write-off of unamortized deferred financing costs and the premiums paid on the redemptions of the 10 5/8% senior notes. (6) Includes the premiums paid on the redemptions of our $11.625 Series B exchangeable preferred stock and our $2.875 senior exchangeable preferred stock in 1998 and 1997, respectively. In 1997, we recorded a preferred stock dividend accrual in the amount of $9,517. Of the total dividend accrual recorded in 1997, the amounts that relate to prior periods were not material. (7) Represents earnings before interest, taxes, depreciation, amortization and other (income) charges including non-cash compensation and non-recurring charges of $35,210 for the year ended December 31, 2000 and $24,544 and $12,727 for the six months ended June 30, 2000 and 2001, respectively, a provision for severance, closures and integration costs of $22,000 and $20,798 for the years ended December 31, 1999 and 2000, respectively, and $16,718 and $12,502 for the six months ended June 30, 2000 and 2001, respectively, other integration costs related to the About.com merger and other company-wide integration efforts of $4,304 for the six months ended June 30, 2001, (gain) loss on the sales of businesses and other, net of $138,640, $(7,216), $(235,580) and $(14,438) for the years ended December 31, 1997, 1998, 1999 and 2000, respectively, and $(28,482) and $(503) for the six months ended June 30, 2000 and 2001, respectively, and a provision for the impairment of long-lived assets of $275,788 for the year ended December 31, 1999. EBITDA is not intended to represent cash flow from operating activities and should not be considered as an alternative to net income (loss) (as determined in conformity with generally accepted accounting principles) as an indicator of our operating performance or to cash flows as a measure of liquidity. We believe EBITDA is a standard measure commonly reported and widely used by analysts, investors and other interested parties in the media industry. Accordingly, this information has been disclosed in this prospectus to permit a more complete comparative analysis of our operating performance relative to other companies in our industry. EBITDA should not be considered in isolation or as a substitute for other measures of financial performance or liquidity. The primary difference between EBITDA and cash flows provided by operating activities relates to changes in working capital requirements and payments made for interest and income taxes. Additionally, EBITDA is not available for our discretionary use as there are legal requirements to pay preferred stock dividends and repay debt, among other payments. EBITDA as presented may not be comparable to similarly titled measures reported by other companies, since not all companies necessarily calculate EBITDA in identical manners, and therefore, is not necessarily an accurate measure of comparison between companies. (8) For purposes of determining the deficiency of earnings to fixed charges and preferred stock dividends and related accretion, "earnings" consist of loss before income taxes, fixed charges and equity in losses of investees, and "fixed charges" consist of interest on all indebtedness, amortization of deferred financing costs and that portion of rental expenses that management believes to be representative of interest and "preferred stock dividends and related accretion" consist of dividends on our preferred stock, the accretion of our preferred stock and premiums paid on the redemption of our $11.625 Series B exchangeable preferred stock in 1998. (9) Loss before income taxes includes non-cash and non-recurring charges for depreciation and amortization of property and equipment, other intangible assets, excess of purchase price over net assets acquired and deferred financing costs, gain (loss) on the sales of businesses and other, net, provision for severance, closures and integration costs, non-cash compensation and non-recurring charges, provision for the impairment of long-lived assets, provision for the impairment of investments, write-off of deferred financing costs and non-cash interest expense on an acquisition obligation, distribution advance and other current liabilities. These charges totaled $198,895, $333,219, $224,063, $294,982 and $419,144 for the years ended December 31, 1996, 1997, 1998, 1999 and 2000, respectively and $109,999 and $218,055 for the six months ended June 30, 2000 and 2001, respectively. Adjusted to eliminate those charges, earnings would have exceeded fixed charges and fixed charges plus cash preferred stock dividends and related accretion by $163,192 and $136,248, $174,095 and $113,473, $186,327 and $123,042, $181,369 and $128,307 and $123,655 and $70,592 for the years ended December 31, 1996, 1997, 1998, 1999 and 2000, respectively, and by $64,224 and $37,693 for the six months ended June 30, 2000. Adjusted to eliminate those charges for the six months ended June 30, 2001, earnings would have exceeded fixed charges by $21,872 but, earnings would have been insufficient to cover fixed charges plus preferred stock dividends and related accretion by $5,475. (10) Includes current maturities of long-term debt and net assets held for sale, where applicable. Consolidated working capital reflects certain industry working capital practices and accounting principles, including the expensing of certain editorial and product development costs when incurred and the recording of deferred revenue from subscriptions as a current liability. Advertising costs are expensed when the promotional activities occur except for certain direct-response advertising costs which are capitalized and amortized over the estimated period of future benefit. (11) Excludes current maturities of long-term debt. 12 RISK FACTORS RISK FACTORS RELATING TO OUR BUSINESS WE MAY NOT BE ABLE TO ACHIEVE THE EXPECTED RESULTS FROM ACQUISITIONS AND INVESTMENTS. We may not be able to continue to integrate the business of About.com or integrate the business of EMAP USA into our existing businesses without encountering difficulties. In addition, we may make acquisitions and investments in the future. The integration of About.com, EMAP USA and other businesses we may acquire is and will be a complex, time consuming and expensive process involving a number of issues, including: - difficulty integrating acquired technologies, operations and personnel with our existing businesses; - diversion of management attention in connection with both negotiating the acquisitions and integrating the assets; - strain on managerial and operational resources as management tries to oversee larger operations; - exposure to unforeseen liabilities of acquired companies; - potential issuance of securities in connection with a future acquisition with rights that are superior to the rights of holders of our currently outstanding securities; and - the requirement to record potentially significant additional future operating costs for the amortization of certain intangible assets. Our future operating results will depend to a significant degree on our ability to address these issues. In addition, we have invested and may invest in the future in some early-stage companies with limited operating histories and limited or no revenues. We may not be able to successfully develop these young companies and, in some cases, we may not own enough equity in them to control their development. GENERAL ECONOMIC TRENDS MAY REDUCE OUR ADVERTISING REVENUES. Our advertising revenues are subject to the risks arising from adverse changes in domestic and global economic conditions. A decline in the level of business activity of our advertisers has had and could continue to have an adverse effect on our revenues and profit margins. Because of the recent economic slowdown in the United States, many advertisers, particularly business-to-business advertisers, are reducing advertising expenditures. If the current economic slowdown continues or worsens, our results of operations may be adversely affected. WE HAVE SUBSTANTIAL INDEBTEDNESS AND OTHER MONETARY OBLIGATIONS, WHICH CONSUME A SUBSTANTIAL PORTION OF THE CASH FLOW THAT WE GENERATE. We have substantial indebtedness and expect to incur additional indebtedness under our bank credit facilities or otherwise. As of June 30, 2001, we had approximately $1,728.3 million of outstanding indebtedness and $562.1 million of outstanding preferred stock. In addition, as a result of our acquisition of EMAP USA, we drew upon our revolving credit facility in an amount of $255 million. A substantial portion of our cash flow is dedicated to the payment of principal and interest on indebtedness and to the payment of dividends on our preferred stock, which reduces funds available for capital expenditures and business opportunities and may limit our ability to respond to adverse developments in our business or in the economy. For the year ended December 31, 2000, we paid $117.7 million of principal and $141.9 million of interest, and for the six months ended June 30, 2001, we paid $59.8 million of interest. In addition, for the year ended December 31, 2000, we made cash 13 dividend payments of $53.1 million on our outstanding preferred stock, and for the six months ended June 30, 2001, we made cash dividend payments of $26.5 million on our outstanding preferred stock. As a result of our recent transactions in connection with the financing of our acquisition of EMAP USA, we expect our annual interest payments to increase by approximately $15 million. As of June 30, 2001, borrowings under our bank credit facilities were approximately $558 million. In addition, to partially finance our acquisition of EMAP USA, we borrowed an additional $255 million under our revolving credit facility. These borrowings bear interest at floating rates based on the federal funds rate, the prime lending rate or LIBOR. Increases in interest rates on indebtedness under our bank credit facilities would increase our interest payment obligations and could have an adverse effect on us. The weighted average interest rate on our bank credit facilities was 6.46% at June 30, 2001. Our ability to make payments with respect to our indebtedness will depend on our future operating performance, which will be affected by prevailing economic conditions and financial, business, competitive and other factors. We will not be able to control many of these factors, such as the economic conditions in the markets in which we operate and initiatives taken by our competitors. Based on the outstanding principal amount of our debt under our bank credit facilities and outstanding senior notes as of June 30, 2001, we will be required to repay $127.4 million of indebtedness on or prior to December 31, 2004, and we will have to repay substantial additional indebtedness and redeem a significant amount of preferred stock thereafter. We may not be able to repay that debt or redeem the preferred stock from available cash sources and may not be able to refinance that debt or preferred stock on commercially reasonable terms, if at all. If we are unable to repay, redeem or refinance these amounts on or prior to their due dates, we may need to sell assets or take other actions that could be detrimental to the holders of our common stock. In that event, we may not be able to generate sufficient cash from asset sales to satisfy our cash needs. If we are unable to repay, redeem or refinance our indebtedness and preferred stock on or prior to their due dates, we will be in default and all of our indebtedness could be accelerated. OUR DEBT INSTRUMENTS LIMIT OUR BUSINESS FLEXIBILITY BY IMPOSING OPERATING AND FINANCIAL RESTRICTIONS ON OUR OPERATIONS. The agreements governing our indebtedness impose specific operating and financial restrictions on us. These restrictions prohibit or limit us from, among other things: - changing the nature of our business; - incurring additional indebtedness; - creating liens on our assets; - selling assets; - engaging in mergers, consolidations or transactions with our affiliates; - making investments in or loans to specific subsidiaries; - making guarantees or specific restricted payments; and - declaring or making dividend payments on our common or preferred stock. As of June 30, 2001, under our most restrictive debt covenants, we must maintain a minimum interest coverage ratio of 1.80 to 1 and a minimum fixed charge coverage ratio of 1.05 to 1. Our maximum allowable debt leverage ratio is 6.0 to 1. The minimum interest coverage ratio and maximum debt coverage ratio we must maintain become more restrictive over time. The maximum leverage ratio decreases to 5.75 to 1, 5.5 to 1, 5.0 to 1 and 4.5 to 1, respectively, on July 1, 2003, January 1, 2004, January 1, 2005 and January 1, 2006. The minimum interest coverage ratio increases to 2.0 to 1, 2.25 to 14 1 and 2.5 to 1, respectively, on July 1, 2003, January 1, 2004 and January 1, 2005. For the twelve months ended June 30, 2001, our interest coverage ratio, fixed charge coverage ratio and debt leverage ratio were 2.34 to 1, 1.28 to 1 and 5.43 to 1, respectively. These restrictions, in combination with our leveraged nature, could limit our ability to effect future acquisitions or financings or otherwise restrict corporate activities. Our failure to comply with the terms and covenants in our indebtedness could lead to a default under the terms of those documents, which would entitle the lenders to accelerate the indebtedness and declare all amounts owed due and payable. Moreover, the instruments governing almost all of our indebtedness, including the notes, contain cross-default provisions so that a default under any of our indebtedness may result in a default under our other indebtedness. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable. We may not be able to comply with these restrictions in the future, or in order to comply with these restrictions we may have to forgo opportunities that might otherwise be beneficial to us. OUR EARNINGS HAVE BEEN INSUFFICIENT TO PAY OUR FIXED CHARGES AND PREFERRED STOCK DIVIDENDS. Our earnings were inadequate to cover fixed charges and fixed charges plus preferred stock dividends and related accretion by $295.5 million and $348.6 million, respectively, for the year ended December 31, 2000 and by $196.2 million and $223.5 million, respectively, for the six months ended June 30, 2001. Earnings consist of loss before income taxes, fixed charges and equity in losses of investees, and fixed charges consist of interest on all indebtedness, amortization of deferred financing costs and that portion of rental expenses that management believes to be representative of interest. Although our earnings were affected by substantial non-cash and non-recurring charges (including depreciation and amortization of property and equipment, other intangible assets, excess of purchase price over net assets acquired and deferred financing costs, write-off of deferred financing costs, gain on the sales of businesses and other, net, provision for severance, closures and integration costs, non-cash compensation and non-recurring charges, provision for the impairment of investments and non-cash interest expense on an acquisition obligation and other current liabilities of approximately $419.1 million for the year ended December 31, 2000 and $218.1 million for the six months ended June 30, 2001), we cannot assure you that our cash flow will be sufficient in future periods to permit us to make our required payments on our indebtedness and preferred stock. KOHLBERG KRAVIS ROBERTS & CO. L.P., OR KKR, HAS CONTROL OF OUR COMMON STOCK AND HAS THE POWER TO ELECT ALL THE MEMBERS OF OUR BOARD OF DIRECTORS AND TO APPROVE ANY ACTION REQUIRING STOCKHOLDER APPROVAL. As of July 31, 2001, approximately 59.5% of the shares of our common stock were held by investment partnerships, of which KKR Associates, L.P., a New York limited partnership, and KKR GP 1996 LLC, a Delaware limited liability company, each an affiliate of KKR, are the general partners. KKR Associates and KKR GP 1996 have sole voting and investment power with respect to those shares. In addition, on August 24, 2001, we issued (1) 10,800,000 shares of our common stock to KKR 1996 Fund, an affiliate of KKR, (2) 15,795,745 shares of our Series K convertible preferred stock which will automatically convert into 15,795,745 shares of common stock to KKR 1996 Fund upon receipt of approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, for KKR 1996 Fund to acquire additional shares of common stock and 20 days after we send out an information statement pursuant to Regulation 14C of the Exchange Act to our stockholders and (3) 1,000,000 shares of our Series J convertible exchangeable preferred stock to KKR 1996 Fund at $125 per share with an aggregate liquidation preference of $125 million and convertible into shares of our common stock at any time after the first anniversary of the issue date at a conversion price per share of $125 million divided by $7 per share. We also granted warrants which are not exercisable until after the first anniversary of the grant date to KKR or one of its affiliates to purchase up to 3,870,000 shares of our common stock and additional warrants to purchase up to 4,000,000 shares of our common stock 15 depending on the date on which shares of our Series J convertible exchangeable preferred stock are still outstanding. As a result of their majority ownership, our stockholders that are affiliated with KKR and their respective general partners and members, four of whom are also our directors, control us and have the power to elect all of our directors and approve any action requiring stockholder approval, including adopting amendments to our certificate of incorporation and approving mergers or sales of all or substantially all of our assets. Our stockholders that are affiliated with KKR will also be able to prevent change of control events or cause a change of control at any time. The interest of our KKR affiliated stockholders and their affiliates may conflict with the interest of holders of our debt securities, including the new notes. INCREASES IN PAPER AND POSTAGE COSTS MAY HAVE AN ADVERSE IMPACT ON OUR FUTURE FINANCIAL RESULTS. The price of paper is a significant expense relating to our print products and direct mail solicitations. Paper price increases may have an adverse effect on our future results. Postage for product distribution and direct mail solicitations is also a significant expense. We use the U.S. Postal Service for distribution of many of our products and marketing materials. Postage costs increased in January 2001 and can be expected to increase in the future. We may not be able to pass these cost increases through to our customers. WE DEPEND ON SOME IMPORTANT EMPLOYEES, AND THE LOSS OF ANY OF THOSE EMPLOYEES MAY HARM OUR BUSINESS. Our performance is substantially dependent on the performance of our executive officers and other key employees. In addition, our success is dependent on our ability to attract, train, retain and motivate high quality personnel, especially for our management team. Competition for those employees is intense. The loss of the services of any of our executive officers or key employees may harm our business. OUR TRADITIONAL BUSINESS IS SUBJECT TO COMPETITION FROM THE RAPIDLY INCREASING AND COMPETITIVE MARKET FOR NEW MEDIA PRODUCTS AND SERVICES. We derive a substantial portion of our revenues from our traditional businesses. The increased availability of information on the Internet subjects our traditional business to additional competition, which may adversely affect our future operating results. Our strategies for obtaining sustained revenue growth and profitability in the market for new media products and services may not be sufficient to compensate for any losses of revenue in our traditional businesses resulting from competition with new media. Numerous well-established companies and smaller entrepreneurial companies are focusing significant resources on developing and marketing products and services that will compete with our products and services. Competition in the market for Internet products and services may intensify in the future. In addition, our current and potential competitors may have greater financial, technical, operational and marketing resources. Competitive pressures may also force prices for Internet goods and services down and those price reductions may adversely affect us. IF THE UNITED STATES OR OTHER GOVERNMENTS REGULATE THE INTERNET MORE CLOSELY, OUR NEW MEDIA BUSINESSES MAY BE HARMED. Any new law or regulation pertaining to the Internet or the application or interpretation of existing laws could decrease the demand for our Internet businesses, increase the cost of doing business of About.com and our other new media businesses or otherwise have a material adverse effect on our business, results of operations and financial condition. There are and will be an increasing number of laws and regulations pertaining to the Internet. These laws or regulations may relate to liability for information retrieved from or transmitted over the Internet, online content regulation, user privacy, 16 taxation and the quality of products and services. In addition, the applicability to the Internet of existing laws governing intellectual property ownership and infringement, copyright, trademark, trade secret, obscenity, libel, employment, personal privacy and other issues is uncertain and developing. IN ORDER FOR OUR NEW MEDIA BUSINESSES TO SUCCEED, WE MUST RESPOND TO THE RAPID CHANGES IN TECHNOLOGY. The markets for Internet products and services are characterized by: - rapidly changing technology; - evolving industry standards; - frequent new product and service introductions; and - changing customer demands. The success of our new media businesses will depend on our ability to adapt to this rapidly evolving marketplace. We may not be able to adequately adapt its products and services or to acquire new products and services that can compete successfully. In addition, we may not be able to establish and maintain effective distribution channels. THE SUCCESS OF OUR NEW MEDIA BUSINESSES DEPENDS ON USE OF THE INTERNET BY BUSINESSES AND INDIVIDUALS. The success of our new media businesses depends on use of the Internet for advertising, marketing, providing services and conducting business. Our new media businesses may suffer if commercial use of the Internet fails to grow in the future. Commercial use of the Internet is currently at an early stage of development and the future of the Internet is not clear. Internet usage may be inhibited for any of the following reasons: - the Internet infrastructure may not be able to support the demands placed on it, and its performance and reliability may decline as usage grows; - security and authentication concerns with respect to the transmission over the Internet of confidential information, such as credit card numbers, and attempts by unauthorized computer users, so-called hackers, to penetrate online security systems; and - privacy concerns, including those related to the ability of web sites to gather user information without the user's knowledge or consent. In addition, it is not clear how effective advertising on the Internet is in generating business as compared to more traditional types of advertising such as print, television and radio. The adoption of Internet advertising, particularly by those entities that have historically relied upon traditional media for advertising, requires the acceptance of a new way of conducting business, exchanging information and advertising products and services. Advertisers that have traditionally relied upon other advertising media may be reluctant to advertise on the Internet. These businesses may find Internet advertising to be less effective than traditional advertising media for promoting their products and services. WE FACE SPECIFIC SECURITY RISKS REGARDING THE TRANSMISSION OF CONFIDENTIAL INFORMATION. Consumer concerns about the security of transmissions of confidential information over public telecommunications facilities is a significant barrier to electronic commerce and communications. Many factors may cause compromises or breaches of our security systems or other Internet sites used to protect proprietary information, including advances in computer and software functionality or new discoveries in the field of cryptography. A compromise of security on the Internet would have a negative effect on the use of the Internet for commerce and communications and negatively impact our businesses. Security breaches of our activities or the activities of our customers and sponsors involving the storage and transmission of proprietary information, such as credit card numbers, may expose us to 17 a risk of loss or litigation and possible liability. Our security measures designed to prevent security breaches and insurance programs we obtain to address the potential losses or liabilities may not be sufficient to cover any such losses or liabilities. WE MAY HAVE LIABILITY FOR INFORMATION RETRIEVED FROM THE INTERNET. Because materials may be downloaded from the Internet and subsequently distributed to others, we may be subject to claims for defamation, negligence, copyright or trademark infringement, personal injury or other theories based on the nature, content, publication and distribution of those materials. WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY, AND WE MAY BE LIABLE FOR INFRINGING THE INTELLECTUAL PROPERTY OF OTHERS. Third parties may infringe or misappropriate our and our subsidiaries' patents, trademarks or other intellectual property, which could have a material adverse effect on our business, results of operations or financial condition. While we and our subsidiaries enter into confidentiality agreements with our material employees, guides, consultants and strategic partners, and generally control access to and distribution of our proprietary information, the steps we and our subsidiaries have taken to protect our intellectual property may not prevent misappropriation. In addition, we and our subsidiaries do not know whether we will be able to defend our proprietary rights since the validity, enforceability and scope of protection of proprietary rights in Internet-related industries is still evolving. Third parties may assert infringement claims against us or our subsidiaries. From time to time in the ordinary course of business we and our subsidiaries have been, and we expect to continue to be, subject to claims of alleged infringement of the trademarks and other intellectual property rights of third parties. These claims and any resultant litigation, should it occur, could subject us and our subsidiaries to significant liability for damages. In addition, even if we and our subsidiaries prevail, litigation could be time-consuming and expensive to defend and could result in the diversion of our time and attention. Any claims from third parties may also result in limitations on our and our subsidiaries' ability to use the intellectual property subject to these claims unless we are able to enter into agreements with the third parties making these claims. RISK FACTORS RELATING TO THE EXCHANGE OFFER IF YOU FAIL TO TENDER YOUR OLD NOTES IN THE EXCHANGE OFFER, THEN THE LIQUIDITY OF THE MARKET FOR YOUR NOTES MAY BE SUBSTANTIALLY LIMITED. We expect that a substantial portion of the old notes will be tendered and accepted in the exchange offer and exchanged for new notes. When the exchange offer is completed, the amount of old notes will be reduced by the amount of new notes that we will issue. Accordingly, we expect that the liquidity of the market for the old notes after the exchange offer is completed will be substantially limited. IF YOU FAIL TO EXCHANGE YOUR OLD NOTES IN THE EXCHANGE OFFER, YOUR OLD NOTES WILL CONTINUE TO BE SUBJECT TO TRANSFER RESTRICTIONS. If you do not exchange your old notes for new notes in the exchange offer your old notes will continue to be subject to the transfer restrictions outlined in the offering memorandum distributed in connection with the offering of the old notes. In general, the old notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreements, we do not intend to register resales of the old notes under the Securities Act. 18 RISK FACTORS RELATING TO THE NEW NOTES WE ARE A HOLDING COMPANY AND OUR ABILITY TO MEET INTEREST AND PRINCIPAL PAYMENTS DEPENDS UPON DISTRIBUTIONS FROM OUR SUBSIDIARIES. We are a holding company and conduct all of our operations through our subsidiaries and currently have no significant operating assets other than our investments in our operating subsidiaries. As a result, we must rely on dividends and other advances and transfers of funds from our subsidiaries to meet our debt service and other obligations. The ability of our subsidiaries to pay dividends or make other advances and transfers of funds will depend on their respective operating results and may be restricted by, among other things, the laws of their jurisdiction of organization which limit the amount of funds available for the payment of dividends and agreements of those subsidiaries. Although the indenture will limit the ability of most of those subsidiaries to enter into consensual restrictions on their ability to pay dividends or make other advances and transfers of funds to us, those limitations are subject to a number of significant qualifications and exceptions. Although most of our subsidiaries will guarantee the new notes, some will not, and in any event these guarantees may not be enforceable. See "--A court may be able to void the guarantees of the new notes and require holders of the new notes to return payments received from our subsidiaries." NOT ALL OF OUR SUBSIDIARIES GUARANTEE OUR OBLIGATIONS UNDER THE NEW NOTES, AND THE ASSETS OF THE NON-GUARANTOR SUBSIDIARIES MAY NOT BE AVAILABLE TO MAKE PAYMENTS ON THE NEW NOTES. Our present and future foreign subsidiaries and our partially owned domestic subsidiaries will not be guarantors of the new notes. Our present and future wholly-owned domestic subsidiaries will guarantee the new notes, except domestic subsidiaries that engage only in the business of financing accounts receivable or that may be designated as unrestricted with respect to the indenture. Payments on the new notes are only required to be made by us and the subsidiary guarantors. As a result, no payments are required to be made from assets of subsidiaries that do not guarantee the new notes, unless those assets are transferred by dividend or otherwise to us or a subsidiary guarantor. In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor subsidiaries, holders of their indebtedness, including their trade creditors, would generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us. As a result, the new notes are effectively subordinated to the indebtedness of the non-guarantor subsidiaries. For the year ended December 31, 2000 and for the six months ended June 30, 2001, our non-guarantor subsidiaries had net sales of $62.0 million and $63.2 million, respectively. The non-guarantor subsidiaries historically have had negative EBITDA but could turn profitable in the future. WE MAY NOT BE PERMITTED OR HAVE THE ABILITY TO PURCHASE THE NEW NOTES UPON A CHANGE OF CONTROL AS REQUIRED BY THE INDENTURE. Our ability to repurchase new notes in connection with a change of control may be limited by a number of factors. The occurrence of certain events that constitute a change of control would constitute a default under our bank credit facilities and would require us to make an offer to purchase our other outstanding notes. In that event, we must repay our borrowings under our bank credit facilities and repurchase any new notes and any of our other outstanding notes that are tendered for repurchase. We may also incur future indebtedness that may require us to offer to repurchase that indebtedness upon a change of control. We may not have sufficient funds to repay or repurchase all that indebtedness. Our failure to repay outstanding indebtedness under our bank credit facilities, make a change of control offer when required or to purchase tendered notes when tendered would constitute 19 an event of default under the indenture related to the new notes and the indentures governing our other outstanding notes. In addition, certain events that may constitute a change of control under our bank credit facilities and cause us to be required to repay our borrowings under the bank credit facilities may not constitute a change of control under the indenture related to the new notes. In that case, we may not have sufficient funds to repurchase that indebtedness, which would cause us to be in default under the bank credit facilities, the new notes and all our outstanding notes. Our and our subsidiaries' future indebtedness may also contain prohibitions of certain events that would constitute a change of control or require indebtedness to be repurchased upon a change of control. A COURT MAY BE ABLE TO VOID THE GUARANTEES OF THE NEW NOTES AND REQUIRE HOLDERS OF THE NEW NOTES TO RETURN PAYMENTS RECEIVED FROM OUR SUBSIDIARIES. Under federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of the guarantor if, among other things, the subsidiary guarantor, at the time that the subsidiary guarantor issued the guarantee: - issued the guarantee to delay, hinder or defraud present or future creditors; or - received less than reasonably equivalent value or fair consideration for issuing the guarantee and at the time it issued the guarantee: - was insolvent or rendered insolvent by reason of issuing the guarantee and the application of the proceeds of the guarantee; - was engaged or about to engage in a business or transaction for which the guarantor's remaining unencumbered assets constituted unreasonably small capital to carry on its business; - intended to incur, or believed that it would incur, debts beyond its ability to pay the debts as they mature; or - it was a defendant in an action for money damages, or had a judgment for money damages docketed against it if, in either case, after final judgment, the judgment is unsatisfied. In addition, any payment by the guarantor under 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 or the guarantee could be subordinated to other debt of the subsidiary guarantor. The measures of insolvency for purposes of fraudulent transfer laws vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a person would be considered insolvent if, at the time it incurred the debt: - the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or - it could not pay its debts as they become due. We cannot be sure as to the standard that a court would use to determine whether or not the guarantor subsidiaries were solvent at the relevant time, or, regardless of the standard that the court uses, that the issuance of the guarantee of the notes would not be voided or the guarantee of the notes would not be subordinated to that subsidiary guarantor's other debt. If such a case were to occur, any guarantee of the new notes incurred by one of the subsidiary guarantors could also be subject to the claim that, since the guarantee was incurred for our benefit, and 20 only indirectly for the benefit of the subsidiary guarantor, the obligations of the applicable guarantor were incurred for less than fair consideration. A court could therefore void the obligations under the guarantees or subordinate the guarantees to the applicable guarantor's other debt or take action detrimental to holders of the notes. FORWARD-LOOKING STATEMENTS This prospectus contains or incorporates by reference forward-looking statements under the captions "Summary--Our Growth Strategy," "Risk Factors" and elsewhere. In some cases these statements are identified by our use of forward-looking words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "continue," "may increase," "may fluctuate" and similar expressions or by our use of future or conditional verbs such as "will," "should," "would" and "could." Forward-looking statements may also use different words and phrases. We have based the forward-looking statements on our current assumptions, expectations and projections about future events. Although the expectations reflected in these forward-looking statements represent management's best judgment at the time they were made, we can give no assurance that these expectations will prove to be correct. These forward-looking statements involve risks and uncertainties, including: - risks relating to our ability to successfully integrate our businesses following the merger with About.com, our acquisition of EMAP USA and our continuing strategy of expanding our business through acquisitions of and investments in businesses, technologies, products and services from other businesses; - the U.S. economy and its impact on advertising revenues; and - other risks and uncertainties, including those listed under the caption "Risk Factors." For more information see "Risk Factors." We caution prospective purchasers not to place undue reliance on these forward-looking statements. USE OF PROCEEDS There will be no cash proceeds to us from the exchange offer. 21 THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER We have entered into a registration rights agreement with the initial purchasers of the old notes in which we and our subsidiaries agreed, under some circumstances, to file a registration statement relating to an offer to exchange the old notes for new notes. We and some of our subsidiaries also agreed to use our reasonable best efforts to cause the offer to be consummated within 230 days following the original issue of the old notes. The new notes will have terms substantially identical to the old notes, except that the new notes will not contain terms with respect to transfer restrictions, registration rights and liquidated damages for failure to observe some obligations in the registration rights agreement. The old notes were issued on May 8, 2001. Under the circumstances set forth below, we will use our reasonable best efforts to cause the SEC to declare effective a shelf registration statement with respect to the resale of the old notes and keep the statement effective for up to two years after the effective date of the shelf registration statement. These circumstances include if: (a) 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 SEC policy; or (b) any holder of old notes notifies us prior to the 20th day following consummation of the exchange offer that: (1) it is prohibited by law or SEC policy from participating in the exchange offer; or (2) 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 available for such resales; or (3) it is a broker-dealer and owns old notes acquired directly from us or an affiliate of ours. If we fail to comply with some obligations under the registration rights agreement, we will be required to pay liquidated damages to each holder of old notes. See "Description of New Notes--Exchange Offer; Registration Rights." Each holder of old notes that wishes to exchange old notes for transferable new notes in the exchange offer will be required to make the following representations: - any new notes will be acquired in the ordinary course of its business; - the holder has no arrangement with any person to participate in the distribution of the new notes; - the holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of ours or if it is an affiliate, that it will comply with applicable registration and prospectus delivery requirements of the Securities Act; - if the holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the new notes; and - if the holder is a broker-dealer, that 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 and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of the new notes. See "Plan of Distribution." 22 RESALE OF EXCHANGE NOTES Based on interpretations of the SEC staff outlined in no action letters issued to unrelated third parties, we believe that new notes issued under the exchange offer in exchange for old notes may be offered for resale, resold and otherwise transferred by any new note holder without compliance with the registration and prospectus delivery provisions of the Securities Act, if: - the holder is not an "affiliate" of ours within the meaning of Rule 405 under the Securities Act; - the new notes are acquired in the ordinary course of the holder's business; and - the holder does not intend to participate in the distribution of the new notes. Any holder who tenders in the exchange offer with the intention of participating in any manner in a distribution of the new notes: - cannot rely on the position of the staff of the SEC enunciated in EXXON CAPITAL HOLDINGS CORPORATION or similar interpretive letters; and - must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. This prospectus may be used for an offer to resell, for the resale or for other retransfer of new notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the old notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives new notes for its own account in exchange for old notes, where the old notes were acquired by the broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the new notes. Please read the section captioned "Plan of Distribution" for more details regarding the transfer of new notes. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions included in this prospectus and in the accompanying letter of transmittal, we will accept for exchange any old notes properly tendered and not withdrawn prior to the expiration date. We will issue $1,000 principal amount of new notes in exchange for each $1,000 principal amount of old notes surrendered under the exchange offer. Old notes may be tendered only in integral multiples of $1,000. The form and terms of the new notes will be substantially identical to the form and terms of the old notes except the new notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not provide for any liquidated damages upon our failure to fulfill our obligations under the registration rights agreement to file, and cause to be effective, a registration statement. The new notes will evidence the same debt as old notes. The new notes will be issued under and entitled to the benefits of the same indenture that authorized the issuance of the old notes. The exchange offer is not conditioned upon any minimum aggregate principal amount of old notes being tendered for exchange. As of the date of this prospectus, $500.0 million aggregate principal amount of the old notes are outstanding. This prospectus and a letter of transmittal are being sent to all registered holders of old notes. There will be no fixed record date for determining registered holders of old notes entitled to participate in the exchange offer. We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC. Old notes that are not tendered for exchange in the exchange offer 23 will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits the holders have under the indenture relating to the old notes, except for any rights under the registration rights agreement that by their terms terminate upon the consummation of the exchange offer. We will be deemed to have accepted for exchange properly tendered old notes when we have given oral or written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the new notes from us and delivering new notes to the holders. Under the terms of the registration rights agreement, we reserve the right to amend or terminate the exchange offer, and not to accept for exchange any old notes not previously accepted for exchange, upon the occurrence of any of the conditions specified below under the caption "--Material Conditions to the Exchange Offer." Holders who tender old notes in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of old notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important that you read the section labeled "--Fees and Expenses" below for more details regarding fees and expenses incurred in the exchange offer. EXPIRATION DATE; EXTENSIONS; AMENDMENTS The exchange offer will expire at 5:00 p.m., New York City time on , 2001, unless in our sole discretion we extend it. In order to extend the exchange offer, we will notify the exchange agent orally or in writing of any extension. We will notify the registered holders of old notes of the extension no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date. We reserve the right, in our sole discretion: - to delay accepting for exchange any old notes; - to extend the exchange offer or to terminate the exchange offer and to refuse to accept old notes not previously accepted if any of the conditions set forth below under "--Material Conditions to the Exchange Offer" have not been satisfied, by giving oral or written notice of such delay, extension or termination to the exchange agent; or - under the terms of the registration rights agreement, to amend the terms of the exchange offer in any manner. Any delay in acceptance, extension, termination, or amendment will be followed as promptly as practicable by oral or written notice to the registered holders of old notes. If we amend the exchange offer in a manner that we determine constitutes a material change, we will promptly disclose the amendment in a manner reasonably calculated to inform the holder of old notes of the amendment. Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we will have no obligation to publish, advertise, or otherwise communicate any public announcement, other than by making a timely release to a financial news service. MATERIAL CONDITIONS TO THE EXCHANGE OFFER Despite any other term of the exchange offer, we will not be required to accept for exchange, or exchange any new notes for, any old notes, and we may terminate the exchange offer as provided in this prospectus before accepting any old notes for exchange if in our reasonable judgment: 24 - the new notes to be received will not be tradable by the holder, without restriction under the Securities Act, the Exchange Act and without material restrictions under the blue sky or securities laws of substantially all of the states of the United States; - the exchange offer, or the making of any exchange by a holder of old notes, would violate applicable law or any applicable interpretation of the staff of the SEC; or - any action or proceeding has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer. In addition, we will not be obligated to accept for exchange the old notes of any holder that has not made to us: - the representations described under "Purpose and Effect of the Exchange Offer," "--Procedures for Tendering" and "Plan of Distribution"; and - other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to it an appropriate form for registration of the new notes under the Securities Act. We expressly reserve the right, at any time or at various times, to extend the period of time during which the exchange offer is open. Consequently, we may delay acceptance of any old notes by giving oral or written notice of the extension to their holders. During any extensions, all old notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange. We will return any old notes that we do not accept for exchange for any reason without expense to their tendering holder as promptly as practicable after the expiration or termination of the exchange offer. We expressly reserve the right to amend or terminate the exchange offer, and to reject for exchange any old notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified above. We will give oral or written notice of any extension, amendment, non-acceptance, or termination to the holders of the old notes as promptly as practicable. Those conditions are for our sole benefit and we may assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times in our sole discretion. If we fail at any time to exercise any of these rights, this failure will not constitute a waiver of this right. Each right will be deemed an ongoing right that we may assert at any time or at various times. In addition, we will not accept for exchange any old notes tendered, and will not issue new notes in exchange for any old notes, if at the time any stop order will be threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act. PROCEDURES FOR TENDERING Only a holder of old notes may tender the old notes in the exchange offer. To tender in the exchange offer, a holder must: - complete, sign and date the accompanying letter of transmittal, or a facsimile of the letter of transmittal; have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires; and mail or deliver the letter of transmittal or facsimile to the exchange agent prior to the expiration date; or - comply with the DTC's Automated Tender Offer Program procedures described below. 25 In addition, either: - the exchange agent must receive the old notes along with the accompanying letter of transmittal; or - the exchange agent must receive, prior to the expiration date, a timely confirmation of book-entry transfer of the old notes into the exchange agent's account at the DTC according to the procedures for book-entry transfer described below or a properly transmitted agent's message; or - the holder must comply with the guaranteed delivery procedures described below. To be tendered effectively, the exchange agent must receive any physical delivery of a letter of transmittal and other required documents at the address set forth below under "--Exchange Agent" prior to the expiration date. The tender by a holder of old notes that is not withdrawn prior to the expiration date will constitute an agreement between the holder of old notes and us in accordance with the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal. The method of delivery of old notes, the letter of transmittal and all other required documents to the exchange agent is at the holder's election and risk. Rather than mail these items, we recommend that holders use an overnight or hand delivery service. In all cases, holders should allow sufficient time to assure delivery to the exchange agent before the expiration date. Holders should not send the letter of transmittal or old notes to us. Holders may request their respective brokers, dealers, commercial banks, trust companies or other nominees to effect the above transactions for them. Any beneficial owner whose old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct it to tender on the owners' behalf. If the beneficial owner wishes to tender on its own behalf, it must, prior to completing and executing the accompanying letter of transmittal and delivering its old notes either: - make appropriate arrangements to register ownership of the old notes in such owner's name; or - obtain a properly completed bond power from the registered holder of old notes. The transfer of registered ownership may take considerable time and may not be completed prior to the expiration date. Signatures on a letter of transmittal or a notice of withdrawal described below must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or another "eligible institution" within the meaning of Rule 17Ad-15 under the Exchange Act, unless the old notes are tendered: - by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the accompanying letter of transmittal; or - for the account of an eligible institution. If the accompanying letter of transmittal is signed by a person other than the registered holder of any old notes listed on the old notes, the old notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder's name appears on the old notes and an eligible institution must guarantee the signature on the bond power. If the accompanying 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, these persons should so indicate when signing. Unless waived by us, they should also submit evidence satisfactory to us of their authority to deliver the accompanying letter of transmittal. 26 The exchange agent and the DTC have confirmed that any financial institution that is a participant in the DTC's system may use the DTC's Automated Tender Offer program to tender. Participants in the program may, instead of physically completing and signing the accompanying letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing the DTC to transfer the old notes to the exchange agent in accordance with its procedures for transfer. The DTC will then send an agent's message to the exchange agent. The term "agent's message" means a message transmitted by the DTC, received by the exchange agent and forming part of the book-entry confirmation, to the effect that: - the DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering old notes that are the subject of the book-entry confirmation; - the participant has received and agrees to be bound by the terms of the accompanying letter of transmittal, or, in the case of an agent's message relating to guaranteed delivery, that the participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and - the agreement may be enforced against that participant. We will determine in our sole discretion all outstanding questions as to the validity, form, eligibility, including time or receipt, acceptance of tendered old notes and withdrawal of tendered old notes. Our determination will be final and binding. We reserve the absolute right to reject any old notes not properly tendered or any old notes the acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular old notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the accompanying 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 the time as we will determine. Although we intend to notify holders of defects or irregularities with respect to tenders of old notes, neither we, the exchange agent nor any other person will incur any liability for failure to give any notification. Tenders of old notes will not be deemed made until any defects or irregularities have been cured or waived. Any old notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the exchange agent without cost to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date. In all cases, we will issue new notes for old notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives: - old notes or a timely book-entry confirmation of the old notes into the exchange agent's account at the DTC; and - a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent's message. By signing the accompanying letter of transmittal or authorizing the transmission of the agent's message, each tendering holder of old notes will represent or be deemed to have represented to us that, among other things: - any new notes that the holder receives will be acquired in the ordinary course of its business; - the holder has no arrangement or understanding with any person or entity to participate in the distribution of the new notes; - if the holder is not a broker-dealer, that is not engaged in and does not intend to engage in the distribution of the new notes; 27 - if the holder is a broker-dealer that will receive new notes for its own account in exchange for old notes that were acquired as a result of market-making activities, that it will deliver a prospectus, as required by law, in connection with any resale of any new notes; and - the holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of ours or, if the holder is an affiliate, it will comply with any applicable registration and prospectus delivery requirements of the Securities Act. BOOK-ENTRY TRANSFER The exchange agent will make a request to establish an account with respect to the old notes at the DTC for purposes of the exchange offer promptly after the date of this prospectus. Any financial institution participating in the DTC's system may make book-entry delivery of old notes by causing the DTC to transfer the old notes into the exchange agent's account at the DTC in accordance with the DTC's procedures for transfer. Holders of old notes who are unable to deliver confirmation of the book-entry tender of their old notes into the exchange agent's account at the DTC or all other documents required by the letter of transmittal to the exchange agent on or prior to the expiration date must tender their old notes according to the guaranteed delivery procedures described below. GUARANTEED DELIVERY PROCEDURES Holders wishing to tender their old notes but whose old notes are not immediately available or who cannot deliver their old notes, the accompanying letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under the DTC's Automated Tender Offer Program prior to the expiration date may tender if: - the tender is made through an eligible institution; - prior to the expiration date, the exchange agent receives from the eligible institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail or hand delivery, or a properly transmitted agent's message and notice of guaranteed delivery: - setting forth the name and address of the holder, the registered number(s) of the old notes and the principal amount of old notes tendered; - stating that the tender is being made thereby; and - guaranteeing that, within three New York Stock Exchange trading days after the expiration date, the accompanying letter of transmittal, or facsimile of the letter of transmittal, together with the old notes or a book-entry confirmation, and any other documents required by the accompanying letter of transmittal will be deposited by the eligible institution with the exchange agent; and - the exchange agent receives the properly completed and executed letter of transmittal, or facsimile of the executed letter of transmittal, as well as all tendered old notes in proper form for transfer or a book-entry confirmation, and all other documents required by the accompanying letter of transmittal, within three New York Stock Exchange trading days after the expiration date. Upon request to the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their old notes according to the guaranteed delivery procedures set forth above. WITHDRAWAL OF TENDERS Except as otherwise provided in this prospectus, holders of old notes may withdraw their tenders at any time prior to the expiration date. 28 For a withdrawal to the effective: - the exchange agent must receive a written notice of withdrawal, which notice may be by telegram, telex, facsimile transmission or letter of withdrawal at one of the addresses set forth below under "--Exchange Agent"; or - holders must comply with the appropriate procedures of the DTC's Automated Tender Offer Program system. Any notice of withdrawal must: - specify the name of the person who tendered the old notes to be withdrawn; - identify the old notes to be withdrawn, including the principal amount of the old notes; and - where certificates for old notes have been transmitted, specify the name in which the old notes were registered, if different from that of the withdrawing holder. If certificates for old notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of the certificates, the withdrawing holder must also submit: - the serial numbers of the particular certificates to be withdrawn; and - a signed notice of withdrawal with signatures guaranteed by an eligible institution unless the holder is an eligible institution. If old notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the DTC to be credited with the withdrawn old notes and otherwise comply with the procedures of that facility. We will determine all questions as to the validity, form and eligibility, including time of receipt, of the notices, and our determination will be final and binding on all parties. We will deem any old notes so withdrawn not to have validly tendered for exchange for purposes of the exchange offer. Any old notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder without cost to the holder, or, in the case of old notes tendered by book-entry transfer into the exchange agent's account at the DTC according to the procedures described above, the old notes will be credited to an account maintained with the DTC for old notes, as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn, old notes may be retendered by following one of the procedures described under "--Procedures for Tendering" above at any time on or prior to the expiration date. 29 EXCHANGE AGENT The Bank of New York has been appointed as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to the exchange agent as follows: FOR DELIVERY BY REGISTERED OR CERTIFIED MAIL: BY HAND OR OVERNIGHT COURIER: The Bank of New York The Bank of New York Reorganization Department Reorganization Department 101 Barclay Street 101 Barclay Street Corporate Trust Services Floor 7E Ground Level New York, New York 10286 New York, New York 10286 Attention: Diane Amoroso Attention: Diane Amoroso BY FACSIMILE TRANSMISSION: (for eligible institutions only): 212-815-6339 Confirm facsimile by telephone only: 212-815-3738
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL. FEES AND EXPENSES We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, we may make additional solicitations by telephone or in person by our officers and regular employees and those of our affiliates. We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptance of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses. We will pay the cash expenses to be incurred in connection with the exchange offer. The expenses are estimated in the aggregate to be approximately $500,000. They include: - SEC registration fees; - fees and expenses of the exchange agent and trustee; - accounting and legal fees and printing costs; and - related fees and expenses. TRANSFER TAXES We will pay all transfer taxes, if any, applicable to the exchange of old notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if: - certificates representing old notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of old notes tendered; 30 - tendered old notes are registered in the name of any person other than the person signing the letter of transmittal; or - a transfer tax is imposed for any reason other than the exchange of old notes under the exchange offer. If satisfactory evidence of payment of the taxes is not submitted with the letter of transmittal, the amount of the transfer taxes will be billed to that tendering holder. Holders who tender their old notes for exchange will not be required to pay any transfer taxes. However, holders who instruct us to register new notes in the name of, or request that old notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of old notes who do not exchange their old notes for new notes under the exchange offer will remain subject to the restrictions on transfer of the old notes: - as set forth in the legend printed on the old notes as a consequence of the issuance of the old notes under the exemption from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and - otherwise as set forth in the prospectus distributed in connection with the private offering of the old notes. In general, you may not offer or sell the old notes unless they are registered under the Securities Act, or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the old notes under the Securities Act. Based on interpretations of the SEC staff, new notes issued under the exchange offer may be offered for resale, resold or otherwise transferred by their holders (other than any holder that is our "affiliate" within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holders acquired the new notes in the ordinary course of the holders' business and the holders have no arrangement or understanding with respect to the distribution of the new notes to be acquired in the exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the new notes: - cannot rely on the applicable interpretations of the SEC; and - must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. ACCOUNTING TREATMENT We will record the new notes in our accounting records at the same carrying value as the old notes, which is the aggregate principal amount net of issuance discount, as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes in connection with the exchange offer. The expenses of the exchange offer will be deferred and amortized over the term of the related notes. OTHER Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take. We may in the future seek to acquire untendered old notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any old notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered old notes. 31 DESCRIPTION OF INDEBTEDNESS AND PREFERRED STOCK BANK CREDIT FACILITIES On June 20, 2001, we completed a refinancing of our existing bank credit facilities pursuant to new bank credit facilities with The Chase Manhattan Bank, Bank of America, N.A, The Bank of New York and The Bank of Nova Scotia, as agents. Borrowings under the bank credit facilities are guaranteed by each of our wholly owned domestic restricted subsidiaries. The guarantees are full, unconditional and joint and several. Certain of our subsidiaries, which primarily represent Internet assets and businesses, including About.com, as well as our foreign and securitization subsidiaries, are not guarantors of the bank credit facilities. The borrowings under the bank credit facilities may be used for general corporate and working capital purposes as well as to finance certain future acquisitions. The bank credit facilities consist of the following: - a $475.0 million revolving loan facility, of which $33.0 million was outstanding at June 30, 2001; - a term loan A, of which $100.0 million was outstanding at June 30, 2001; and - a term loan B, of which $425.0 million was outstanding at June 30, 2001. As of June 30, 2001, we had $558.0 million borrowings outstanding, $22.0 million letters of credit outstanding and unused bank commitments of approximately $420.4 million under our bank credit facilities. In addition, we have drawn on our revolving loan facility in an amount of $255 million to partially finance our acquisition of EMAP USA. With the exception of the term loan B, the amounts borrowed bear interest, at our option, at either the higher of the base rate plus an applicable margin ranging from 0.125% to 1.50% or the Eurodollar Rate plus an applicable margin ranging from 1.125% to 2.50%. Additionally, until we issue financial statements for the period ending December 31, 2001, the applicable margin for the amounts borrowed will be a minimum of 0.75% for the base rate option and 1.75% for the Eurodollar rate option. The term loan B bears interest at the base rate plus 1.75% or LIBOR plus 2.75%. At June 30, 2001, the weighted average variable interest rate on all outstanding borrowings under the bank credit facilities was 6.46%. Under the bank credit facilities, we have agreed to pay commitment fees at a per annum rate of either 0.375% or 0.50%, depending on our debt to EBITDA ratio as defined in our new credit agreement, on the daily average aggregate unutilized commitment under the revolving loan commitment. We also have agreed to pay certain fees with respect to the issuance of letters of credit and an annual administration fee. The commitments under the revolving loan commitment are subject to mandatory reductions semiannually on June 30 and December 31 commencing December 31, 2004 with the final reduction on June 30, 2008. The aggregate mandatory reductions of the revolving loan commitments under the bank credit facility are $23.75 million in 2004, $47.5 million in 2005, $71.25 million in 2006, $142.5 million in 2007 and a final reduction of $190.0 million in 2008. To the extent that the total revolving credit loans outstanding exceed the reduced commitment amount, these loans must be paid down to an amount equal to or less than the reduced commitment amount. However, if the total revolving credit loans outstanding do not exceed the reduced commitment amount, then there is no requirement to pay down any of the revolving credit loans. Aggregate term loan payments under the bank credit facility are $2.125 million in 2001, $4.25 million in 2002 and 2003, $16.75 million in 2004, $29.25 million in 2005, 2006 and 2007, $16.75 million in 2008 and $393.125 million in 2009. The bank credit facilities, among other things, limit our ability to change the nature of our businesses, incur indebtedness, create liens, sell assets, engage in mergers, consolidations or transactions 32 with affiliates, make investments in or loans to certain subsidiaries, issue guarantees and make certain restricted payments including dividend payments on our common stock in excess of $75.0 million in any given year. Under our most restrictive debt covenants, we must maintain a minimum interest coverage ratio of 1.80 to 1 and a minimum fixed charge coverage ratio of 1.05 to 1. Our maximum allowable debt leverage ratio is 6.0 to 1. The maximum leverage ratio decreases to 5.75 to 1, 5.5 to 1, 5.0 to 1 and 4.5 to 1, respectively, on July 1, 2003, January 1, 2004, January 1, 2005 and January 1, 2006. The minimum interest coverage ratio increases to 2.0 to 1, 2.25 to 1 and 2.5 to 1, respectively, on July 1, 2003, January 1, 2004 and January 1, 2005. The bank credit facilities required us to create a new intermediate holding company to own, directly or indirectly, our restricted subsidiaries. We pledged the stock of this new intermediate holding company to secure our obligations under the bank credit facilities and our outstanding notes. As a result of the refinancing of our existing bank credit facilities, we wrote-off the remaining balance of deferred financing costs originally recorded. 10 1/4% SENIOR NOTES DUE 2004 The 10 1/4% senior notes are our senior obligations in an aggregate principal amount of $100 million. They mature on June 1, 2004, with no sinking fund requirements, and have interest payable semiannually in June and December at an annual rate of 10 1/4%. The 10 1/4% senior notes are fully, unconditionally and jointly and severally guaranteed by each of our domestic restricted subsidiaries. They are currently redeemable at 101.65% with annual reductions to 100% in 2002 plus accrued and unpaid interest. If we become subject to a change of control, each holder of the notes will have the right to require us to purchase any or all of the notes at a purchase price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest, if any, to the date of purchase. 8 1/2% SENIOR NOTES DUE 2006 The 8 1/2% senior notes are our senior obligations in an aggregate principal amount of $300 million. They mature on February 1, 2006, with no sinking fund requirements, and have interest payable semiannually in February and August at an annual rate of 8 1/2%. The 8 1/2% senior notes are fully, unconditionally and jointly and severally guaranteed by each of our domestic restricted subsidiaries. Beginning in 2001 and thereafter, the 8 1/2% senior notes are redeemable in whole or in part, at our option, at prices ranging from 104.25% with annual reductions to 100% in 2003 plus accrued and unpaid interest. If we become subject to a change of control, each holder of the notes will have the right to require us to purchase any or all of the note at a purchase price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest, if any, to the date of purchase. 7 5/8% SENIOR NOTES DUE 2008 The 7 5/8% senior notes are our senior obligations in an aggregate principal amount of $250 million. They mature on April 1, 2008, with no sinking fund requirement, and interest is payable semiannually in April and October at the annual rate of 7 5/8% commencing October 1, 1998. They are fully, unconditionally and jointly and severally guaranteed by each of our domestic restricted subsidiaries. The 7 5/8% senior notes may not be redeemed prior to April 1, 2003 other than in connection with a change of control. Beginning on April 1, 2003 and thereafter, the 7 5/8% senior notes are redeemable in whole or in part, at our option, at prices ranging from 103.813% with annual reductions to 100% in 2006 plus accrued and unpaid interest. 33 If we become subject to a change of control, each holder of the notes will have the right to require us to purchase any or all of the note at a purchase price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest, if any, to the date of purchase. $10.00 SERIES D EXCHANGEABLE PREFERRED STOCK In 1996, we completed an offering of 2,000,000 shares of $0.01 par value, Series D preferred stock at $100 per share. Annual dividends of $10 per share on the Series D preferred stock are cumulative and payable quarterly in cash. The liquidation and redemption value is $200 million. On or after February 1, 2001, the Series D preferred stock may be redeemed in whole or in part, at our option, at specified redemption prices plus accrued and unpaid dividends. We are required to redeem the Series D preferred stock on February 1, 2008 at a redemption price equal to the liquidation preference of $100 per share, plus accrued and unpaid dividends. The Series D preferred stock is exchangeable in whole but not in part, at our option, on any scheduled dividend payment date, into 10% Class D subordinated exchange debentures due 2008. If we become subject to a change of control, each holder of a 10% Class D subordinated exchange debenture will have the right to require us to purchase any or all of the 10% Class D subordinated exchange debentures of that holder at a purchase price equal to 101% of the aggregate principal amount of the debentures plus accrued and unpaid interest, if any, to the date of purchase. This right is subject to the repayment of obligations under our bank credit facility, all our outstanding senior notes and the commencement of an offer to purchase and the purchase of all exchange debentures $9.20 SERIES F EXCHANGEABLE PREFERRED STOCK 1,250,000 shares of $9.20 Series F exchangeable preferred stock, $0.01 par value, offered at $100 per share, are outstanding. Annual dividends of $9.20 per share on the Series F exchangeable preferred stock were cumulative and payable quarterly in cash. We are required to redeem the Series F exchangeable preferred stock on November 1, 2009 at a redemption price equal to the liquidation preference of $100 per share, plus accrued and unpaid dividends. Series F exchangeable preferred stock is exchangeable into 9.20% Class F subordinated exchange debentures due 2009, in whole but not in part, at our option on any scheduled dividend payment date. As of December 31, 2000, the liquidation and redemption value of the Series F exchangeable preferred stock was $125 million. If we become subject to a change of control, each holder of a 9.20% Class F subordinated exchange debenture will have the right to require us to purchase any or all of the 9.20% Class F subordinated exchange debentures of that holder at a purchase price equal to 101% of the aggregate principal amount of the debentures plus accrued and unpaid interest, if any, to the date of purchase. This right is subject to the repayment of obligations under our bank credit facility, all our outstanding senior notes and the commencement of an offer to purchase and the purchase of all exchange debentures. $8.625 SERIES H EXCHANGEABLE PREFERRED STOCK 2,500,000 shares of $8.625 Series H exchangeable preferred stock, par value $0.01, offered at $99.40 per share, are outstanding. Annual dividends of $8.625 per share on the Series H exchangeable preferred stock are cumulative and payable quarterly in cash. On or after April 1, 2003, the Series H exchangeable preferred stock may be redeemed in whole or in part, at our option, at prices ranging from 104.313% with annual reductions to 100% in 2006, plus accrued and unpaid dividends. We are required to redeem the Series H exchangeable preferred stock on April 1, 2010 at a redemption price equal to the liquidation preference of $100 per share, plus accrued and unpaid dividends. The liquidation and redemption value of the Series H exchangeable preferred stock is $250 million. The 34 Series H exchangeable preferred stock is exchangeable, in whole but not in part, at our option, on any scheduled dividend payment date into 8.625% Class H subordinated exchange debentures due 2010. If we become subject to a change of control, each holder of an 8.625% Class H subordinated exchange debenture will have the right to require us to purchase any or all of the 8.625% Class H subordinated exchange debentures of that holder at a purchase price equal to 101% of the aggregate principal amount of the debentures plus accrued and unpaid interest, if any, to the date of purchase. This right is subject to the repayment of obligations under our bank credit facility, all our outstanding senior notes and the commencement of an offer to purchase and the purchase of all exchange debentures. SERIES J CONVERTIBLE EXCHANGEABLE PREFERRED STOCK Our Series J convertible exchangeable preferred stock is non-voting. Our Series J convertible exchangeable preferred stock is perpetual and ranks pari passu with our existing series of outstanding preferred stock. In the event of a liquidation, the holders of shares of the Series J convertible exchangeable preferred stock are entitled to be paid out of our assets available for distribution to our stockholders, an amount in cash equal to $125 for each share outstanding, plus an amount in cash equal to accrued but unpaid dividends. Dividends on the Series J convertible exchangeable preferred stock accrue at an annual rate of 12.5% and are payable quarterly in kind. We have the option to redeem any or all of the shares of Series J convertible exchangeable preferred stock at any time for cash at 100% of the liquidation preference of each share being redeemed. The Series J convertible exchangeable preferred stock may be converted into shares of our common stock at any time after the first anniversary of the issue date at a conversion price of $125 million divided by $7 per share, subject to adjustments. On any dividend payment date, we have the option to exchange the Series J convertible exchangeable preferred stock into 12.5% Class J subordinated notes at an exchange rate of $1,000,000 principal amount of the Class J subordinated notes for each $1,000,000 of liquidation preference of Series J convertible exchangeable preferred stock. Our ability to redeem or exchange the Series J convertible exchangeable preferred stock into debt is subject to the approval of a majority of our independent directors. SERIES K CONVERTIBLE PREFERRED STOCK Our Series K convertible preferred stock is non-voting but otherwise the economic equivalent of our common stock. It ranks pari passu with our common stock. In the event of a liquidation, the holders of shares of the Series K convertible preferred stock are entitled to receive any assets of ours as such holders would have received had their shares of Series K convertible preferred stock already been converted into shares of our common stock. The holders of the Series K convertible preferred stock participate ratably with the holders of common stock as if the shares of Series K convertible preferred stock had been converted into common stock in all dividends, when and if paid on the common stock. There is no option to repurchase or redeem the Series K convertible preferred stock as the shares of Series K convertible preferred stock will be automatically converted into an equal number of shares of common stock upon receipt of approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, for KKR 1996 Fund to acquire additional common stock and 20 days after we send out an information statement pursuant to the Commission's proxy rules. 35 DESCRIPTION OF NEW NOTES THE FOLLOWING IS A SUMMARY DESCRIPTION OF THE NEW NOTES, WHICH WE REFER TO IN THIS SECTION AS THE NOTES. GENERAL PRIMEDIA will issue the notes under an indenture (the "Indenture") among PRIMEDIA, the Guarantors and The Bank of New York, as trustee (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. The notes are subject to all those terms, and holders of the notes are referred to the Indenture and the Trust Indenture Act for a statement of those terms. You can find the definitions of certain terms used in the following description under "--Certain Definitions." The notes: - are general obligations of PRIMEDIA; - rank PARI PASSU in right of payment with all existing and future senior indebtedness of PRIMEDIA, including PRIMEDIA's obligations under the Credit Facilities and the Outstanding Notes; - are senior in right of payment to any future subordinated indebtedness of PRIMEDIA; - are fully and unconditionally guaranteed on a senior basis by each domestic, wholly-owned Restricted Subsidiary of PRIMEDIA, other than any Securitization Subsidiary; and - are secured, together with all of PRIMEDIA's other senior indebtedness by a pledge of the stock of PRIMEDIA Companies Inc., an intermediate holding company owned directly by PRIMEDIA. PRIMEDIA Companies Inc. owns all of PRIMEDIA's operating subsidiaries. As of June 30, 2001, PRIMEDIA had approximately $1,698.9 million of senior indebtedness, consisting of $558.0 million of borrowings under the Credit Facilities, $100.0 million of PRIMEDIA's 10 1/4% senior notes due 2004, $299.3 million of PRIMEDIA's 8 1/2% senior notes due 2006, $248.9 million in aggregate principal amount of PRIMEDIA's 7 5/8% senior notes due 2008 and $492.7 million of the old notes. In addition, as a result of the concurrent transactions, PRIMEDIA expects to draw upon its revolving credit facility in an amount of $270 million. The notes will rank PARI PASSU in right of payment with all this indebtedness. As of June 30, 2001, PRIMEDIA had no subordinated indebtedness outstanding. Subject to the financial covenants in the Credit Facilities, PRIMEDIA has the option at any time to exchange its outstanding series of preferred stock into subordinated indebtedness in an aggregate principal amount of $562.1 million. The Guarantors have guaranteed PRIMEDIA's obligations under the Credit Facilities and the Outstanding Notes. As of June 30, 2001, the Guarantors had on a combined basis approximately $28.9 million of additional senior indebtedness, all of which is secured by a pledge of the stock of PRIMEDIA Companies Inc. The guarantees under the notes will rank PARI PASSU in right of payment with all of the guarantees under the Credit Facilities and the Outstanding Notes. PRINCIPAL, MATURITY, AND INTEREST The notes initially are limited in aggregate principal amount to $500.0 million and will mature on May 15, 2011. The notes will be issued in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. Additional notes may be issued from time to time after this offering, subject to the provisions of the Indenture described below under the caption "--Certain Covenants--Incurrence of Indebtedness." The new notes offered under this prospectus, the old notes and any additional notes subsequently issued would be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Unless the context otherwise requires, for all purposes of the Indenture and this "Description of New 36 Notes," references to the notes include any additional notes actually issued. Interest on the notes will accrue at the rate of 8 7/8% per annum and will be payable semiannually on May 15 and November 15, commencing on November 15, 2001, to holders of record on the immediately preceding May 1 and November 1. Interest on the notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the original date of issuance. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. We may be obligated to pay liquidated damages with respect to the old notes in certain circumstances under the Registration Rights Agreement. See "--Registration Rights; Liquidated Damages." The notes will be payable both as to principal and interest at the office or agency of PRIMEDIA maintained for that purpose within or without the City and State of New York or, at the option of PRIMEDIA, payment of interest may be made by check mailed to the holders of the notes at their respective addresses set forth in the register of holders of notes. Until otherwise designated by PRIMEDIA, its office or agency in New York will be the office of the Trustee maintained for that purpose. OPTIONAL REDEMPTION At any time before May 15, 2004, PRIMEDIA may on any one or more occasions redeem up to 35% of the aggregate principal amount of notes (which includes additional notes, if any) originally issued under the Indenture at a redemption price of 108.875% of the principal amount of those notes, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more Equity Offerings; PROVIDED that: (1) at least 65% of the aggregate principal amount of notes (which includes additional notes, if any) originally issued remains outstanding immediately after the occurrence of each of those redemptions (excluding notes held by PRIMEDIA and its Subsidiaries); and (2) any redemption must occur within 60 days of the date of closing of that Equity Offering. Except as provided in the preceding paragraph and other than in connection with a Change of Control, as described below, PRIMEDIA may not redeem the notes before May 15, 2006. On or after May 15, 2006, PRIMEDIA may, at its option, redeem the notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued and unpaid interest on the notes being redeemed to the applicable redemption date, if redeemed during the 12-month period beginning May 15 of the years indicated below:
YEAR PERCENTAGE - ---- ---------- 2006........................................................ 104.438% 2007........................................................ 102.958% 2008........................................................ 101.479% 2009 and thereafter......................................... 100.000%
If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the person or entity in whose name the note is registered at the close of business on that record date, and no additional interest will be payable to holders whose notes will be subject to redemption by PRIMEDIA. The Credit Facilities restrict the optional redemption or the prepayment of the notes, and the indentures governing the Outstanding Notes make that redemption or prepayment a Restricted Payment (as defined in the indentures governing the Outstanding Notes). 37 SINKING FUND There will be no sinking fund payments for the notes. CHANGE OF CONTROL HOLDERS' RIGHT TO REQUIRE REPURCHASE UPON CHANGE OF CONTROL If a Change of Control occurs, each holder will have the right to require PRIMEDIA to repurchase all or any part (equal to $1,000 or any integral multiple of $1,000) of that holder's notes pursuant to the offer described below (the "Change of Control Offer") at a purchase price equal to 101% of the aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase (the "Change of Control Payment"). The redemption prices for optional redemptions in the event of a Change of Control described in the next subsection would in all cases be equal to or greater than this repurchase price. Because of the highly leveraged nature of PRIMEDIA, there can be no assurance that PRIMEDIA will have sufficient funds to repurchase the notes in the event of a Change of Control. The right of the holders of the notes to require PRIMEDIA to repurchase the notes in the event of a Change of Control cannot be waived by the Trustee, PRIMEDIA or PRIMEDIA's board of directors. Within 40 days following any Change of Control, PRIMEDIA will mail a notice to each holder stating: (1) that the Change of Control Offer is being made pursuant to the CHANGE OF CONTROL covenant and that all notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which will be no earlier than 30 days nor later than 60 days from the date that notice is mailed (the "Change of Control Payment Date"); (3) that any notes not tendered will continue to accrue interest; (4) that, unless PRIMEDIA defaults in the payment of the Change of Control Payment, all notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date; (5) that holders electing to have any notes purchased pursuant to a Change of Control Offer will be required to surrender the notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of each note completed, to the paying agent at the address specified in the notice before the close of business on the Business Day preceding the Change of Control Payment Date; (6) that holders will be entitled to withdraw their election if the paying agent receives, not later than the close of business on the third Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the principal amount of the notes delivered for purchase and a statement that that holder is withdrawing his election to have those notes purchased; and (7) that holders whose notes are being purchased only in part will be issued new notes equal in principal amount to the unpurchased portion of the notes surrendered. On the Change of Control Payment Date, PRIMEDIA will, to the extent lawful: (1) accept for payment notes or portions of notes 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 so tendered; and 38 (3) deliver or cause to be delivered to the Trustee the notes so accepted together with an officers' certificate stating the notes or portions of notes that were tendered to PRIMEDIA. The paying agent will promptly mail to each holder of notes so accepted payment in an amount equal to the purchase price for those notes, and the Trustee will promptly authenticate and mail to that holder a note equal in principal amount to any unpurchased portion of the notes surrendered; PROVIDED that each of those notes will be in a principal amount of $1,000 or integral multiples of $1,000. PRIMEDIA will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. Indebtedness under the Credit Facilities will automatically accelerate upon the earlier of (i) 30 days from the Change of Control and the Change of Control Payment Date. If PRIMEDIA has insufficient funds with which to repay the indebtedness under the Credit Facilities and to repurchase the notes and any other senior indebtedness that is required to be repurchased upon a Change of Control, including the Outstanding Notes, the holders of notes will have a claim on the funds of PRIMEDIA equal to that of the lenders under the Credit Facilities and of the holders of any such other senior indebtedness, including the holders of the Outstanding Notes. The provisions described above that require PRIMEDIA 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 to that Change of Control. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the holders of the notes to require that PRIMEDIA repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction. PRIMEDIA 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 included in the Indenture applicable to a Change of Control Offer made by PRIMEDIA and purchases all notes validly tendered and not withdrawn under that Change of Control Offer. OPTIONAL REDEMPTION UPON CHANGE OF CONTROL In addition to the rights set forth under "Optional Redemption," PRIMEDIA may, at its option, redeem the notes, in whole or in part, at any time within 160 days after a Change of Control upon not less than 30 nor more than 60 days' prior notice to each holder of notes to be redeemed, at a redemption price equal to the sum of (i) the then outstanding principal amount of the notes being redeemed plus (ii) accrued and unpaid interest, if any, to the redemption date plus (iii) the Applicable Premium. The following definitions are used to determine the Applicable Premium: "Applicable Premium" with respect to the notes will be calculated with respect to the date of redemption and will equal the greater of (i) 1.0% of the then outstanding principal amount of the notes and (ii) the excess of (A) the present value of the required interest and principal payments due on the notes, computed using a discount rate equal to the Treasury Rate plus the Applicable Spread, over (B) the then outstanding principal amount of the notes. "Applicable Spread," for purposes of the Indenture, is defined as one half of one percent. "Treasury Rate," for purposes of the Indenture, is defined as the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days prior to the date fixed for prepayment (or, if that Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal 39 to the then remaining Average Life of the notes; PROVIDED, that if the Average Life of the notes is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate will be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which those yields are given, except that if the Average Life of the notes 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. The redemption prices in an optional redemption upon a Change of Control will in all cases be equal to or higher than the price applicable to a repurchase upon a Change of Control required by a holder. If PRIMEDIA were to effect an optional Change of Control redemption before the Change of Control Payment Date, holders that had previously tendered notes to PRIMEDIA for repurchase could withdraw those tenders before the Change of Control Payment Date so as to participate in the optional redemption. However, PRIMEDIA would have no obligation to announce an optional Change of Control redemption before the closing of the mandatory Change of Control Offer. PRIMEDIA will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations promulgated under that act to the extent those laws and regulations are applicable in connection with the repurchase of the notes triggered by a Change of Control. 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, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or (2) if the notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee will deem fair and appropriate. No notes of $1,000 or less will be redeemed in part. Notice 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 of notes to be redeemed at its registered address. If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note to be redeemed. A note in principal amount equal to the unredeemed portion of that note will be issued in the name of the holder of that note upon cancellation of the original notes. On and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption. CERTAIN COVENANTS LIMITATIONS ON RESTRICTED PAYMENTS PRIMEDIA will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of PRIMEDIA or any of its Restricted Subsidiaries' Capital Stock or other Equity Interests, other than (A) dividends or distributions payable in Equity Interests, other than Redeemable Stock, of PRIMEDIA or that Restricted Subsidiary, (B) dividends or distributions payable to PRIMEDIA or any of its Restricted Subsidiaries or (C) dividends or distributions by a Partially Owned Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by that Partially Owned Restricted Subsidiary, PRIMEDIA or a Restricted Subsidiary of PRIMEDIA receives at least its pro rata share of 40 that dividend or distribution in accordance with its Equity Interests in that class or series of securities; (ii) (A) voluntarily purchase, redeem or otherwise acquire or retire for value any preferred stock of PRIMEDIA or any of its Restricted Subsidiaries which, by its terms, is exchangeable for any Indebtedness ("Exchangeable Preferred Stock") that is PARI PASSU with or subordinated in right of payment to the notes or (B) purchase, redeem or otherwise acquire or retire for value any Equity Interests (other than Exchangeable Preferred Stock) of PRIMEDIA or any of its Restricted Subsidiaries, other than any Equity Interests purchased from PRIMEDIA or any of its Restricted Subsidiaries; (iii) voluntarily purchase, repay, redeem, defease (including, but not limited to, covenant or legal defeasance) or otherwise acquire or retire for value any Indebtedness that is subordinated in right of payment to the notes (other than in connection with the refunding or refinancing of that Indebtedness), except a payment of interest or principal at the stated maturity of that Indebtedness or in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of that payment, and other than Indebtedness between and among PRIMEDIA and its Restricted Subsidiaries; or (iv) make Investments in Restricted Payment Unrestricted Subsidiaries (the foregoing actions set forth in clauses (i) through (iv) being referred to as "Restricted Payments"), if, at the time of that Restricted Payment: (a) a Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; or (b) PRIMEDIA could not incur at least $1.00 of additional Indebtedness under the first paragraph of the INCURRENCE OF INDEBTEDNESS covenant (without giving effect to clauses (i) through (xvi) of the second paragraph of that covenant), which calculation will be made on a pro forma basis deducting from Adjusted Consolidated Net Income the amount of any Investment PRIMEDIA has made in an Unrestricted Subsidiary during the relevant period and any Investment PRIMEDIA intends to make in an Unrestricted Subsidiary, to the extent that that Investment is made with amounts included in Adjusted Consolidated Net Income as a result of Transfers described in clause (c)(x) below or clause (c)(y) of the INVESTMENTS IN UNRESTRICTED SUBSIDIARIES covenant; or (c) that Restricted Payment, together with the aggregate of all other Restricted Payments made after May 13, 1992, exceeds the sum of the following: (w) 50% of the amount of the Adjusted Consolidated Net Income (other than amounts included in the next succeeding clause (c)(x)) of PRIMEDIA for the period (taken as one accounting period) from the beginning of the first quarter commencing immediately after May 13, 1992 through the end of PRIMEDIA's fiscal quarter ending immediately prior to the time of that Restricted Payment (or, if Adjusted Consolidated Net Income for that period is a deficit, 100% of that deficit); PLUS (x) 100% of the amount of all Transfers from a Restricted Payment Unrestricted Subsidiary up to the aggregate amount of the Investment (after taking into account all prior Transfers from that Restricted Payment Unrestricted Subsidiary) in that Restricted Payment Unrestricted Subsidiary (valued in each case as provided in the definition of "Investment"); PLUS (y) in the event of a designation of a Restricted Payment Unrestricted Subsidiary as a Restricted Subsidiary, 100% of an amount equal to the greater of (A) the fair market value of that Subsidiary as determined by the board of directors of PRIMEDIA in 41 good faith (or, if that fair market value may exceed $25.0 million, as determined in writing by an independent investment banking firm of nationally recognized standing) at the time of the redesignation of that Restricted Payment Unrestricted Subsidiary as a Restricted Subsidiary and (B) the Consolidated Net Cash Flow generated by that Subsidiary for the period (taken as one accounting period) from the beginning of its first fiscal quarter commencing immediately after the date of its designation as a Restricted Payment Unrestricted Subsidiary through that Subsidiary's fiscal quarter ending immediately prior to its designation as a Restricted Subsidiary (or if that Consolidated Net Cash Flow for that period is a deficit, 100% of that deficit); PLUS (z) 100% of the aggregate net cash proceeds received by PRIMEDIA from (i) the issuance or sale of Equity Interests of PRIMEDIA (other than Equity Interests issued or sold to a Restricted Subsidiary of PRIMEDIA and other than Redeemable Stock) or (ii) the sale of the stock of an Unrestricted Subsidiary or the sale of all or substantially all of the assets of an Unrestricted Subsidiary to the extent that a liquidating dividend is paid to PRIMEDIA or any Restricted Subsidiary from the proceeds of that sale; PROVIDED, HOWEVER, that for purposes of making Investments in Unrestricted Subsidiaries, if the amount determined in accordance with clauses (w) or (y) above is a deficit, that deficit will be excluded from the computation of this clause (c); PROVIDED, FURTHER, that all those amounts applied under this clause (c) will not be available for application under clause (c) of the INVESTMENTS IN UNRESTRICTED SUBSIDIARIES covenant. As of June 30, 2001, the amount available for Restricted Payments under clause (c) was approximately $702.2 million. The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration of that dividend, if at that date of declaration the payment would have complied with the provisions of the Indenture; (ii) (A) the retirement of any shares of PRIMEDIA's Capital Stock (the "Retired Capital Stock") either (1) in exchange for or (2) out of the net proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of PRIMEDIA) of other shares of, PRIMEDIA's Capital Stock (the "Refunding Capital Stock") other than any Redeemable Stock, and (B) if immediately prior to the retirement of Retired Capital Stock the declaration and payment of dividends on the Retired Capital Stock was permitted under either clause (iii) or (vii) of this paragraph, the declaration and payment of dividends on the Refunding Capital Stock in an aggregate amount per year no greater than the aggregate amount of dividends per year that was declarable and payable on the Retired Capital Stock immediately prior to the retirement; (iii) the declaration and payment of dividends to the holders of Series D Preferred Stock, Series F Preferred Stock and Series H Preferred Stock; (iv) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of PRIMEDIA issued to present and former members of management of PRIMEDIA and its Subsidiaries under subscription and option agreements in effect on the date of the Indenture or under any stock option plan of About.com, Inc. existing on the date of the Indenture and Equity Interests of PRIMEDIA issued to future members of management under subscription agreements executed after the date of the Indenture, containing provisions for the repurchase of those Equity Interests upon death, disability or termination of employment of those persons which are substantially identical to those contained in the subscription agreements in effect on the date of the Indenture; 42 (v) the declaration and payment of dividends on PRIMEDIA's common stock of up to $25.0 million per annum plus 6% per annum of the net proceeds received at any time by PRIMEDIA from (a) the issue or sale of its common stock or (b)(1) the issuance of securities convertible into its common stock (other than any such convertible securities issued to (A) members of PRIMEDIA's management or its board of directors and (B) any Subsidiary of PRIMEDIA) and (2) the conversion of those convertible securities into PRIMEDIA's common stock, in both cases at the time of the conversion into common stock; (vi) the repurchase, redemption or other acquisition or retirement for value of Indebtedness of PRIMEDIA or any Guarantor which is subordinated in right of payment to the notes either (A) in exchange for or (B) with the proceeds of the issuance of, Equity Interests (other than Redeemable Stock) of PRIMEDIA; (vii) the declaration and payment of dividends to holders of any class or series of PRIMEDIA's preferred stock issued after the date of the Indenture (including, without limitation, the declaration and payment of dividends on Refunding Capital Stock in excess of the dividends declarable and payable on Refunding Capital Stock under clause (ii) of this paragraph); PROVIDED that at the time of the issuance PRIMEDIA's Fixed Charge Coverage Ratio, after giving effect to the issuance, would be greater than 1.25 to 1; (viii) the redemption, repurchase or other acquisition or retirement for value of any Indebtedness of PRIMEDIA or any Guarantor which is subordinated in right of payment to the notes (A) with the proceeds of, or in exchange for, Indebtedness incurred pursuant to clause (vii) of the second paragraph of the INCURRENCE OF INDEBTEDNESS covenant or (B) if, after giving effect to that redemption, repurchase or retirement, PRIMEDIA could incur at least $1.00 of Indebtedness under the first paragraph of the INCURRENCE OF INDEBTEDNESS covenant (without giving effect to clauses (i) through (xvi) of the second paragraph of that covenant); (ix) the retirement of the Series D Preferred Stock, Series F Preferred Stock and Series H Preferred Stock in exchange for the issuance of the Class D Subordinated Debentures, Class F Subordinated Debentures and Class H Subordinated Debentures, respectively, under the respective certificates of designations relating to those series of preferred stock; (x) the purchase of Class D Subordinated Debentures, Class F Subordinated Debentures and Class H Subordinated Debentures in accordance with the CHANGE OF CONTROL covenants in the Class D Debenture Indenture, Class F Debenture Indenture and Class H Debenture Indenture, respectively; (xi) Investments in Unrestricted Subsidiaries having an aggregate fair market value, when taken together with all other Investments made under this clause (xi) that are at that time outstanding, not to exceed $50.0 million at the time of that Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (xii) the repurchase, retirement or other acquisition for value of Equity Interests of PRIMEDIA which are not held by KKR or any of its Affiliates; PROVIDED, that (A) the aggregate Restricted Payments made under this clause (xii) in any calendar year will not exceed $75.0 million and (B) immediately after giving effect to each Restricted Payment made under this clause (xii) on a pro forma basis, PRIMEDIA could incur at least $1.00 of additional Indebtedness under the first paragraph of the INCURRENCE OF INDEBTEDNESS covenant (without giving effect to clauses (i) through (xvi) of the second paragraph of that covenant); (xiii) other Restricted Payments in an aggregate amount not to exceed $50.0 million; and 43 (xiv) any Investment made in a Securitization Subsidiary in connection with a Qualified Securitization Transaction, which Investment consists of the transfer of Receivables and Other Assets. PROVIDED that in determining the aggregate amount expended for Restricted Payments in accordance with paragraph (c) above: (1) no amounts expended under clauses (ii)(A)(1), (vi)(A), (viii), (ix) and (xiv) of this paragraph will be included; (2) 100% of the amounts expended under clauses (ii)(A)(2), (iv), (v), (vi)(B), (vii), (x), (xi), (xii) and (xiii) of this paragraph will be included; (3) 50% of the amounts expended under clause (iii) of this paragraph will be included; (4) amounts expended under clause (ii)(B) of this paragraph will be included to the extent previously included for the Retired Capital Stock; and (5) 100% of the amounts expended under clause (i) to the extent not included under subclauses (1) through (4) of this proviso will be included. For the purposes of determining compliance with this covenant, in the event that a Restricted Payment meets the criteria of more than one of the categories of permitted Restricted Payments described in clauses (i) through (xiv) above or is entitled to be incurred under the first paragraph of this covenant (including clauses (a), (b) and (c) of this covenant), PRIMEDIA will, in its sole discretion, classify that Restricted Payment in any manner that complies with the covenants described above and that Restricted Payment will be treated as having been made under only one of those clauses or under the first paragraph of this covenant. Not later than the date of making any Restricted Payment, PRIMEDIA will deliver to the Trustee an officer's certificate stating that the Restricted Payment is permitted and setting forth the basis upon which the calculations required by the RESTRICTED PAYMENTS covenant were computed, which calculations may be based on PRIMEDIA's latest available internal financial statements. INVESTMENTS IN UNRESTRICTED SUBSIDIARIES PRIMEDIA will not, and will not permit any Restricted Subsidiary to, directly or indirectly, make any Investment in any Unrestricted Subsidiary, if at the time of that Investment: (a) a Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; or (b) immediately before that Investment, PRIMEDIA would not be permitted to incur at least $1.00 of Indebtedness under the first paragraph of the INCURRENCE OF INDEBTEDNESS covenant (without giving effect to clauses (i) through (xvi) of the second paragraph of that covenant), which calculation will be made on a pro forma basis deducting from Adjusted Consolidated Net Income the amount of any Investment PRIMEDIA has made in an Unrestricted Subsidiary during the relevant period and any Investment PRIMEDIA intends to make in an Unrestricted Subsidiary, to the extent that that Investment is made with amounts included in Adjusted Consolidated Net Income as a result of the Transfers described in clause (c)(x) of the LIMITATIONS ON RESTRICTED PAYMENTS covenant or clause (c)(y) below; or (c) that Investment, together with the aggregate of all other Investments in Unrestricted Subsidiaries made after May 13, 1992, exceeds: (w) the aggregate Consolidated Net Cash Flow of PRIMEDIA for the period (taken as one accounting period) from the beginning of the first quarter immediately after May 13, 1992, to the end of PRIMEDIA's most recently ended fiscal quarter at the time of that Investment; PLUS 44 (x) 100% of the aggregate net cash proceeds received by PRIMEDIA from (i) the issue or sale of Equity Interests of PRIMEDIA (other than Equity Interests issued or sold to a Restricted Subsidiary of PRIMEDIA and other than Redeemable Stock) or (ii) the sale of the stock of an Unrestricted Subsidiary or the sale of all or substantially all of the assets of an Unrestricted Subsidiary to the extent that a liquidating dividend is paid to PRIMEDIA or any Restricted Subsidiary from the proceeds of that sale; PLUS (y) 100% of the amount of all Transfers from a Net Cash Flow Unrestricted Subsidiary up to the aggregate Investment (after taking into account all prior Transfers from that Net Cash Flow Unrestricted Subsidiary) in that Net Cash Flow Unrestricted Subsidiary resulting from those payments or transfers of assets (valued in each case as provided in the definition of "Investment"); PLUS (z) in the event of a designation of a Net Cash Flow Unrestricted Subsidiary as a Restricted Subsidiary, 100% of an amount equal to the greater of (A) the fair market value of that Subsidiary as determined by the board of directors of PRIMEDIA in good faith (or, if the fair market value may exceed $25.0 million, as determined in writing by an independent investment banking firm of nationally recognized standing) at the time of the redesignation of that Net Cash Flow Unrestricted Subsidiary as a Restricted Subsidiary and (B) the Consolidated Net Cash Flow generated by that Subsidiary for the period (taken as one accounting period) from the beginning of its first fiscal quarter commencing immediately after the date of its designation as a Net Cash Flow Unrestricted Subsidiary through that Subsidiary's fiscal quarter ending immediately prior to its designation as a Restricted Subsidiary (or if the Consolidated Net Cash Flow for that period is a deficit, 100% of that deficit); PROVIDED that all those amounts applied under this clause (c) will not be available for application under clause (c) of the RESTRICTED PAYMENTS covenant. As of June 30, 2001, the amount available for Investments under clause (c) was approximately $1.1 billion. The foregoing limitations will not apply to: (i) an Investment to the extent that it is to capitalize a Restricted Payment Unrestricted Subsidiary permitted under the LIMITATIONS ON RESTRICTED PAYMENTS covenant; (ii) an Investment to the extent that it is funded by the issuance of Equity Interests of PRIMEDIA to the extent net proceeds are not used to fund an optional redemption of notes; (iii) any Investment made in a Securitization Subsidiary in connection with a Qualified Securitization Transaction, which Investment consists of the transfer of Receivables and Other Assets; and (iv) Investments in Unrestricted Subsidiaries having an aggregate fair market value, when taken together with all other Investments made under this clause (iv) that are at that time outstanding, not to exceed $50.0 million at the time of that Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value). For the purposes of determining compliance with this covenant, in the event that the making of an Investment in an Unrestricted Subsidiary meets the criteria of more than one of the categories of permitted Investments in Unrestricted Subsidiaries described in clauses (i) through (iv) above or is entitled to be incurred under the first paragraph of this covenant (including clauses (a), (b) and (c) of the first paragraph of this covenant), PRIMEDIA will, in its sole discretion, classify that Investment in an Unrestricted Subsidiary in any manner that complies with the covenants described above and 45 Investment in an Unrestricted Subsidiary will be treated as having been made under only one of those clauses or under the first paragraph of this covenant. Each Net Cash Flow Unrestricted Subsidiary of PRIMEDIA will at all times remain (1) wholly owned, directly or indirectly, by PRIMEDIA or a wholly owned Restricted Subsidiary of PRIMEDIA or (2) a Subsidiary of PRIMEDIA so long as there is no encumbrance or restriction on the ability of that Subsidiary to pay dividends or make any other distributions on its Capital Stock, or pay any Indebtedness or other obligations, to PRIMEDIA or any Restricted Subsidiary of PRIMEDIA. Not later than the date of making any Investment described above, PRIMEDIA will deliver to the Trustee an officer's certificate stating that the Investment is permitted (including, without limitation, whether the Investment is capitalizing a Net Cash Flow Unrestricted Subsidiary or a Restricted Payment Unrestricted Subsidiary) and setting forth the basis upon which the calculations required by the INVESTMENTS IN UNRESTRICTED SUBSIDIARIES covenant were computed, which calculations may be based on PRIMEDIA's latest available internal financial statements. DIVIDENDS AND PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES PRIMEDIA will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions on its Capital Stock, or any other interest or participation in, or measured by, its profits, owned by PRIMEDIA or any of its Restricted Subsidiaries, or pay any Indebtedness owed to PRIMEDIA or any of its Restricted Subsidiaries; (ii) make loans or advances to PRIMEDIA or any of its Restricted Subsidiaries; or (iii) transfer any of its properties or assets to PRIMEDIA or any of its Restricted Subsidiaries. However, the preceding restrictions will not apply to encumbrances or restrictions existing by reason of: (A) the terms, as in effect on the date of the Indenture, of the Existing Indebtedness; (B) the terms, as in effect on the date of the Indenture, of the Bank Credit Facilities and the Outstanding Notes and the indentures governing the Outstanding Notes; (C) the terms of Indebtedness of PRIMEDIA incurred in accordance with the INCURRENCE OF INDEBTEDNESS covenant; PROVIDED that the terms of the Indebtedness constitute no greater encumbrance or restriction on the ability of any Restricted Subsidiary to pay dividends or make distributions, make loans or advances or transfer properties or assets than is permitted by this covenant; (D) the terms of the Indenture and the notes; (E) applicable law; (F) customary non-assignment provisions entered into in the ordinary course of business and consistent with past practices; (G) the terms of purchase money obligations for property acquired in the ordinary course of business, but only to the extent that those purchase money obligations restrict or prohibit the transfer of the property so acquired; (H) the terms of the Class D Subordinated Debentures, the Class D Debenture Indenture, the Class F Subordinated Debentures, the Class F Debenture Indenture, the Class H Subordinated Debentures and the Class H Debenture Indenture; 46 (I) any encumbrance or restriction with respect to a Subsidiary of PRIMEDIA that is not a Subsidiary of PRIMEDIA on the date of the Indenture, which encumbrance or restriction is in existence at the time that person becomes a Subsidiary of PRIMEDIA or is created on the date it becomes a Subsidiary of PRIMEDIA; (J) any encumbrance or restriction with respect to a Subsidiary of PRIMEDIA imposed under an agreement which has been entered into for the sale or disposition of all or substantially all the Capital Stock or assets of that Subsidiary; (K) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business; (L) customary provisions contained in leases and other agreements entered into in the ordinary course of business; (M) the terms of any Indebtedness for borrowed money of any Partially Owned Restricted Subsidiary; (N) in the case of clause (iii) of the first paragraph of this covenant, any encumbrance or restriction contained in mortgages, pledges or other security agreements permitted under the Indenture securing Indebtedness of PRIMEDIA or a Restricted Subsidiary of PRIMEDIA to the extent that encumbrance or restriction restricts the transfer of the property subject to those mortgages, pledges or other security agreements; (O) any contractual requirements incurred with respect to Qualified Securitization Transactions relating exclusively to a Securitization Subsidiary that, in the good faith determination of the board of directors of PRIMEDIA, are customary in Qualified Securitization Transactions; or (P) any encumbrance or restriction existing under any agreement which refinances or replaces the agreements described in clauses (A), (B), (D), (H), (K), (L) and (M), PROVIDED that the terms and conditions of any of those encumbrances or restrictions contained in any of those agreements constitute no greater encumbrance or restriction on the ability of any Restricted Subsidiary to pay dividends or make distributions, make loans or advances or transfer properties or assets than those under or pursuant to the agreement evidencing the Indebtedness or obligations refinanced. Nothing contained in this covenant will prevent PRIMEDIA or a Restricted Subsidiary from entering into any agreement permitting or providing for the incurrence of Liens otherwise permitted by the LIMITATION ON LIENS covenant. INCURRENCE OF INDEBTEDNESS PRIMEDIA 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 with respect to any Indebtedness unless PRIMEDIA's Debt to Consolidated Cash Flow Ratio for its four full fiscal quarters ending immediately prior to the date that additional Indebtedness is created, incurred, issued, assumed or guaranteed would have been no greater than 6.0 to 1, and that Indebtedness is not senior in right of payment to the notes; PROVIDED that the calculation will give effect to (A) the incurrence of any Indebtedness (after giving effect to the application of the proceeds of that Indebtedness) in connection with the simultaneous acquisition of any person, business, property or assets and (B) the Consolidated Cash Flow generated by that acquired person, business, property or assets, giving effect in each case to the incurrence of Indebtedness, application of proceeds and Consolidated Cash Flow as if that acquisition had occurred at the beginning of that four quarter period. For purposes of the previous paragraph, cash flow generated by any acquired person, business, property or asset will be determined on the same basis as the definition of Consolidated Cash Flow and 47 will be based on the actual earnings before interest, taxes, depreciation and amortization of that acquired person, business, property or asset during the immediately preceding four full fiscal quarters PLUS (y) (i) the savings in cost of goods sold that would have resulted during that period from the effect of using PRIMEDIA's actual costs for comparable goods and services during that period and (ii) other savings in cost of goods sold or eliminations of selling, general and administrative expenses as determined by PRIMEDIA in good faith in its consideration of those acquisitions and consistent with PRIMEDIA's experiences in acquisitions of similar businesses MINUS (z) the incremental expenses that would be included in cost of goods sold and selling, general and administrative expenses that would have been incurred by PRIMEDIA in the operation of that acquired person, business, property or assets during that period. The foregoing limitations will not apply to the incurrence of: (i) Indebtedness under the Credit Facilities (PROVIDED that the principal amount of that Indebtedness will not exceed $1.3 billion, less the amount of all repayments made in respect of term loans and of all permanent commitment reductions with respect to revolving loans (except to the extent, and only to the extent, that any required repayments of principal in connection with that commitment reduction are not made) made under the Credit Facilities (excluding those repayments and commitment reductions which occur substantially contemporaneously with a refinancing or a refunding thereof)), plus any amounts then available under clause (vi) of this paragraph; (ii) Existing Indebtedness; (iii) Indebtedness represented by the Outstanding Notes and the notes (but not any additional notes); (iv) Indebtedness represented by the Class D Subordinated Debentures issued in exchange for all the outstanding Series D Preferred Stock, the Class F Subordinated Debentures issued in exchange for all the outstanding Series F Preferred Stock and the Class H Subordinated Debentures issued in exchange for all the outstanding Series H Preferred Stock; (v) Capital Lease Obligations in an aggregate principal amount which, when aggregated with the principal amount of all other Capital Lease Obligations then outstanding and incurred pursuant to this clause (v) and including all Refinancing Indebtedness (as defined below) incurred to refund, refinance or replace any other Indebtedness incurred under this clause (v), does not exceed 5% of Total Assets; (vi) Indebtedness in an aggregate principal amount equal to the greater of (A) $225.0 million in the aggregate at any one time outstanding for PRIMEDIA and its Restricted Subsidiaries and (B) Indebtedness created, incurred, issued, assumed or guaranteed (x) by PRIMEDIA at any one time outstanding not in excess of 7% of the Consolidated Net Worth of PRIMEDIA at the time of the creation, incurrence, issuance, assumption or guarantee or (y) by any Restricted Subsidiary of PRIMEDIA at any one time outstanding not in excess of 7% of the Consolidated Net Worth of that Restricted Subsidiary at the time of the creation, incurrence, issuance, assumption or guarantee; (vii) Indebtedness created, incurred, issued, assumed or guaranteed in exchange for or the proceeds of which are used to extend, refinance, renew, replace, substitute or refund Indebtedness referred to in clauses (i) through (vi) above, including additional Indebtedness incurred to pay premiums and fees in connection with that additional Indebtedness (the "Refinancing Indebtedness"); PROVIDED, that (A) the principal amount of that Refinancing Indebtedness will not exceed the principal amount of Indebtedness (including unused commitments and additional Indebtedness incurred to pay premiums and fees in connection with that Indebtedness) so extended, refinanced, renewed, replaced, substituted or refunded 48 PLUS any amounts then available under clause (vi) of this paragraph, (B) in the case of Refinancing Indebtedness for Indebtedness permitted under clauses (ii) and (iv) of this paragraph, the Refinancing Indebtedness permitted under clauses (ii) and (iv) of this paragraph will have an Average Life equal to or greater than the Average Life of the Indebtedness being extended, refinanced, renewed, replaced, substituted or refunded and (C) the Refinancing Indebtedness for Indebtedness permitted under clauses (ii) and (iv) of this paragraph will rank, in right of payment, no more senior than that Indebtedness being extended, refinanced, renewed, replaced, substituted or refunded and the Refinancing Indebtedness for Indebtedness permitted under clauses (i), (iii), (v) and (vi) of this paragraph will rank, in right of payment, PARI PASSU with or junior to the notes; (viii) intercompany Indebtedness incurred in connection with Investments in Unrestricted Subsidiaries; PROVIDED that those Investments are permitted by the LIMITATIONS ON RESTRICTED PAYMENTS covenant or the INVESTMENTS IN UNRESTRICTED SUBSIDIARIES covenant; (ix) Indebtedness under Currency Agreements and Interest Rate Agreements, PROVIDED that in the case of Currency Agreements which relate to other Indebtedness, those Currency Agreements do not increase the Indebtedness of PRIMEDIA outstanding other than as a result of fluctuations in foreign currency exchange rates; (x) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any obligations of PRIMEDIA or any Restricted Subsidiary of PRIMEDIA under those agreements, incurred or assumed by the acquired Subsidiary in connection with the acquisition or disposition of any business, assets or Restricted Subsidiary of PRIMEDIA, other than guarantees or similar credit support by PRIMEDIA of Indebtedness incurred by any person acquiring all or any portion of that business, those assets or that Restricted Subsidiary for the purpose of financing that acquisition; PROVIDED that the maximum aggregate liability in respect of all that Indebtedness in the nature of those guarantees will at no time exceed the gross proceeds actually received from the sale of that business, those assets or that Restricted Subsidiary; (xi) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts, which will not be, and will not be deemed to be, inadvertent) drawn against insufficient funds in the ordinary course of business, PROVIDED that that Indebtedness is extinguished within three business days of its incurrence; (xii) Indebtedness of an entity at the time it is acquired as a Restricted Subsidiary, PROVIDED that that Indebtedness was not incurred or assumed by that entity in connection with or in anticipation of that acquisition; (xiii) Indebtedness between PRIMEDIA and any Restricted Subsidiary; PROVIDED that any subsequent transfer of any Capital Stock which results in any Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to PRIMEDIA or another Restricted Subsidiary) shall be deemed in each case to constitute the incurrence of such Indebtedness by the obligor thereon; (xiv) Non-Compete Notes, not to exceed $50.0 million in aggregate principal amount less the amount of all principal repayments made in respect of those notes; (xv) PRIMEDIA's Obligations arising from the repurchase, redemption or other acquisitions of Capital Stock from management investors to the extent permitted by the LIMITATIONS ON RESTRICTED PAYMENTS covenant; and 49 (xvi) Indebtedness incurred by a Securitization Subsidiary in connection with a Qualified Securitization Transaction that is Non-Recourse Indebtedness with respect to PRIMEDIA and its Restricted Subsidiaries (except for Standard Securitization Undertakings); PROVIDED that in the event such Securitization Subsidiary ceases to qualify as a Securitization Subsidiary or such Indebtedness ceases to constitute such Non-Recourse Indebtedness, such Indebtedness will be deemed, in each case, to be incurred at such time. For the purposes of determining the aggregate Indebtedness of any referent person, Indebtedness will not include guarantees by any other person of that Indebtedness. For the purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (i) through (xvi) above or is entitled to be incurred under the first paragraph of this covenant, (A) PRIMEDIA will, in its sole discretion, classify that item of Indebtedness in any manner that complies with the covenants described above; PROVIDED that any Indebtedness classified as incurred pursuant to clause (vi) above may later be reclassified as having been incurred pursuant to the first paragraph of this covenant to the extent such reclassified Indebtedness could be incurred pursuant to the first paragraph at the time of such reclassification; and (B) that item of Indebtedness will be treated as having been incurred pursuant to only one of those clauses or pursuant to the first paragraph of this covenant except as otherwise set forth in the proviso to clause (A) above. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. LIMITATIONS ON LIENS PRIMEDIA will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) on any of its assets or any income or profits from any of its assets or assign or convey any right to receive income from any of its assets unless the notes are equally and ratably secured with the Indebtedness secured by that Lien for so long as that Indebtedness is so secured. Upon the release and discharge of the initial Lien, any Lien created in favor of the notes as a result of the initial Lien will be automatically released. LIMITATIONS ON ASSET SALES PRIMEDIA will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale (including the sale of any of the stock of any Subsidiary) unless at least 100% of the Net Proceeds from that Asset Sale (or, in the case of a Partially Owned Restricted Subsidiary, PRIMEDIA's Pro Rata Portion of the Net Proceeds, after repayment by that Partially Owned Restricted Subsidiary of its Indebtedness) are applied first to repay Obligations or reduce commitments under the Credit Facilities in accordance with the terms of the Credit Facilities and second to offer to redeem at par the Outstanding Notes and third to offer to redeem at par the notes. The foregoing application of Net Proceeds from Asset Sales is not required in the case of: (i) sales or dispositions generating cash proceeds of less than, with respect to PRIMEDIA and its Restricted Subsidiaries, $2,500,000; and (ii) sales and dispositions as to which PRIMEDIA delivers a reinvestment notice and the proceeds are so reinvested in one or more communications, publishing, information, education or media assets or businesses within 12 months of the date the relevant Asset Sale is consummated. 50 Notwithstanding the foregoing, neither PRIMEDIA nor its Restricted Subsidiaries will be required to apply the Net Proceeds from any Asset Sale: (i) to the extent that the aggregate Net Proceeds from that Asset Sale, together with the Net Proceeds, if any, of any other Asset Sale which have not been previously applied, are less than $25,000,000; or (ii) to the extent that, and for so long as, those Net Proceeds cannot be so applied as a result of an encumbrance or restriction permitted under the LIMITATIONS ON LIENS covenant. The procedure for offering to redeem the notes in connection with Asset Sales is substantially the same as the mechanism for redeeming the notes in connection with a Change of Control. TRANSACTIONS WITH AFFILIATES Neither PRIMEDIA nor any of its Restricted Subsidiaries will make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding (each, an "Affiliate Transaction") with, or for the benefit of: (i) any person (or any Affiliate of that person) holding 10% or more of any class of Capital Stock of PRIMEDIA or any of its Restricted Subsidiaries; or (ii) any Affiliate of PRIMEDIA or any of its Restricted Subsidiaries, in each case involving aggregate payments or consideration in excess of $5.0 million, unless: (a) that Affiliate Transaction is on terms that are not materially less favorable to PRIMEDIA or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by PRIMEDIA or that Restricted Subsidiary with an unrelated Person; and (b) PRIMEDIA delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution adopted by the majority of the board of directors of PRIMEDIA approving that Affiliate Transaction and set forth in an officers' certificate certifying that that Affiliate Transaction complies with clause (a) above. The foregoing restrictions will not apply to: (i) the payment of an annual fee to KKR for the rendering of management consulting and financial services to PRIMEDIA and its Restricted Subsidiaries in an aggregate amount which is reasonable in relation to those services; (ii) the payment of transaction fees to KKR in amounts which are in accordance with past practices for the rendering of financial advice and services, in connection with acquisitions, dispositions and financings by PRIMEDIA and its Subsidiaries; (iii) loans to officers, directors and employees of PRIMEDIA and its Subsidiaries for business or personal purposes and other loans and advances to those officers, directors and employees for travel, entertainment, moving and other relocation expenses made in the ordinary course of business of PRIMEDIA and its Subsidiaries; (iv) any Restricted Payments not prohibited by the LIMITATIONS ON RESTRICTED PAYMENTS covenant or any Investment not prohibited by the INVESTMENTS IN UNRESTRICTED SUBSIDIARIES covenant; (v) transactions between or among any of PRIMEDIA and its Restricted Subsidiaries; 51 (vi) allocation of corporate overhead to Unrestricted Subsidiaries on a basis not materially less favorable to PRIMEDIA than those allocations to Restricted Subsidiaries; (vii) the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of PRIMEDIA or any Restricted Subsidiary; or (viii) sales or other transfers or dispositions of Receivables and Other Assets transferred to a Securitization Subsidiary in a Qualified Securitization Transaction. MERGER, CONSOLIDATION OR SALE OF ASSETS PRIMEDIA may not consolidate with, merge with or into, or transfer all or substantially all of its assets (as an entirety or substantially as an entirety in one transaction or a series of related transactions), to any person (except a wholly owned Restricted Subsidiary, PROVIDED that in connection with any merger of PRIMEDIA with a Restricted Subsidiary of PRIMEDIA, no consideration (other than common stock in the surviving corporation or PRIMEDIA) will be issued or distributed to the shareholders of PRIMEDIA) or permit any person to merge with or into it unless: (i) PRIMEDIA will be the continuing person, or the person (if other than PRIMEDIA) formed by that consolidation or into which PRIMEDIA is merged or to which the properties and assets of PRIMEDIA are transferred will be a corporation organized and existing under the laws of the United States or any State of the United States or the District of Columbia and will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of the obligations of PRIMEDIA under the notes and Indenture; and (ii) immediately after giving effect to that transaction on a pro forma basis (a) no Default and no Event of Default under the Indenture will have occurred and be continuing and (b) PRIMEDIA could incur at least $1.00 of additional Indebtedness under the first paragraph of the INCURRENCE OF INDEBTEDNESS covenant (without giving effect to clause (i) through (xvi) of the second paragraph of that covenant) or the Debt to Consolidated Cash Flow Ratio equals or is less than the Debt to Consolidated Cash Flow Ratio immediately prior to that transaction. PAYMENTS FOR CONSENT Neither PRIMEDIA nor any of its Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any holder of any notes 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 that consideration is offered to be paid or agreed to be paid to all holders of the notes which so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to that consent, waiver or agreement. GUARANTEES GUARANTEES. The new notes will be fully and unconditionally guaranteed on a senior basis, jointly and severally, by each Guarantor. In the event that any guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of any Guarantor under that guarantee would be reduced to the maximum amount permissible under the applicable fraudulent conveyance or similar law. The foregoing guarantees (the "Guarantees") rank PARI PASSU with the guarantees made for the benefit of the lenders under the Credit Facilities and with guarantees made for the benefit of the holders of the Outstanding Notes. No Unrestricted Subsidiary will become a guarantor of any Indebtedness of PRIMEDIA or any Restricted Subsidiaries unless that Unrestricted Subsidiary becomes a guarantor of the notes. In addition, no Securitization Subsidiary will become a guarantor of the notes. 52 RELEASES OF GUARANTEES Upon the sale or disposition (by merger or otherwise) of any Guarantor by PRIMEDIA or any subsidiary of PRIMEDIA to any entity that is not an affiliate of PRIMEDIA or any of its subsidiaries and which sale or disposition is otherwise in compliance with the terms of the Indenture, that Guarantor will be released from its obligations under its Guarantee if that Guarantor is sold or disposed of for at least fair market value, evidenced by a resolution of the board of directors of PRIMEDIA set forth in an officer's certificate delivered to the Trustee; PROVIDED that the foregoing proviso will not apply to the sale or disposition of a Guarantor in a foreclosure proceeding to the extent that that proviso would be inconsistent with the requirements of the Uniform Commercial Code. EVENTS OF DEFAULT AND REMEDIES The Indenture provides that each of the following constitutes an "Event of Default": (i) the failure to make any payment of interest on the notes when the same becomes due and payable and the continuance of that failure for a period of 30 days; (ii) the failure to make any payment when due of principal or premium on the notes, whether at maturity, or upon acceleration, redemption or otherwise; (iii) failure by PRIMEDIA to comply with any of its other agreements in the Indenture or the notes and that Default continues for 30 days after receipt of a written notice from the Trustee or holders of at least 30% of the aggregate principal amount of the notes then outstanding, specifying that Default and requiring that it be remedied; (iv) 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 PRIMEDIA or any of its Restricted Subsidiaries (or the payment of which is guaranteed by PRIMEDIA or any of its Restricted Subsidiaries) whether that Indebtedness or guarantee is now existing or thereafter created in the future, if either: (A) that default is the failure to pay the final scheduled principal installment in an amount of at least $10 million in respect of any such Indebtedness on the stated maturity date of that Indebtedness (after giving effect to any extension of the maturity date by the holder of that Indebtedness and after the expiration of any grace period in respect of the final scheduled principal installment contained in the instrument under which that Indebtedness is outstanding); or (B) as a result of that default the maturity of that Indebtedness has been accelerated prior to its express maturity and the principal amount of that Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been accelerated, aggregates $20 million or more; PROVIDED that an Event of Default will not be deemed to occur with respect to any accelerated indebtedness which is repaid or prepaid within 20 days after that declaration; (v) failure by PRIMEDIA or any of its Significant Subsidiaries to pay certain final judgments that exceed $15 million individually or $25 million in the aggregate, which judgments are not discharged, satisfied, stayed, annulled or rescinded within 60 days after their entry; (vi) certain events of bankruptcy or insolvency with respect to PRIMEDIA or any of its Significant Subsidiaries; and (vii) except as permitted by the Indenture and the notes, the cessation of the effectiveness of the Guarantees or the finding in any judicial proceeding that the Guarantees are unenforceable or invalid or the denial or disaffirmation by any Guarantor of its obligations under its Guarantee. 53 The term "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. If a Default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee will mail to each holder of the notes a notice of the Default or Event of Default within 30 days after it occurs or, if later, within 10 days after the Default or Event of Default becomes known to the Trustee, unless the Default or Event of Default has been cured. Except in the case of a Default or Event of Default in the payment of principal of, premium, if any, or interest on any notes or that results from a failure to comply with the CHANGE OF CONTROL covenant, the Trustee may withhold the notice if and so long as a committee of its responsible officers in good faith determines that withholding the notice is in the interest of the holders of the notes. If an Event of Default (other than an Event of Default with respect to PRIMEDIA resulting from bankruptcy, insolvency or reorganization) occurs and is continuing, the Trustee by written notice to PRIMEDIA, or the holders of at least 30% of the principal amount of the notes then outstanding by written notice to PRIMEDIA and the Trustee, may, and the Trustee at the request of those holders will, declare all unpaid principal of, premium, if any, and accrued interest on the notes to be due and payable, as specified below. Upon a declaration of acceleration, the principal, premium, if any, and accrued interest will be due and payable immediately. If an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization occurs with respect to PRIMEDIA, all unpaid principal of, premium, if any, and accrued interest on the notes then outstanding shall IPSO FACTO become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee or any holder. The holders of at least a majority in principal amount of the notes by notice to the Trustee may rescind an acceleration and its consequences upon conditions provided in the Indenture. Subject to certain restrictions set forth in the Indenture, the holders of at least a majority in principal amount of the outstanding notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences (including waivers obtained in connection with a tender offer or exchange offer for notes), except a continuing Default or Event of Default in the payment of principal of, premium, if any, or interest on, the notes (including, without limitation, pursuant to any mandatory or optional redemption obligation under the Indenture). When a Default or Event of Default is waived, it is cured and ceases. A holder of notes may not pursue any remedy with respect to the Indenture, the notes or any Guarantee unless: (1) the holder gives to the Trustee written notice of a continuing Event of Default; (2) the holders of at least 30% in principal amount of the notes outstanding make a written request to the Trustee to pursue the remedy; (3) the holder or holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense (including, without limitation, fees of counsel); (4) the Trustee does not comply with the request within 30 days after receipt of the request and the offer of indemnity; and (5) during that 30-day period the holders of a majority in principal amount of the outstanding notes do not give the Trustee a direction which is inconsistent with the request. PRIMEDIA is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and PRIMEDIA is required upon becoming aware of any Default or Event of Default to deliver a statement to the Trustee specifying that Default or Event of Default. 54 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS No director, officer, employee, incorporator or shareholder of PRIMEDIA, as such, will have any liability for any obligations of PRIMEDIA under the notes, the Indenture, the Guarantees or the Registration Rights Agreement or for any claim based on, in respect of, or by reason of, those obligations or their creation. Each holder of the notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. That 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. LEGAL DEFEASANCE AND COVENANT DEFEASANCE PRIMEDIA may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes ("Legal Defeasance"), except for: (1) the rights of holders of outstanding notes to receive payments in respect of the principal of, premium, if any, and interest on the notes when those payments are due from the trust referred to below; (2) PRIMEDIA's obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the Trustee, and PRIMEDIA's obligations in connection with those rights, powers, trusts, duties and immunities; and (4) the Legal Defeasance provisions of the Indenture. In addition, PRIMEDIA may, at its option and at any time, elect to have the obligations of PRIMEDIA released with respect to certain covenants 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 or bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the notes. In order to exercise either Legal Defeasance or Covenant Defeasance: (1) PRIMEDIA must irrevocably deposit or cause to be deposited with the Trustee or the paying agent, in trust, money or direct noncallable obligations of or guaranteed by the United States of America in an amount sufficient, without reinvestment, to pay the principal of and interest on the outstanding notes on the stated maturity or on the applicable redemption date, as the case may be; (2) in the case of Legal Defeasance, PRIMEDIA will have delivered to the Trustee an opinion of counsel from nationally recognized counsel acceptable to the Trustee or a tax ruling from the Internal Revenue Service to the effect that the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of the Legal Defeasance and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if the Legal Defeasance had not occurred; (3) in the case of Covenant Defeasance, PRIMEDIA will have delivered to the Trustee an opinion of counsel from nationally recognized counsel 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 the Covenant Defeasance and will be subject to federal 55 income tax on the same amount, in the same manner and at the same times as would have been the case if the Covenant Defeasance had not occurred; (4) no Default or Event of Default will have occurred and be continuing (A) on the date of the deposit or (B) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of the deposit; and (5) PRIMEDIA must deliver to the Trustee an officer's certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. TRANSFER AND EXCHANGE A holder may transfer or exchange notes in accordance with the Indenture. The registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents, and PRIMEDIA may require a holder to pay any taxes and fees required by law or permitted by the Indenture. PRIMEDIA is not required to transfer or exchange any note selected for redemption. Also, PRIMEDIA is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed. The registered holder of a note will be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next succeeding paragraph, the Indenture, the Guarantees 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 consents obtained in connection with a 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 consents obtained in connection with a 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 of notes): (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 notes or alter the provisions with respect to the redemption or purchase price in connection with repurchases of the notes with proceeds of Asset Sales, upon a Change of Control or otherwise; (iii) reduce the rate of or change the time for payment of interest on any notes; (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest 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); (v) make any notes payable in money other than that stated in the notes; (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of or interest on the notes; (vii) waive a redemption payment with respect to any note; or (viii) make any change in the foregoing. 56 Notwithstanding the foregoing, without the consent of any holder of the notes, PRIMEDIA and the Trustee may amend or supplement the Indenture or the notes to: (1) cure any ambiguity, defect or inconsistency; (2) provide for uncertificated notes in addition to or in place of certificated notes; (3) provide for the assumption of PRIMEDIA's obligations to holders of the notes in the case of a merger or consolidation; (4) make any change that would provide any additional rights or benefits to the holders of the notes or that does not adversely affect the legal rights under the Indenture of any such holder; or (5) comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of PRIMEDIA, 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 that 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 (which is not cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of its own affairs. Subject to those provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the holders of the notes, unless they offer to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. EXCHANGE OFFER, REGISTRATION RIGHTS On May 8, 2001, PRIMEDIA, the Guarantors and the initial purchasers entered into the Registration Rights Agreement. Under the Registration Rights Agreement, PRIMEDIA agreed, for the benefit of the holders of the Transfer Restricted Securities, that PRIMEDIA will, at its cost, (1) cause to be filed, on or before 120 days after the Closing Date, the Exchange Offer Registration Statement with the SEC under the Securities Act concerning the Exchange Offer, and (2) (a) use its reasonable best efforts to cause the Exchange Offer Registration Statement to be declared effective by the SEC on or before 200 days after the closing Date and (b) cause the Exchange Offer to remain open for the minimum period required by applicable federal and state securities laws, PROVIDED, HOWEVER, that in no event will that period be less than 20 business days. For each Transfer Restricted Security surrendered to PRIMEDIA and accepted for exchange in the exchange offer, the holder of that Transfer Restricted Security will receive a new note having a principal amount equal to that of the surrendered Transfer Restricted Security. Based upon no-action letters issued by the staff of the SEC to third parties, PRIMEDIA believes that the new notes issued in the exchange offer in exchange for Transfer Restricted Securities would in general be freely transferable after the exchange offer without further registration under the Securities Act if the holder of the new notes represents (1) that it is not an "affiliate" as defined in Rule 405 under the Securities Act, of PRIMEDIA, (2) that it is acquiring the new notes in the ordinary course of its business and (3) that it has no arrangement or understanding with any person to participate in 57 the distribution, within the meaning of the Securities Act, of the new notes, PROVIDED that, in the case of broker-dealers, a prospectus meeting the requirements of the Securities Act be delivered as required. However, the SEC has not considered the exchange offer in the context of a no-action letter and there can be no assurance that the staff of the SEC would make a similar determination with respect to the exchange offer as in those other circumstances. Holders of Transfer Restricted Securities wishing to accept the exchange offer must represent to PRIMEDIA that those conditions have been met. Each broker-dealer that receives new notes for its own account in the exchange offer, where it acquired the new notes exchanged for the new notes 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 the resale of the new notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act. A holder of Transfer Restricted Securities other than certain specified holders, who wishes to exchange those Transfer Restricted Securities for new notes in the exchange offer will be required to represent that any new notes to be received by it will be acquired in the ordinary course of its business, and that at the time of the commencement of the exchange offer it has no arrangement or understanding with any person to participate in the distribution, within the meaning of the Securities Act, of the new notes and that it is not an "affiliate" of PRIMEDIA, as defined in Rule 405 under the Securities Act, or if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the exchange offer is not permitted by applicable law or SEC policy or (2) if any Holder of Transfer Restricted Securities will notify PRIMEDIA within 20 business days following the consummation of the exchange offer that (a) the holder was prohibited by law or SEC policy from participating in the exchange offer or (b) the holder 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 the resales by the holders or (c) the holder is a broker-dealer and holds old notes acquired directly from the Company or any of its affiliates, then PRIMEDIA will, at its cost, (A) cause to be filed a shelf registration statement (the "Shelf Registration Statement") covering resales of the Transfer Restricted Securities, (B) use its reasonable best efforts to cause the shelf Registration Statement to be declared effective under the Securities Act and (C) use its reasonable best efforts to keep the Shelf Registration Statement effective until two years after its effective date or any shorter period ending when all resales of Transfer Restricted Securities covered by the Shelf Registration Statement have been made. A holder selling those Transfer Restricted Securities under the Shelf Registration Statement generally would be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with those sales and will be bound by the provisions of the Registration Rights Agreement which are applicable to that holder, including certain indemnification obligations. If (a) PRIMEDIA fails to file any of the registration statements required by the Registration Rights Agreement on or before the date specified for such filing; (b) any of such registration statements is not declared effective by the Commission on or prior to the date specified for such effectiveness (the "Effectiveness Target Date"); (c) PRIMEDIA fails to consummate the exchange offer within 30 days of the Effectiveness Target Date with respect to the Exchange Offer Registration Statement; or 58 (d) the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the periods specified in the Registration Rights Agreement (each such event referred to in clauses (a) through (d) above a "Registration Default"), then PRIMEDIA will pay liquidated damages to each holder of Transfer Restricted Securities ("Liquidated Damages"). Liquidated Damages will accrue, with respect to the first 90-day period (or portion thereof) immediately following the occurrence of the first Registration Default, at a rate of 0.25% per annum of the aggregate principal amount of the outstanding notes on the date of such Registration Default, payable in cash semiannually in arrears on each interest payment date, commencing on the date of such Registration Default. The rate of the Liquidated Damages will increase by an additional 0.25% per annum at the beginning of each subsequent 90-day period (or portion thereof) until all Registration Defaults have been cured, up to a maximum rate of Liquidated Damages for all Registration Defaults of 0.50% per annum. The Registration Rights Agreement will provide that the Liquidated Damages specified above will be the exclusive remedy available to holders of Transfer Restricted Securities for any failure by PRIMEDIA to comply with the registration requirements of the Registration Rights Agreement. The summary in this prospectus of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by, all of the provisions of the Registration Rights Agreement. BOOK-ENTRY; DELIVERY AND FORM The notes will initially be represented in the form of one or more global notes in definitive, fully-registered book-entry form, without interest coupons that will be deposited with or on behalf of The Depository Trust Company, or DTC, and registered in the name of DTC or its participants. Except as set forth below, the global notes may be transferred, in whole and not in part, solely 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 physical, certificated form except in the limited circumstances described below. DEPOSITORY PROCEDURES The following description of the operations and procedures of the DTC 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. PRIMEDIA takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters. The DTC has advised PRIMEDIA that the 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 accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers), 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. 59 The DTC has also advised PRIMEDIA that, pursuant to procedures established by it: (1) upon deposit of the Global Notes, the DTC will credit the accounts of Participants designated by the initial purchasers 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 the DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes). 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 those persons will be limited to that extent. Because the 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 those interests to persons that do not participate in the DTC system, or otherwise take actions in respect of those interests, may be affected by the lack of a physical certificate evidencing those interests. EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS 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 OF THE GLOBAL NOTES 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 the DTC or its nominee will be payable to the DTC in its capacity as the registered holder under the indenture. Under the terms of the indenture, PRIMEDIA 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 PRIMEDIA, the trustee nor any agent of PRIMEDIA or the trustee has or will have any responsibility or liability for: (1) any aspect of the DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of the DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Notes; or (3) any other matter relating to the actions and practices of the DTC or any of its Participants or Indirect Participants. The DTC has advised PRIMEDIA 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 the DTC has reason to believe it will not receive payment on that 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 the 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 the DTC, the trustee or PRIMEDIA. Neither PRIMEDIA nor the trustee will be liable for any delay by the DTC or any of its Participants in identifying the beneficial owners of the notes, and PRIMEDIA and the trustee may conclusively rely on and will be protected in relying on instructions from the DTC or its nominee for all purposes. Transfers between Participants in the DTC will be effected in accordance with the DTC's procedures, and will be settled in same-day funds. The DTC has advised PRIMEDIA that it will take any action permitted to be taken by a holder of notes only at the direction of one or more Participants to whose account the DTC has credited the 60 interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the notes as to which the Participant or Participants has or have given that direction. However, if there is an Event of Default under the notes, the DTC reserves the right to exchange the Global Notes for legended notes in certificated form and to distribute those notes to its Participants. Although the DTC has agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in the DTC, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither PRIMEDIA nor the trustee nor any of their respective agents will have any responsibility for the performance by the DTC 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) the DTC (a) notifies PRIMEDIA that it is unwilling or unable to continue as depositary for the Global Notes and PRIMEDIA fails to appoint a successor depositary or (b) has ceased to be a clearing agency registered under the Exchange Act; (2) PRIMEDIA, 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 the 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). SAME-DAY SETTLEMENT AND PAYMENT PRIMEDIA 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. PRIMEDIA 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. 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 those terms, as well as any other capitalized terms used in this prospectus for which no definition is provided. "Adjusted Consolidated Net Income" means, with respect to any person for any period: (i) the Consolidated Net Income of such person for such period, plus (ii) in the case of PRIMEDIA and its Restricted Subsidiaries, all cash received during such period by PRIMEDIA or any Restricted Subsidiary from its Unrestricted Subsidiaries from the payment of dividends or distributions (including tax sharing payments and loans or advances which are junior in right of payment to the notes and have a longer Average Life than the notes), but only to the extent such cash payments are not otherwise included in "Adjusted Consolidated Net Income." 61 Each item of Adjusted Consolidated Net Income will be determined in conformity with GAAP, except that, for purposes of the application of Accounting Principles Board Opinions Nos. 16 and 17, such person may select any amortization practice allowable by GAAP up to 40 years, notwithstanding the use of a different amortization in such person's consolidated financial statements. Any designation of a Subsidiary of PRIMEDIA as a Restricted Subsidiary or Unrestricted Subsidiary at or prior to the time of the calculation of Adjusted Consolidated Net Income of a Subsidiary will be treated as if it had occurred at the beginning of the applicable period. "Affiliate" of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. A person shall be deemed to "control" (including the correlative meanings, the terms "controlling," "controlled by" and "under common control with") another person if the controlling person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled person, whether through ownership of voting securities, by agreement or otherwise. "Asset Sale" means, with respect to any person, the sale, lease, conveyance, disposition or other transfer by the referent person of any of its assets (including by way of a sale-and-leaseback and including the sale or other transfer of any of the Capital Stock of any Subsidiary of the referent person); PROVIDED that, notwithstanding the foregoing, the term "Asset Sale" shall not include the sale, lease, conveyance, disposition or other transfer of: (i) with respect to any Unrestricted Subsidiary, (A) any assets not constituting all or substantially all of the assets of any Net Cash Flow Unrestricted Subsidiary and (B) any Capital Stock or any assets of any Restricted Payment Unrestricted Subsidiary; (ii) all or substantially all of the assets of PRIMEDIA, as permitted pursuant to the MERGER, CONSOLIDATION OR SALE OF ASSETS covenant; (iii) any assets between PRIMEDIA, any Restricted Subsidiary or any Unrestricted Subsidiary; (iv) (A) cash and cash equivalents, (B) inventory in the ordinary course of business and (C) any other tangible or intangible asset, in each case in the ordinary course of business of PRIMEDIA or its Restricted Subsidiaries; (v) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof; or (vi) Receivables and Other Assets pursuant to a Qualified Securitization Transaction. "Average Life" means, as of the date of determination, with respect to any debt security, the quotient obtained by dividing: (i) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment (assuming the exercise by the obligor of such debt security of all unconditional (other than as to the giving of notice) extension options of each such scheduled payment date) of such debt security multiplied by the amount of such principal payment by (ii) the sum of all such principal payments. "Bank Credit Facilities" means (1) the Credit Agreement, dated as of March 11, 1999, among PRIMEDIA, the lending institutions listed therein, The Bank of New York and Bankers Trust Company, as Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent, and The 62 Chase Manhattan Bank, as Administrative Agent and (2) the Credit Agreement, dated as of May 24, 1996, among PRIMEDIA, the lending institutions listed therein, The Bank of New York and Bankers Trust Company, as Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent, and The Chase Manhattan Bank, as Administrative Agent. "Business Day" means any day other than a Saturday, a Sunday or a day on which banking institutions in The City of New York or at a place of payment are authorized or obligated by law, regulation or executive order to remain closed. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease which would at such time be so required to be capitalized on the balance sheet in accordance with GAAP. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock. "Change of Control" means such time as: (i) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than KKR and its Affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than (A) 35 percent (35%) of the total voting power of the then outstanding voting stock of PRIMEDIA and (B) the total voting power of the then outstanding voting stock of PRIMEDIA beneficially owned by KKR and its Affiliates; or (ii) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted PRIMEDIA's board of directors (together with any new directors whose election by PRIMEDIA's board of directors or whose nomination for election by PRIMEDIA's shareholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office. "Class D Debenture Indenture" means the indenture governing the Class D Subordinated Debentures. "Class D Subordinated Debentures" means the 10% Class D Subordinated Exchange Debentures due 2008 of PRIMEDIA issuable in exchange for the Series D Preferred Stock. "Class F Debenture Indenture" means the indenture governing the Class F Subordinated Debentures. "Class F Subordinated Debentures" means the 9.20% Class F Subordinated Exchange Debentures due 2009 of PRIMEDIA issuable in exchange for the Series F Preferred Stock. "Class H Debenture Indenture" means the indenture governing the Class H Subordinated Debentures. "Class H Subordinated Debentures" means the 8 5/8% Class H Subordinated Exchange Debentures due 2010 of PRIMEDIA issuable in exchange for the Series H Preferred Stock. 63 "Consolidated Cash Flow" means, with respect to any person for any period, the Adjusted Consolidated Net Income of such person for such period plus (a) (i) with respect to any Restricted Subsidiary other than a Partially Owned Restricted Subsidiary, provision for taxes based on income or profits to the extent such provision for taxes was included in computing Adjusted Consolidated Net Income and (ii) with respect to any Partially Owned Restricted Subsidiary, the Pro Rata Portion of any provision for taxes based on income or profits to the extent such provision for taxes was included in computing Adjusted Consolidated Net Income, plus (b) (i) with respect to any Restricted Subsidiary other than a Partially Owned Restricted Subsidiary, consolidated Interest Expense, whether paid or accrued, to the extent such expense was deducted in computing Adjusted Consolidated Net Income (including amortization of original issue discount and non-cash interest payments), and (ii) with respect to any Partially Owned Restricted Subsidiary, the Pro Rata Portion of consolidated Interest Expense, whether paid or accrued, to the extent such expense was deducted in computing Adjusted Consolidated Net Income (including amortization of original issue discount and non-cash interest payments), plus (c) (i) with respect to any Restricted Subsidiary other than a Partially Owned Restricted Subsidiary, depreciation, amortization and other non-cash charges to the extent such depreciation, amortization and other non-cash charges were deducted in computing Adjusted Consolidated Net Income (including amortization of goodwill and other intangibles) and (ii) with respect to any Partially Owned Restricted Subsidiary, the Pro Rata Portion of depreciation, amortization and other non-cash charges to the extent such depreciation, amortization and other non-cash charges were deducted in computing Adjusted Consolidated Net Income (including amortization of goodwill and other intangibles); PROVIDED, with respect to the calculation of a person's Debt to Consolidated Cash Flow Ratio, that if, during such period, (a) such person or any of its Subsidiaries shall have made any Asset Sales (other than, in the case of PRIMEDIA and its Restricted Subsidiaries, sales of the Capital Stock of or any assets of Unrestricted Subsidiaries which constitute Asset Sales), Consolidated Cash Flow of such person for such period shall be reduced by an amount equal to the Consolidated Cash Flow (if positive), to the extent such Consolidated Cash Flow was included in computing Consolidated Cash Flow, directly attributable to the assets or Capital Stock which are the subject of such Asset Sales for such period or increased by an amount equal to the Consolidated Cash Flow (if negative), to the extent such Consolidated Cash Flow was included in computing Consolidated Cash Flow, directly attributable thereto for such period and (b) such person or any of its Subsidiaries (other than, in the case of PRIMEDIA and its Restricted Subsidiaries, Unrestricted Subsidiaries) has made any acquisition of assets or Capital Stock (occurring by merger or otherwise), including without limitation, any acquisition of assets or Capital Stock occurring in connection with a transaction causing a calculation to be made hereunder, Consolidated Cash Flow of such person shall be calculated (notwithstanding clause (i) of the definition of Consolidated Net Income) as if such acquisition of assets or Capital Stock (including the incurrence of any Indebtedness in connection with any such acquisition and the application of the proceeds thereof) took place on the first day of such period. Consolidated Cash Flow of such person shall be determined for any period without regard to changes in Working Capital of such person and its Subsidiaries during such period. "Consolidated Fixed Charges" means, with respect to any person for any period, the (a) consolidated Interest Expense, whether paid or accrued, to the extent such expense was deducted in 64 computing Adjusted Consolidated Net Income (including amortization of original issue discount and non-cash interest payments) and (b) the amount of all cash dividend payments on all series of preferred stock other than cash dividends on preferred stock of Unrestricted Subsidiaries and cash dividends paid to such person or its Subsidiaries; PROVIDED, that with respect to Partially Owned Restricted Subsidiaries, only the Pro Rata Portion of any amounts covered by clauses (a) and (b) above shall be included in calculating Consolidated Fixed Charges; PROVIDED FURTHER that if during such period (i) such person or any of its Subsidiaries shall have made any Asset Sales (other than, in the case of PRIMEDIA and its Restricted Subsidiaries, sales of the Capital Stock of or any assets of Unrestricted Subsidiaries which constitute Asset Sales), Consolidated Fixed Charges of such person for such period shall be reduced by an amount equal to the Consolidated Fixed Charges directly attributable to the assets which are the subject of such Asset Sales for such period and (ii) such person or any of its Subsidiaries (other than, in the case of PRIMEDIA and its Restricted Subsidiaries, Unrestricted Subsidiaries) has made any acquisition of assets or Capital Stock (occurring by merger or otherwise), including, without limitation, any acquisition of assets or Capital Stock occurring in connection with the transaction causing a calculation to be made hereunder, Consolidated Fixed Charges of such person shall be calculated as if such acquisition of assets or Capital Stock (including the incurrence of any Indebtedness in connection with any such acquisition and the application of the proceeds thereof) took place on the first day of such period. "Consolidated Net Cash Flow" means, with respect to any person for any period, the aggregate Consolidated Cash Flow of such person for such period, MINUS (a) capital expenditures of such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof), MINUS (b) the aggregate amount of all cash dividends paid by such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof) to holders of its Capital Stock other than to such person or its Subsidiaries, MINUS (c) the aggregate amount of all taxes based on income or profits paid by such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof) other than to such person or its Subsidiaries, MINUS (d) cash Interest Expense of such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof), MINUS (e) repayments of principal of Indebtedness by such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof), MINUS (f) any increases in Working Capital of such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof), and PLUS (g) any decreases in Working Capital of such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the 65 case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof), in each case, for such period and determined in accordance with GAAP; PROVIDED that in calculating the amount referred to in clause (f) or (g) above, as the case may be, for any period during which PRIMEDIA or any of its Restricted Subsidiaries has consummated an Asset Sale (other than, in the case of PRIMEDIA and its Restricted Subsidiaries, sales of Capital Stock of, cash or any assets of Unrestricted Subsidiaries which constitute Asset Sales), the portion of the change in Working Capital for such period attributable to the entity or business sold or purchased shall be based (x) in the case of such an Asset Sale, on the change in Working Capital attributable to the entity or business sold from the first day of such period to the date of the consummation of such sale and (y) in the case of an acquisition, on the change in Working Capital attributable to the entity or business acquired from the date of consummation of such acquisition to the last day of such period. "Consolidated Net Income" means, with respect to any person for any period, the aggregate net income (or loss) of such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, with respect to any Partially Owned Restricted Subsidiary, including only the Pro Rata Portion of the net income (or loss) of such Partially Owned Restricted Subsidiary as of any date of determination of Consolidated Net Income for PRIMEDIA and its Restricted Subsidiaries) for such period, on a consolidated basis, determined in accordance with GAAP, PROVIDED that: (i) the net income (or loss) of any person which is not a Subsidiary or is accounted for by the equity method of accounting shall be included only to the extent of the amount of cash dividends or distributions (including tax sharing payments and loans or advances which are junior in right of payment to the notes and have a longer Average Life than the notes) paid to the referent person or a Subsidiary of the referent person; (ii) except to the extent includable pursuant to the foregoing clause (i), the income (or loss) of any person accrued prior to the date it becomes a Subsidiary of such person or is merged into or consolidated with such person or any of its Subsidiaries or that person's assets are acquired by such person or any of its Subsidiaries shall be excluded; (iii) any gains or losses attributable to Asset Sales net of related tax costs or tax benefits, as the case may be, shall be excluded; and (iv) the net income of any Unrestricted Subsidiary (and, solely for purposes of the RESTRICTED PAYMENTS covenant, the net income of any Partially Owned Restricted Subsidiary) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Unrestricted Subsidiary (or, solely for the purposes of the RESTRICTED PAYMENTS covenant, any Partially Owned Restricted Subsidiary) of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders that, in each such case, has not been legally waived or otherwise satisfied. In addition, "Consolidated Net Income" will not include, without limitation: (A) any non-capitalized transaction costs and expenses incurred in connection with financings, investments or acquisitions, including, but not limited to, financing and refinancing fees; 66 (B) any extraordinary or nonrecurring charges relating to any premium or penalty paid, write-off of deferred financing costs or other financial recapitalization charges in connection with the redemption or retirement of any Indebtedness prior to its stated maturity; and (C) any non-recurring charges arising out of the restructuring or consolidation of the operations of any persons or business either alone or together with PRIMEDIA or any Restricted Subsidiary of PRIMEDIA, incurred within 18 months following the acquisition of those persons or businesses by PRIMEDIA or any Restricted Subsidiary of PRIMEDIA. "Consolidated Net Worth" means, at any date of determination, the sum of the Capital Stock and additional paid-in capital plus retained earnings (or minus accumulated deficit) of the referent person and its Subsidiaries on a consolidated basis, less amounts attributable to Redeemable Stock, each item to be determined in conformity with GAAP (excluding the effects of foreign currency exchange adjustments under Financial Accounting Standards Board Statement of Financial Accounting Standards No. 52), except that all effects of the application of Accounting Principles Board Opinions Nos. 16 and 17 and related interpretations shall be disregarded. "Credit Facilities" means, with respect to PRIMEDIA or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the Bank Credit Facilities) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Currency Agreement" means the obligations of any person pursuant to any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect such person or any of its subsidiaries against fluctuations in currency values. "Debt to Consolidated Cash Flow Ratio" means the ratio of all Indebtedness of PRIMEDIA and its Restricted Subsidiaries to Consolidated Cash Flow. "Equity Interests" means Capital Stock, warrants, options or other rights to acquire Capital Stock (but excluding any debt security which is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private offering of Equity Interests (other than Redeemable Stock) of PRIMEDIA. "Existing Indebtedness" means Indebtedness of PRIMEDIA and its Subsidiaries (other than the Bank Credit Facilities and the Outstanding Notes) in existence on the date of the Indenture, until such amounts are repaid. "Fixed Charge Coverage Ratio" means the ratio of Consolidated Cash Flow to Consolidated Fixed Charges. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of the Indenture. "Guarantor" means each domestic Restricted Subsidiary of PRIMEDIA, other than any Securitization Subsidiary, which is wholly owned, directly or indirectly, by PRIMEDIA. "Indebtedness" of any person is defined as any indebtedness, contingent or otherwise, in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such 67 person or only to a portion thereof), or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement obligations with respect thereto) or representing the balance deferred and unpaid of the purchase price of any property (including pursuant to financing leases), if and to the extent any of the foregoing indebtedness would appear as a liability upon a balance sheet of such person prepared in accordance with GAAP (except that any such balance that constitutes a trade payable and/or an accrued liability arising in the ordinary course of business shall not be considered Indebtedness), and shall also include, to the extent not otherwise included, any Capital Lease Obligations, the maximum fixed repurchase price of any Redeemable Stock, indebtedness secured by a Lien to which the property or assets owned or held by such person is subject, whether or not the obligations secured thereby shall have been assumed, guarantees of items that would be included within this definition to the extent of such guarantees (exclusive of whether such items would appear upon such balance sheet), and net liabilities in respect of Currency Agreements and Interest Rate Agreements. For purposes of the preceding paragraph, the maximum fixed repurchase price of any Redeemable Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Stock as if such Redeemable Stock were repurchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, PROVIDED that if such Redeemable Stock is not then permitted to be repurchased, the repurchase price shall be the book value of such Redeemable Stock. The amount of Indebtedness of any person at any date shall be without duplication: (i) the outstanding balance at such date of all unconditional obligations as described above and the maximum liability of any such contingent obligations at such date; and (ii) in the case of Indebtedness of others secured by a Lien to which the property or assets owned or held by such person is subject, the lesser of the fair market value at such date of any asset subject to a Lien securing the Indebtedness of others and the amount of the Indebtedness secured. For the purpose of determining the aggregate Indebtedness of PRIMEDIA and its Restricted Subsidiaries, such Indebtedness shall exclude: (a) the Indebtedness of any Unrestricted Subsidiary of PRIMEDIA or any Unrestricted Subsidiary of a Restricted Subsidiary; and (b) with respect to any Partially Owned Restricted Subsidiary, the Pro Rata Portion of any Indebtedness of any Partially Owned Restricted Subsidiary of PRIMEDIA or any Partially Owned Restricted Subsidiary of a Restricted Subsidiary pursuant to which the lender thereunder does not have recourse to any of the assets of PRIMEDIA or any of its Restricted Subsidiaries. "Interest Expense" means, with respect to any person, for any period, the aggregate amount of interest in respect of Indebtedness (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and the net cost (benefit) associated with Interest Rate Agreements, and excluding amortization of deferred finance fees and interest recorded as accretion in the carrying value of liabilities (other than Indebtedness) recorded at a discounted value) and all but the principal component of rentals in respect of Capital Lease Obligations, paid, accrued or scheduled to be paid or accrued by such person during such period. "Interest Rate Agreements" means the obligations of any person pursuant to any interest rate swap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect such person or any of its subsidiaries against fluctuations in interest rates. 68 "Investment" means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business, which are recorded as accounts receivable on the balance sheet of any person or its Subsidiaries) or other extension of credit or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities issued by any other person. For the purposes of the RESTRICTED PAYMENTS and INVESTMENT IN UNRESTRICTED SUBSIDIARIES covenants described above: (i) "Investment" shall include and be valued at the fair market value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair market value of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary; and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at fair market value at the time of such transfer, in each case as determined by the board of directors of PRIMEDIA in good faith. "Lien" means any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement or lease in the nature thereof). "Net Cash Flow Unrestricted Subsidiary" means an Unrestricted Subsidiary which is not a Restricted Payment Unrestricted Subsidiary. "Net Proceeds" shall mean, with respect to any Asset Sale, the aggregate cash proceeds (including any cash received by way of deferred payment pursuant to a note receivable issued in connection with such Asset Sale, other than the portion of such deferred payment constituting interest, and including any amounts received as disbursement or withdrawals from any escrow or similar account established in connection with any such Asset Sale, but, in either such case, only as and when so received) received by PRIMEDIA or any of its Subsidiaries in respect of such Asset Sale, net of: (i) the cash expenses of such sale (including, without limitation, the payment of principal, premium, if any, and interest on Indebtedness required to be paid as a result of such Asset Sale (other than the Outstanding Notes and the notes and amounts repaid pursuant to the Credit Facilities) and legal, accounting and investment banking fees and sales commissions); (ii) taxes paid or payable as a result thereof; (iii) any portion of cash proceeds which PRIMEDIA determines in good faith should be reserved for post-closing adjustments, it being understood and agreed that on the day that all such post-closing adjustments have been determined, the amount (if any) by which the reserved amount in respect of such Asset Sale exceeds the actual post-closing adjustments payable by PRIMEDIA or any of its Subsidiaries shall constitute Net Proceeds on such date; and (iv) any relocation expenses and pension, severance and shutdown costs incurred as a result thereof. "Non-Compete Notes" means the promissory notes issued by PRIMEDIA pursuant to the Non-Competition Agreement, dated as of June 17, 1991, among PRIMEDIA Holdings, Inc., News America Holdings Incorporated and the other parties thereto in an aggregate principal amount not to exceed $50.0 million, as such notes may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof. "Non-Recourse Indebtedness" means Indebtedness (i) as to which neither PRIMEDIA nor any Restricted Subsidiary (other than a Securitization Subsidiary) (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly 69 or indirectly liable (as a guarantor or otherwise) or (c) constitutes the lender, (ii) as to which no default (including any rights that the holders thereof 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 of PRIMEDIA or any Restricted Subsidiary (other than a Securitization Subsidiary) to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity and (iii) as to which the lenders have been notified in writing they will not have recourse to the shares or assets of PRIMEDIA or any Restricted Subsidiary (other than a Securitization Subsidiary). "Obligations" means any principal, interest, penalties, fee, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Outstanding Notes" means the 10 1/4% Senior Notes due 2004, the 8 1/2% Senior Notes due 2006 and the 7 5/8% Senior Notes due 2008 of PRIMEDIA, as each may be amended, supplemented or otherwise modified from time to time. "Partially Owned Restricted Subsidiary" means any Restricted Subsidiary other than a wholly owned Restricted Subsidiary. "Permitted Liens" means: (i) Liens for taxes, assessments, governmental charges or claims which are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (ii) statutory Liens of landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings, if a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (iv) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a like nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money); (v) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business of PRIMEDIA or any of its Subsidiaries incurred in the ordinary course of business; (vi) Liens (including extensions and renewals thereof) upon real or tangible personal property acquired after the date of the Indenture, PROVIDED that (a) any such Lien is created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of the item of property subject thereto, (b) the principal amount of the Indebtedness secured by such Lien does not exceed 100% of such cost, (c) such Lien does not extend to or cover any other property other than such item of property and any improvements on such item and (d) the incurrence of such Indebtedness is permitted by the INCURRENCE OF INDEBTEDNESS covenant; (vii) Liens securing reimbursement obligations with respect to letters of credit which encumber documents and other property relating to such letters of credit and the products and proceeds thereof; 70 (viii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (ix) judgment and attachment Liens not giving rise to an Event of Default; (x) leases or subleases granted to others not interfering in any material respect with the business of PRIMEDIA or any of its Subsidiaries; (xi) Liens encumbering customary initial deposits and margin deposits, and other liens incurred in the ordinary course of business and which are within the general parameters customary in the industry, in each case securing Indebtedness under Interest Rate Agreements and Currency Agreements; (xii) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of PRIMEDIA or its Subsidiaries; (xiii) Liens arising out of consignment or similar arrangements for the sale of goods entered into by PRIMEDIA or any of its Subsidiaries in the ordinary course of business of PRIMEDIA and its Subsidiaries; (xiv) any interest or title of a lessor in the property subject to any Capital Lease Obligation or operating lease; (xv) Liens arising from filing Uniform Commercial Code financing statements regarding leases; (xvi) Liens permitted by the Credit Facilities as in effect on the date of the Indenture; (xvii) Liens securing Indebtedness described in clause (xii) of the second paragraph of the INCURRENCE OF INDEBTEDNESS covenant; (xviii) Liens between PRIMEDIA and any Restricted Subsidiary or between Restricted Subsidiaries; (xix) Liens securing letters of credit in an amount not to exceed $75 million in the aggregate at any one time; (xx) Liens in an amount not to exceed $50 million in the aggregate at any one time; (xxi) Liens incurred by Partially Owned Restricted Subsidiaries which do not exceed 10% of Total Assets in the aggregate at any one time; and (xxii) Liens on assets of a Securitization Subsidiary arising in connection with a Qualified Securitization Transaction. "Pro Rata Portion" means, with respect to any Partially Owned Restricted Subsidiary, the percentage of such Partially Owned Restricted Subsidiary's outstanding Equity Interests beneficially owned by PRIMEDIA and its Restricted Subsidiaries. "Qualified Securitization Transaction" means any transaction or series of transactions that may be entered into by PRIMEDIA or any Restricted Subsidiary pursuant to which PRIMEDIA or any Restricted Subsidiary may sell, convey or otherwise transfer to (a) a Securitization Subsidiary (in the case of a transfer by PRIMEDIA or of any Restricted Subsidiary) and (b) any other person (in the case of a transfer by a Securitization Subsidiary), or may grant a security interest in, Receivables and Other Assets. "Receivables and Other Assets" means, with respect to any person, all of the following property and interests in property of such person, whether now existing or existing in the future or hereafter acquired or arising: (1) accounts; (2) accounts receivable or other similar rights to future payments in respect of assets sold or to be sold, rights granted or to be granted or services rendered or to be rendered, including, without 71 limitation, all rights to payment created by or arising from sales of goods, lease of goods or the rendition of services no matter how evidenced, whether or not earned by performance; (3) all unpaid seller's or lessor's rights, including, without limitation, recession, replevin, reclamation and stoppage in transit, relating to any of the foregoing or arising therefrom; (4) all rights to any goods or merchandise represented by any of the foregoing, including, without limitation, returned or repossessed goods; (5) all reserves and credit balances with respect to any such accounts receivable or account debtors; (6) all letters of credit, security or guarantees of any of the foregoing; (7) all insurance policies or reports relating to any of the foregoing; (8) all collection or deposit accounts relating to any of the foregoing; (9) all proceeds of any of the foregoing; and (10) all books and records relating to any of the foregoing. "Redeemable Stock" means any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable before the stated maturity of the notes), or upon the happening of any event, matures or is mandatorily redeemable, in whole or in part, prior to the stated maturity of the notes, or is, by its terms or upon the happening of any event, redeemable at the option of the holder thereof, in whole or in part, at any time prior to the stated maturity of the notes except for Equity Interests of PRIMEDIA issued to present and former members of management of PRIMEDIA and its Subsidiaries pursuant to subscription and option agreements in effect on the date of the Indenture or under any stock option plan of About.com, Inc. existing on the date of the Indenture and common stock and options of PRIMEDIA issued to future members of management of PRIMEDIA and its Subsidiaries pursuant to subscription agreements executed subsequent to the date of the Indenture containing provisions for the repurchase of such common stock and options upon death, disability or termination of employment of such persons which are substantially identical to those contained in the subscription agreements in effect on the date of the Indenture; PROVIDED that for purposes of the "LIMITATION OF RESTRICTED PAYMENTS" covenant and for purposes of the definition of Indebtedness, Redeemable Stock does not include the Series D Preferred Stock, the Series F Preferred Stock or the Series H Preferred Stock. "Registration Rights Agreement" means (a) the registration rights agreement, dated May 8, 2001, among PRIMEDIA, the Guarantors and Salomon Smith Barney Inc., J.P. Morgan Securities Inc. and Banc of America Securities LLC, as representatives of the initial purchasers, and (b) with respect to each issuance of additional notes issued in a transaction exempt from the registration requirements of the Securities Act, the registration rights agreement, if any, among PRIMEDIA and the persons purchasing such additional notes under the related purchase agreement. "Restricted Payment Unrestricted Subsidiary" means an Unrestricted Subsidiary which was capitalized exclusively with a permitted Restricted Payment or with the proceeds from the issuance of an Equity Interest by PRIMEDIA or with the proceeds of the sale of stock or substantially all of the assets of any other Unrestricted Subsidiary which was capitalized with such funds to the extent that a liquidating dividend is paid to PRIMEDIA for any Restricted Subsidiary from the proceeds of such sale. "Restricted Subsidiary" means a Subsidiary of PRIMEDIA which at the time of determination is not an Unrestricted Subsidiary. "Securitization Subsidiary" means any person to which PRIMEDIA or any Restricted Subsidiary of PRIMEDIA transfers Receivables and Other Assets that engages in no activities other than in 72 connection with financing of Receivables and Other Assets and that is designated by the board of directors as a Securitization Subsidiary and (A) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (i) is guaranteed by PRIMEDIA or any Restricted Subsidiary (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings); (ii) is recourse to or obligates PRIMEDIA or any Restricted Subsidiary (other than such Securitization Subsidiary) in any way other than pursuant to Standard Securitization Undertakings; (iii) subjects any property or asset of PRIMEDIA or any Restricted Subsidiary (other than such Securitization Subsidiary), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings; (B) with which neither PRIMEDIA nor any Restricted Subsidiary (other than such Securitization Subsidiary) has any material contract, agreement, arrangement or understanding other than on terms no less favorable to PRIMEDIA or such Restricted Subsidiary than those that might be obtained at the time from persons that are not Affiliates of PRIMEDIA, other than fees payable in the ordinary course of business in connection with servicing Receivables and Other Assets of such entity; and (C) to which neither PRIMEDIA nor any Restricted Subsidiary (other than such Securitization Subsidiary) has any obligation to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results. Any designation of a Securitization Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the board of directors of PRIMEDIA giving effect to the designation and an officers' certificate certifying that the designation complied with the preceding conditions and was permitted by the Indenture. "Series D Preferred Stock" means PRIMEDIA's $10.00 Series D Exchangeable Preferred Stock Redeemable 2008, par value $0.01 per share. "Series F Preferred Stock" means PRIMEDIA's $9.20 Series F Exchangeable Preferred Stock Redeemable 2009, issuable in exchange for the Series E Preferred Stock and containing terms identical to the Series E Preferred Stock. "Series H Preferred Stock" means PRIMEDIA's $8.625 Series H Exchangeable Preferred Stock Redeemable 2010 issuable in exchange for the Series G Preferred Stock and containing terms identical to the Series G Preferred Stock. "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 date of the Indenture. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by PRIMEDIA or any Restricted Subsidiary that are reasonably customary in a Qualified Securitization Transaction. "Subsidiary" of any person means any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such person or one or more of the other Subsidiaries of that person or a combination thereof. "Total Assets" means the total consolidated assets of the Company and its Restricted Subsidiaries. 73 "Transfers" means: (i) any payment of interest on Indebtedness, dividends or repayments of loans or advances; and (ii) any other transfers of assets, in each case from an Unrestricted Subsidiary to PRIMEDIA or any of its Restricted Subsidiaries. "Unrestricted Subsidiary" means: (i) each of the following Subsidiaries of the Company, unless and until such Subsidiary ceases to be a Subsidiary of the Company or is designated as a Restricted Subsidiary pursuant to the terms of the Indenture: PRIMEDIANet Inc.; PRIMEDIA Ventures, Inc.; PRIMEDIA Teenclick Corp.; PRIMEDIA Digital Video Holdings LLC; About.com, Inc.; HPC Interactive, LLC; Media Central Acquisition, LLC; Kagan World Media Limited; Kagan Asia Media, Ltd.; In New York LLC; and PRIMEDIA International, Inc.; (ii) any other Subsidiary of PRIMEDIA which at the time of determination is an Unrestricted Subsidiary (as designated by the board of directors of PRIMEDIA, as provided below); and (iii) any subsidiary of an Unrestricted Subsidiary. The board of directors of PRIMEDIA may designate any Subsidiary of PRIMEDIA (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns, or holds any Lien on, any property of, any other Subsidiary of PRIMEDIA which is not a Subsidiary of the Subsidiary to be so designated; PROVIDED that: (a) PRIMEDIA certifies that such designation complies with the LIMITATION ON RESTRICTED PAYMENTS AND INVESTMENTS IN UNRESTRICTED SUBSIDIARIES covenants; and (b) the Subsidiary to be so designated has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of PRIMEDIA or any of its Restricted Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that immediately after giving effect to such designation, PRIMEDIA could incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the INCURRENCE OF INDEBTEDNESS covenant (without giving effect to clauses (i) through (xvi) of the second paragraph of that covenant) on a pro forma basis taking into account such designation. "Working Capital" means, with respect to any person for any period, the current assets of such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof) on a consolidated basis, after excluding therefrom cash and cash equivalents and deferred income taxes, less the current liabilities of such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof) on a consolidated basis, after excluding therefrom, in each case to the extent otherwise included therein, all short-term Indebtedness for borrowed money, the current portion of any long-term Indebtedness, liabilities arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts, which will not be, and will not be deemed to be, inadvertent) drawn against insufficient funds in the ordinary course of business, PROVIDED that such liabilities are extinguished within three business days of this incurrence, and deferred income taxes of such person and its Subsidiaries (and in the case of PRIMEDIA and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof). 74 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following is a summary of certain U.S. federal income tax consequences of the acquisition, ownership and disposition of new notes as of the date of this prospectus. Except where noted, this summary deals only with new notes that are acquired in connection with this exchange offer and held as capital assets and does not deal with taxpayers subject to special treatment under the U.S. federal income tax laws, including if you are one of the following: - a dealer in securities or currencies; - a financial institution; - an insurance company; - a tax exempt organization; - a person holding the new notes as part of a hedging, integrated or conversion transaction, a constructive sale or straddle; - a trader in securities that has elected the mark-to-market method of accounting for your securities; - a person liable for alternative minimum tax; or - a U.S. person whose "functional currency" is not the U.S. dollar. If a partnership holds the new notes, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding the new notes, you should consult your own tax advisors. The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended, and regulations, rulings and judicial decisions as of the date of this prospectus. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those discussed below. IF YOU ARE CONSIDERING THE ACQUISITION OF NEW NOTES, YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES TO YOU AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY FOREIGN, STATE, LOCAL OR OTHER TAXING JURISDICTION. CONSEQUENCES OF THE EXCHANGE The exchange of the old notes for the new notes in the exchange offer (see "The Exchange Offer") will not constitute a taxable event to you. As a result: - you will not realize any gain or loss upon receipt of a new note; - the holding period of the new note will include the holding period of the old note exchanged for the new note; and - the adjusted basis of the new note will be the same as the adjusted tax basis of the old note exchanged for the new note immediately before the exchange. CONSEQUENCES TO U.S. HOLDERS The following is a summary of certain U.S. federal tax consequences that will apply to you if you are a U.S. holder of new notes. The material consequences to "non-U.S. holders" of new notes, who are beneficial owners of exchange notes and who are not U.S. holders, are described below under "Consequences to Non-U.S. Holders". 75 "U.S. holder" means a beneficial owner of a new note that is: - a citizen or resident of the United States; - a corporation or partnership created or organized in or under the laws of the United States or any political subdivision of the U.S.; - an estate the income of which is subject to U.S. federal income taxation regardless of its source; or - a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. PAYMENTS OF INTEREST Except as set forth below, interest on a new note will generally be taxable to you as ordinary income from domestic sources at the time it is paid or accrued in accordance with your method of accounting for tax purposes. AMORTIZABLE BOND PREMIUM If you purchased an old note for an amount in excess of the sum of all amounts payable on the old note after the purchase date other than stated interest, you will be considered to have purchased the note at a "premium." You generally may elect to amortize the premium over the remaining term (or an applicable call date as discussed below) of the new note on a constant yield method as an offset to interest when includible in income under your regular method of accounting. The new notes are subject to a call provision at the option of PRIMEDIA at various times, as described in this prospectus under "Description of New Notes--Optional Redemption." You will calculate the amount of amortizable bond premium based on the amount payable at the applicable call date, but only if use of the call date (in lieu of the stated maturity date) results in a smaller amortizable bond premium for the period ending on the call date. If you do not elect to amortize bond premium, that premium will decrease the gain or increase the loss you would otherwise recognize on disposition of the new note. Your election to amortize premium on a constant yield method will also apply to all debt obligations held or subsequently acquired by you on or after the first day of the first taxable year to which the election applies. You may not revoke the election without the consent of the Internal Revenue Service. You should consult your own tax advisor before making this election. CALCULATION OF AMORTIZABLE BOND PREMIUM IS COMPLICATED, AND WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR CONCERNING THE APPLICATION OF THESE RULES AS THEY APPLY TO YOU. MARKET DISCOUNT If you purchased an old note for an amount that is less than its stated redemption price at maturity, the amount will be treated as "market discount" for United States federal income tax purposes, unless that difference is less than a specified de minimis amount. Under the market discount rules, you will be required to treat any payment, other than stated interest, on, or any gain on the sale, exchange, retirement or other disposition of, a new note as ordinary income to the extent of the market discount that you have not previously included in income and are treated as having accrued on the new note at the time of its payment or disposition. In addition, you may be required to defer, until the maturity of the new note or its earlier disposition in a taxable transaction, the deduction of all or a portion of the interest expense on any indebtedness attributable to the new note. Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the new note, unless you elect to accrue on a constant yield interest 76 method. You may elect to include market discount in income currently as it accrues, on either a ratable or constant yield interest method, in which case the rule described above regarding deferral of interest deductions will not apply. Your election to include market discount in income currently, once made, applies to all market discount obligations acquired by you on or after the first taxable year to which your election applies and may not be revoked without the consent of the Internal Revenue Service. You should consult your own tax advisor before making this election. SALE, EXCHANGE AND RETIREMENT OF NOTES When you sell, exchange or retire a new note, you will recognize gain or loss equal to the difference between the amount you receive (less an amount equal to any accrued interest you have not previously included in income, which will be taxable as interest income) and your adjusted basis in the new note. Except as described above with respect to market discount, your gain or loss realized on the sale, exchange or retirement of a new note will generally be treated as capital gain or loss, and will be long-term capital gain or loss if at the time of the sale, exchange or retirement of a new note, you have held the new note for more than one year. Long-term capital gains of individuals are eligible for reduced rates of taxation. The deductability of capital losses is subject to limitations. INFORMATION REPORTING AND BACKUP WITHHOLDING In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on new notes and to the proceeds of sale of a new notes made to you, unless you are an exempt recipient, like a corporation. A backup withholding tax will apply to those payments if you fail to provide a taxpayer identification number, a certification of exempt status, or fail to report in full dividend and interest income. CONSEQUENCES TO NON-U.S. HOLDERS The following is a summary of certain U.S. federal income tax consequences that will apply to you if you are a non-U.S. holder of new notes. This summary does not represent a detailed description of the federal income tax consequences to you in light of your particular circumstances. In addition, it does not deal with non-U.S. holders that are subject to special treatment under the U.S. federal income tax laws (including if you are a controlled foreign corporation, passive foreign investment company, foreign personal holding company, a corporation that accumulates earnings to avoid federal income tax, or in certain circumstances, a United States expatriate). U.S. FEDERAL WITHHOLDING TAX The 30% U.S. federal withholding tax will not apply to any payment of principal or interest on the new notes provided that: - you do not actually, or constructively, own 10% or more of the total combined voting power of all classes of our voting stock within the meaning of the Internal Revenue Code and applicable U.S. Treasury regulations; - you are not a controlled foreign corporation that is related to us through stock ownership; - you are not a bank whose receipt of interest on the exchange notes is described in section 881(c)(3)(A) of the Internal Revenue Code; and - (a) you provide your name and address on an Internal Revenue Service Form W-BEN (or other applicable form), and certify, under penalties of perjury, that you are not a U.S. person or (b) you hold the exchange notes through certain foreign intermediaries and you satisfy the certification requirements of applicable U.S. Treasury regulations. Special certification rules apply to certain non-U.S. holders that are entities rather than individuals. 77 If you cannot satisfy the requirements described above, payments of interest made to you will be subject to the 30% U.S. federal withholding tax, unless you provide us with a properly executed (1) Internal Revenue Service Form W-8BEN (or other applicable form) claiming an exemption from, or reduction in, withholding under the benefit of an applicable tax treaty; or (2) Internal Revenue Service Form W-8ECI (or successor form) stating that interest paid on a new note is not subject to withholding because it is effectively connected with your conduct of a trade or business in the United States, as described below under "U.S. Federal Income Tax". The 30% U.S. federal withholding tax will not generally apply to any gain that you realize on the sale, exchange, retirement or other disposition of the new notes. U.S. FEDERAL ESTATE TAX Your estate will not be subject to U.S. federal estate tax on new notes beneficially owned by you at the time of your death, provided that you are not a U.S. citizen or resident (as specifically defined for U.S. federal estate tax purposes) and (1) you do not own 10% or more of the total combined voting power of all classes of our voting stock (within the meaning of the Internal Revenue Code and the U.S. Treasury regulations) and (2) interest on the new note would not have been, if received at the time of your death, effectively connected with the conduct by you of a trade or business in the United States. U.S. FEDERAL INCOME TAX If you are engaged in a trade or business in the United States and interest on the new notes is effectively connected with the conduct of that trade or business, you will be subject to U.S. Federal income tax on that interest on a net income basis in the same manner as if you were a U.S. person as defined under the Internal Revenue Code, although that interest income will be exempt from the 30% U.S. federal withholding tax. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower applicable treaty rate) of your earnings and profits for the taxable year, subject to certain adjustments. Any gain realized on the disposition of a new note generally will not be subject to U.S. federal income tax unless: - the gain is effectively connected with the conduct by you of a trade or business in the United States, or - you are an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and other conditions are met. INFORMATION REPORTING AND BACKUP WITHHOLDING In general, you will not be subject to backup withholding and information reporting with respect to payments that we make to you provided that we do not have actual knowledge that you are a U.S. person and we have received from you the statement described above under "Consequences to Non-U.S. Holders--U.S. Federal Withholding Tax." In addition, you will not be subject to backup withholding or information reporting with respect to the proceeds of the sale of a new note within the United States or conducted through U.S.-related financial intermediaries, if the payor receives the statement described above and does not have actual knowledge that you are a U.S. person, as defined under the Internal Revenue Code, or you otherwise establish an exemption. 78 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 the new notes. This prospectus, as it may be amended or supplemented, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes only where the old notes were acquired as a result of market-making activities or other trading activities. We have agreed that we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any resale for a period of 180 days from the date on which the exchange offer is consummated, or any shorter period as will terminate when all old notes acquired by broker-dealers for their own accounts as a result of market-making activities or other trading activities have been exchanged for new notes and the new notes have been resold by the broker-dealers. 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 these methods of resale, at market prices prevailing at the time of resale, at prices related to the prevailing market prices or negotiated prices. Any 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 broker-dealer or the purchasers of any 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 the new notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any resale of new notes and any commissions or concessions received by these persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days from the date on which the exchange offer is consummated, or a shorter period as will terminate when all old notes acquired by broker-dealers for their own accounts as a result of market-making activities or other trading activities have been exchanged for new notes and the new notes have been resold by the broker-dealers, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests the documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer, including the expenses of one counsel for the holders of the old notes, other than commissions or concessions of any brokers or dealers and the fees of any counsel or other advisors or experts retained by the holders of old notes, except as expressly set forth in the registration rights agreement, and will indemnify the holders of old notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act. 79 LEGAL MATTERS Certain legal matters with respect to the new notes and the guarantees are being passed upon on our behalf by Simpson Thacher & Bartlett, New York, New York. EXPERTS The financial statements and the related financial statement schedule incorporated in this prospectus by reference from PRIMEDIA's Annual Report on Form 10-K for the year ended December 31, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports, which are incorporated herein by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The consolidated financial statements of About.com as of December 31, 2000 and for the year then ended, incorporated by reference in this prospectus from PRIMEDIA's current report on Form 8-K/A dated April 26, 2001, have been audited by Ernst & Young LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 80 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- $500,000,000 [LOGO] OFFER TO EXCHANGE ALL OUTSTANDING $500,000,000 8 7/8% SENIOR NOTES DUE 2011 FOR $500,000,000 8 7/8% SENIOR NOTES DUE 2011, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 UNCONDITIONALLY GUARANTEED ON A SENIOR BASIS BY ALL OUR DOMESTIC WHOLLY-OWNED RESTRICTED SUBSIDIARIES, OTHER THAN SECURITIZATION SUBSIDIARIES ----------------- P R O S P E C T U S ------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS (a) PRIMEDIA Inc., Adams/Laux Company, Inc., Bacon's Information, Inc., Canoe & Kayak, Inc., Channel One Communications Corp., Climbing, Inc., CSK Publishing Company Inc., ENO Productions, Inc., Films for the Humanities & Sciences, Inc., Game & Fish Publications, Inc., Haas Publishing Companies, Inc., Hacienda Productions, Inc., HPC Brazil, Inc., PRIMEDIA Business Magazines & Media Inc., Kagan World Media, Inc., Kitplanes Acquisition Company, Paul Kagan Associates, Inc., PRIMEDIA Companies Inc., PRIMEDIA Enterprises, Inc., PRIMEDIA Finance Shared Services, Inc., PRIMEDIA Holdings III Inc., PRIMEDIA Information Inc., PRIMEDIA Magazines Inc., PRIMEDIA Magazine Finance Inc., PRIMEDIA Special Interest Publications Inc., PRIMEDIA Leisure Group Inc. and PRIMEDIA Specialty Group Inc. Reference is made to Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL") which enables a corporation in its original certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director for violations of the director's fiduciary duty, except (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) for liability of directors for unlawful payment of dividends or unlawful stock purchase or redemptions pursuant to Section 174 of the DGCL or (iv) for any transaction from which a director derived an improper personal benefit. Reference also is made to Section 145 of the DGCL, which provides that a corporation may indemnify any persons, including officers and directors, who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such officer, director, employee or agent acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interest and, for criminal proceedings, had no reasonable cause to believe that his conduct was unlawful. A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses that such officer or director actually and reasonably incurred. The certificate of incorporations and/or bylaws of PRIMEDIA Inc., Adams/Laux Company, Inc., Bacon's Information, Inc., Canoe & Kayak, Inc., Channel One Communications Corporation, Climbing, Inc., CSK Publishing Company, Inc., ENO Productions, Inc., Films for the Humanities & Sciences, Inc., Game & Fish Publications, Inc., Haas Publishing Companies, Inc., Hacienda Productions, Inc., HPC Brazil, Inc., PRIMEDIA Business Magazines & Media Inc., Kagan World Media, Inc., Kitplanes Acquisition Company, Paul Kagan Associates, Inc., PRIMEDIA Companies Inc., PRIMEDIA Enterprises, Inc., PRIMEDIA Finance Shared Services, Inc., PRIMEDIA Holdings III Inc., PRIMEDIA Information Inc., PRIMEDIA Magazines Inc., PRIMEDIA Magazine Finance Inc., PRIMEDIA Special Interest Publications Inc. and PRIMEDIA Specialty Group Inc. provide for the mandatory indemnification of their directors and officers, and the discretionary indemnification of their employees and other agents, to the maximum extent permitted by the DGCL. II-1 As permitted by sections 102 and 145 of the DGCL, the certificate of incorporation of PRIMEDIA Inc., Adams/Laux Company, Inc., Bacon's Information, Inc., Canoe & Kayak, Inc., Channel One Communications Corp., Climbing, Inc., ENO Productions, Inc., Films for the Humanities & Sciences, Inc., Game & Fish Publications, Inc., Haas Publishing Companies, Inc., Hacienda Productions, Inc., HPC Brazil, Inc., PRIMEDIA Business Magazines & Media Inc., Kagan World Media, Inc., Kitplanes Acquisition Company, Paul Kagan Associates, Inc., PRIMEDIA Companies Inc., PRIMEDIA Enterprises, Inc., PRIMEDIA Finance Shared Services, Inc., PRIMEDIA Holdings III Inc., PRIMEDIA Information Inc., PRIMEDIA Magazines Inc., PRIMEDIA Magazine Finance Inc., PRIMEDIA Special Interest Publications Inc., PRIMEDIA Leisure Group Inc. and PRIMEDIA Specialty Group Inc. eliminate a director's personal liability for monetary damages to the company and its stockholders arising from a breach of a director's fiduciary duty, other than for a breach of a director's duty of loyalty or for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, and except as otherwise provided under the DGCL. (b) Cover Concepts Marketing Services, LLC and MediaCentral LLC Cover Concepts Marketing Services, LLC and MediaCentral LLC (each, a "Company") are permitted by section 18-108 of the Delaware Limited Liability Company Act, subject to the procedures and limitations stated therein, to indemnify any person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding in which such person is made a party by reason of his being or having been a director, officer, employee or agent of the Company. The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any agreement, vote of members or disinterested directors or otherwise. The limited liability company agreement of Cover Concepts Marketing Services, LLC and MediaCentral LLC permit indemnification by the company for any loss, damage, cost or expense by reason of any act or omission performed or omitted by a manager on behalf of the company and in a manner believed to be within the scope of his or her authority, subject to certain exceptions. (c) Bowhunter Magazine, Inc. and PRIMEDIA Enthusiast Publications, Inc. Subchapter D of Chapter 17 of the Pennsylvania Business Corporation Law of 1988 (the "PBCL" or "Pennsylvania Law") contains provisions for mandatory and discretionary indemnification of a corporation's directors, officers, employees and agents, and related matters, which are summarized below. Under Section 1741, subject to certain limitations, a corporation has the power to indemnify directors, officers and other parties under certain prescribed circumstances against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative, to which any of them is a party or threatened to be made a party by reason of his being a representative of the corporation or serving at the request of the corporation as a representative of another corporation, partnership, joint venture, trust or other enterprise, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. Section 1742 provides for indemnification with respect to derivative actions similar to that provided by Section 1741. However, indemnification is not provided under Section 1742 in respect of any claim, issue or matter as to which a party has been adjudged to be liable to the corporation unless and only to the extent that the proper court determines upon application that, despite the adjudication of liability II-2 but in view of all the circumstances of the case, the party is fairly and reasonably entitled to indemnity for the expenses that the court deems proper. Section 1743 provides that indemnification against expenses is mandatory to the extent that a party has been successful on the merits or otherwise in defense of any such action or proceeding referred to in Section 1741 or 1742. Section 1744 provides that unless ordered by a court, any indemnification under Section 1741 or 1742 shall be made by the corporation as authorized in the specific case upon a determination that indemnification of a party is proper because the party met the applicable standard of conduct, and such determination will be made by (i) the board of directors by a majority vote of a quorum of directors not parties to the action or proceeding; (ii) if a quorum is not obtainable or if obtainable and a majority of disinterested directors so directs, by independent legal counsel in a written opinion; or (iii) by the shareholders. Section 1745 provides that expenses incurred by a parties in defending any action or proceeding referred to in Subchapter D of Chapter 17 of the PBCL may be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the party to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation. Section 1746 provides generally that except in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness, the indemnification and advancement of expenses provided by Subchapter D of Chapter 17 of the PBCL shall not be deemed exclusive of any other rights to which a Representative seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding that office. The by-laws of Bowhunter Magazine, Inc. and PRIMEDIA Enthusiast Publications, Inc. provide that, to the fullest extent permitted by the PBCL, as amended from time to time, will indemnify any and current or former directors or officers, and may indemnify any current or former employee or agents, from and against any and all of the expenses, liabilities, or other matters referred to in the PBCL. (d) Communication Concepts, Inc. Subsection 1 of Section 78.7502 of the Nevada General Corporation Law (the "NGCL") empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative (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 or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Subsection 2 of Section 78.7502 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action 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 acted in any of the capacities set forth above against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted under similar standards, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged II-3 by a court of competent jurisdiction to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which such action or suit was brought determines that, despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Section 78.7502 further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (1) and (2), or in the defense of the claim, issue or matter, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him. Section 78.751 of the NGCL provides that the indemnification provided for by Section 78.7502 shall not be deemed exclusive or exclude any other rights to which the indemnified party may be entitled and that the scope of indemnification shall continue as to directors, officers, employees or agents who have ceased to hold such positions, and to their heirs, executors and administrators. Article VI of the Articles of Incorporation of Communication Concepts, Inc. provides that, to the fullest extent permitted by the NGCL, as amended from time to time, the company will indemnify its directors from and against any and all of the expense, liabilities or other matters referred to in the NGCL. Article VI further provides that a director shall not be liable for damages for actions of the corporation to stockholder or to any other person (natural or otherwise) unless such director engages in personal fraud affecting such action or actions of the corporation. (e) Cowles History Group, Inc. Cowles History Group, Inc. is permitted by sections 13.1-697 and 13.1-702 of the Virginia Stock Corporation Act ("VSCA"), subject to the procedures and limitations stated therein and in section 13.1-701, to indemnify directors, officers, employees, and agents in civil or criminal actions if they acted in good faith and believed their conduct to be in the best interests of the corporation and, in the case of criminal actions, had no reasonable cause to believe that the conduct was unlawful. Article X of Cowles History Group, Inc.'s Articles of Incorporation states that no director shall be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty to the extent allowable by the VSCA provided that (1) the director did not breach his duty of loyalty to the corporation or its shareholders, (2) the director did not act in good faith or knowingly violated the law, or (3) the director did not derive an improper personal benefit from his actions. (f) Symbol of Excellence Publishers, Inc. Sections 10-2B-8.51 and 10-2B-8.56 of the Code of Alabama gives a corporation power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, against expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement reasonably incurred by him in connection with such action, suit or proceeding. Indemnification is only allowed if the person acted in good faith and in a manner he reasonably believed to be in the best interests of the corporation, when acting in his or her official capacity with the corporation, or, in all other cases, not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The same sections also give a corporation power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by or in the right of the corporation, against expenses (including attorneys' fees) reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in the best interests of the corporation, when acting in his or her official capacity with the corporation or, in all other cases, not opposed to the best interests of the corporation. No indemnification shall be made, however, in respect of any claim, issue or matter as to which such person shall have not met the applicable standard of conduct, shall have been adjudged to be liable to the corporation or, in connection with any other action, suit or proceeding charging II-4 improper personal benefit to such person, if such person was adjudged liable on the basis that personal benefit was improperly received by him, 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, the person is fairly and reasonably entitled to indemnity for expenses which the court shall deem proper. Section 10-2B-8.52 further states that, to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any such action, suit or proceeding, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) reasonably incurred by him in connection therewith, notwithstanding that he has not been successful on any other claim, issue or matter in any such action, suit or proceeding. As permitted by the Code of Alabama, the by-laws of Symbol of Excellence Publishers, Inc. provide that, to the fullest extent permitted by the Code of Alabama, as amended from time to time, the company will indemnify any and current or former directors or officers, and may indemnify any current or former employee or agents, from and against any and all of the expenses, liabilities, or other matters referred to in the Code of Alabama. (g) The Virtual Flyshop, Inc. Article 7-109 of the Colorado Business Corporation Act ("CBCA") authorizes the indemnification of directors and officers against liability incurred by reason of being a director or officer and against expenses (including attorney's fees), judgments, fines and amounts paid in settlement and reasonably incurred in connection with any action seeking to establish liability. In the case of third-party claims, if the officer or director acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and in the case of actions by or in the right of the corporation, if the officer or director acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and if the officer or director shall not have been adjudged liable to the corporation, the CBCA authorizes indemnification unless a court otherwise determines that this would contravene public policy. Indemnification is also authorized with respect to any criminal action or proceeding where the officer or director also had no reasonable cause to believe his conduct was unlawful. As permitted by the CBCA, Article VII(c) of the Articles of Incorporation and the by-laws of The Virtual Flyshop, Inc. provide that, to the fullest extent permitted by the CBCA, as amended from time to time, the company will indemnify any and current or former directors or officers, and may indemnify any current or former employee or agents, from and against any and all of the expenses, liabilities, or other matters referred to in the CBCA. (h) Go Lo Entertainment, Inc., Horse & Rider, Inc., IntelliChoice, Inc., Kagan Media Appraisals, Inc., Kagan Seminars, Inc., Low Rider Publishing Group, Inc., McMullen Argus Publishing, Inc., Miramar Communications, Inc. and PRIMEDIA Membership Clubs Inc. Section 317 of the California General Corporations Law ("CGCL") authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers who are parties or are threatened to be made parties to any proceeding (with certain exceptions) by reason of the fact that the person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the proceeding if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation. Section 317 of the CGCL does not extend to acts or omissions of a director in his capacity as an officer. Further, section 317 has no effect on claims arising under federal or state securities laws and does not affect the availability of injunctions and other equitable remedies available to its shareholders for any violation of a director's fiduciary duty to the corporation or its shareholders. II-5 Section 204 of the CGCL provides that the limitation on liability in section 317 has no effect on a director's liability (a) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (b) for acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (c) for any transaction from which a director derived an improper personal benefit, (d) for acts or omissions that show a reckless disregard for the director's duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of a serious injury to the corporation or its shareholders, (e) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the corporation or its shareholders, (f) under Section 310 of the law (concerning contracts or transactions between the corporation and a director), or (g) under Section 316 of the law (directors' liability for improper dividends, loans and guarantees). The certificate of incorporations and/or bylaws of Go Lo Entertainment, Inc., Horse & Rider, Inc., IntelliChoice, Inc., Low Rider Publishing Group, Inc., McMullen Argus Publishing, Inc. and PRIMEDIA Membership Clubs Inc. provide for the mandatory indemnification of their directors and officers, and the discretionary indemnification of their employees and other agents, to the maximum extent permitted by the CGCL. The certification of incorporation and by-laws of Miramar Communications, Inc. do not have such a provision, but the board of directors may still indemnify directors pursuant to the CGCL. (i) Simba Information, Inc. Section 33-771 of the Connecticut Stock Corporation Act ("CSCA") authorizes a corporation to indemnify a director who is sued in his official capacity as long as (1) he conducted himself in good faith and (2) he reasonably believed that his official conduct was in the best interests of the corporation or that his conduct was not opposed to the best interests of the corporation. Indemnification is also available in the case of a criminal proceeding if the director had no reasonable cause to believe that his conduct was unlawful. Section 33-772 mandates that a corporation indemnify against reasonable expenses incurred by a director who is wholly successful, on the merits or otherwise, in defense of any proceeding to which he was a party because of his position as a director of the corporation. Section 33-779 of the CSCA limits the provision of indemnification solely to the conditions as specified by the CSCA. Section 33-778 of the CSCA provides that a corporation may obligate itself in advance to provide indemnification according to the requirements of Section 33-771 by a provision in its certificate of incorporation or by-laws or in a resolution approved by the board of directors or shareholders. Simba Information, Inc. contains such a provision in Article V of its by-laws, which states that the corporation will be bound and comply with the provisions of the CSCA pertaining to indemnification of corporate shareholders, officers, directors, employees, agents, and other eligible parties. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits
EXHIBIT NUMBER DESCRIPTION - --------------------- ----------- 2.1 Agreement and Plan of Merger among PRIMEDIA Inc., Abracadabra Acquisition Corporation and About. com, Inc. dated as of October 29, 2000. (1) *2.2 Agreement regarding acquisition of EMAP, Inc. 4.1 10 1/4 % Senior Note Indenture (including form of note and form of guarantee). (2) 4.2 8 1/2% Senior Note Indenture (including form of note and form of guarantee). (3)
II-6
EXHIBIT NUMBER DESCRIPTION - --------------------- ----------- 4.3 Form of Class D Subordinated Debenture Indenture (including form of debenture). (4) 4.4 Form of Class F Subordinated Debenture Indenture (including form of debenture). (5) 4.5 Form of Class H Subordinated Debenture Indenture (including form of debenture). (6) 4.6 7 5/8% Senior Note Indenture (including form of note and form of guarantee). (7) **4.7 Indenture, dated as of May 8, 2001, by and among PRIMEDIA Inc., certain of its subsidiaries and The Bank of New York. **4.8 Form of 8 7/8% Senior Note due 2011 (included in Exhibit 4.7). **4.9 Registration Rights Agreement, dated as of May 8, 2011 by and among PRIMEDIA Inc., certain of its subsidiaries and Salomon Smith Barney Inc., on behalf of the other underwriters. **5.1 Opinion of Simpson Thacher & Bartlett as to the legality of the securities being registered. **10.1 Credit Agreement dated as of June 20, 2001 among PRIMEDIA Inc., various lending institutions, Bank of America N.A., as syndication agent, The Bank of New York and The Bank of Nova Scotia, as co-documentation agents and The Chase Manhattan Bank, as administrative agent. **10.2 Amended and Restated About.com, Inc. 1999 Employee Stock Purchase Plan. **12.1 Statement re Computation of Ratios. *21.1 Subsidiaries of PRIMEDIA. **23.1 Consent of Simpson Thacher & Bartlett (contained in Exhibit 5.1). *23.2 Consent of Deloitte & Touche LLP. *23.3 Consent of Ernst & Young LLP. **24.1 Power of Attorney. *25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York as Trustee. **99.1 Form of Letter of Transmittal. **99.2 Form of Notice of Guaranteed Delivery. **99.3 Form of Exchange Agent Agreement between The Bank of New York and PRIMEDIA to be used in connection with the exchange offer.
- ------------------------ * Filed herein ** Previously filed. (1) Incorporated by reference to Exhibit 2.1 filed with PRIMEDIA Inc.'s Registration Statement on Form S-4 (Registration No. 333-51432). (2) Incorporated by reference to Exhibit 4.4 to K-III Communication Corporation's Annual Report on Form 10-K for year ended December 31, 1994 (Registration No. 1-11106). (3) Incorporated by reference to Exhibit 4.1 to K-III Communication Corporation's Registration Statement on Form S-4 (Registration No. 333-03691). (4) Incorporated by reference to Exhibit 4.2 to K-III Communication Corporation's Registration Statement on Form S-4 (Registration No. 333-03691). (5) Incorporated by reference to Exhibit 4.1 to K-III Communication Corporation's Registration Statement on Form S-4 (Registration No. 333-38451). II-7 (6) Incorporated by reference to Exhibit 4.2 filed with PRIMEDIA Inc.'s Registration Statement on Form S-4 (Registration No. 333-51891). (7) Incorporated by reference to Exhibit 4.1 filed with PRIMEDIA Inc.'s Registration Statement on Form S-4 (Registration No. 333-51891). ITEM 22. UNDERTAKINGS The undersigned registrants hereby undertake: (1) To file, during any period in which offers or sales of the registered securities 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 he information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low and high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan distribution not previously disclosed in the registration statement or any material change in such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, 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 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 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) 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-8 Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer of controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-9 SIGNATURES Pursuant to the requirements of the Securities Act, the registrants have duly caused this Pre-Effective Amendment No. 1 to this Form S-4 Registration Statement to be signed on their behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on September 10, 2001. PRIMEDIA INC. By: /s/ BEVERLY C. CHELL ----------------------------------------- (Beverly C. Chell) VICE CHAIRMAN AND SECRETARY
Adams/Intertec International, Inc. Adams/Laux Company, Inc. Bacon's Information, Inc. Bowhunter Magazine, Inc. Canoe & Kayak, Inc. Channel One Communications Corporation Climbing, Inc. Communication Concepts, Inc. Cover Concepts Marketing Services, LLC Cowles History Group, Inc. CSK Publishing Company, Inc. ENO Productions, Inc. Films for the Humanities & Sciences, Inc. Game & Fish Publications, Inc. Go Lo Entertainment, Inc. Haas Publishing Companies, Inc. Hacienda Productions, Inc. HPC Brazil, Inc. Horse & Rider, Inc. IntelliChoice, Inc. PRIMEDIA Business Magazines & Media Inc. Kagan Media Appraisals, Inc. Kagan Seminars, Inc. Kagan World Media, Inc. Kitplanes Acquisition Company Low Rider Publishing Group, Inc. McMullen Argus Publishing, Inc. MediaCentral LLC Miramar Communications Inc. Paul Kagan Associates, Inc. PRIMEDIA Companies Inc. PRIMEDIA Enterprises, Inc. PRIMEDIA Finance Shared Services Inc. PRIMEDIA Holdings III Inc. PRIMEDIA Information Inc. PRIMEDIA Magazines Inc. PRIMEDIA Magazine Finance Inc. PRIMEDIA Special Interest Publications Inc. PRIMEDIA Workplace Learning LP PRIMEDIA Enthusiast Publications, Inc. Simba Information, Inc. Symbol of Excellence Publishers, Inc. The Virtual Flyshop, Inc. PRIMEDIA Leisure Group Inc. PRIMEDIA Specialty Group Inc. PRIMEDIA Membership Clubs Inc. Liberty Management Corporation Liberty Productions, Inc. Pro Associates New Car Shows, Inc. Auto Dealer Services, Inc. By: /s/ BEVERLY C. CHELL ----------------------------------------- (Beverly C. Chell) SECRETARY
II-10 Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective Amendment No. 1 to this Form S-4 Registration Statement has been signed below by the following persons in the capacities indicated on September 10, 2001.
NAME TITLE DATE ---- ----- ---- * ------------------------------------------- Chief Executive Officer and September 10, 2001 (Thomas S. Rogers) Director * ------------------------------------------- Chief Financial Officer September 10, 2001 (Lawrence R. Rutkowski) * ------------------------------------------- Controller September 10, 2001 (Robert J. Sforzo) * ------------------------------------------- Director September 10, 2001 (Charles G. McCurdy) * ------------------------------------------- Director September 10, 2001 (Beverly C. Chell) * ------------------------------------------- Director September 10, 2001 (Meyer Feldberg) * ------------------------------------------- Director September 10, 2001 (Henry R. Kravis) * ------------------------------------------- Director September 10, 2001 (George R. Roberts) * ------------------------------------------- Director September 10, 2001 (Michael T. Tokarz) * ------------------------------------------- Director September 10, 2001 (Perry Golkin) * ------------------------------------------- Director September 10, 2001 (H. John Greeniaus) * ------------------------------------------- Director September 10, 2001 (Scott P. Kurnit)
II-11
NAME TITLE DATE ---- ----- ---- * ------------------------------------------- Director September 10, 2001 (David Bell)
*By Power of Attorney /s/ BEVERLY C. CHELL ------------------------------------------- Attorney-in-fact September 10, 2001 Beverly C. Chell
II-12 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - --------------------- ----------- 2.1 Agreement and Plan of Merger among PRIMEDIA Inc., Abracadabra Acquisition Corporation and About. com, Inc. dated as of October 29, 2000. (1) *2.2 Agreement regarding acquisition of EMAP, Inc. 4.1 10 1/4 % Senior Note Indenture (including form of note and form of guarantee). (2) 4.2 8 1/2% Senior Note Indenture (including form of note and form of guarantee). (3) 4.3 Form of Class D Subordinated Debenture Indenture (including form of debenture). (4) 4.4 Form of Class F Subordinated Debenture Indenture (including form of debenture). (5) 4.5 Form of Class H Subordinated Debenture Indenture (including form of debenture). (6) 4.6 7 5/8% Senior Note Indenture (including form of note and form of guarantee). (7) **4.7 Indenture, dated as of May 8, 2001, by and among PRIMEDIA Inc., certain of its subsidiaries and The Bank of New York. **4.8 Form of 8 7/8% Senior Note due 2011 (included in Exhibit 4.7). **4.9 Registration Rights Agreement, dated as of May 8, 2011 by and among PRIMEDIA Inc., certain of its subsidiaries and Salomon Smith Barney Inc., on behalf of the other underwriters. **5.1 Opinion of Simpson Thacher & Bartlett as to the legality of the securities being registered. **10.1 Credit Agreement dated as of June 20, 2001 among PRIMEDIA Inc., various lending institutions, Bank of America N.A., as syndication agent, The Bank of New York and The Bank of Nova Scotia, as co-documentation agents and The Chase Manhattan Bank, as administrative agent. **10.2 Amended and Restated About.com, Inc. 1999 Employee Stock Purchase Plan. **12.1 Statement re Computation of Ratios. *21.1 Subsidiaries of PRIMEDIA. **23.1 Consent of Simpson Thacher & Bartlett (contained in Exhibit 5.1). *23.2 Consent of Deloitte & Touche LLP. *23.3 Consent of Ernst & Young LLP. **24.1 Power of Attorney. *25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York as Trustee. **99.1 Form of Letter of Transmittal. **99.2 Form of Notice of Guaranteed Delivery. **99.3 Form of Exchange Agent Agreement between The Bank of New York and PRIMEDIA to be used in connection with the exchange offer.
- ------------------------ * Filed herein ** Previously filed (1) Incorporated by reference to Exhibit 2.1 filed with PRIMEDIA Inc.'s Registration Statement on Form S-4 (Registration No. 333-51432). (2) Incorporated by reference to Exhibit 4.4 to K-III Communication Corporation's Annual Report on Form 10-K for year ended December 31, 1994 (Registration No. 1-11106). (3) Incorporated by reference to Exhibit 4.1 to K-III Communication Corporation's Registration Statement on Form S-4 (Registration No. 333-03691). (4) Incorporated by reference to Exhibit 4.2 to K-III Communication Corporation's Registration Statement on Form S-4 (Registration No. 333-03691). (5) Incorporated by reference to Exhibit 4.1 to K-III Communication Corporation's Registration Statement on Form S-4 (Registration No. 333-38451). (6) Incorporated by reference to Exhibit 4.2 filed with PRIMEDIA Inc.'s Registration Statement on Form S-4 (Registration No. 333-51891). (7) Incorporated by reference to Exhibit 4.1 filed with PRIMEDIA Inc.'s Registration Statement on Form S-4 (Registration No. 333-51891). EX-2.2 3 a2058719zex-2_2.txt EXHIBIT 2.2 EXHIBIT 2.2 EXECUTION COPY ================================================================================ STOCK PURCHASE AGREEMENT Dated as of July 1, 2001 Among EMAP PLC, EMAP AMERICA PARTNERS, EMAP, INC. And PRIMEDIA INC. ================================================================================ TABLE OF CONTENTS PAGE ARTICLE I PURCHASE AND SALE OF THE SHARES; CLOSING; AND POST-CLOSING PURCHASE PRICE ADJUSTMENT SECTION 1.01. Purchase and Sale of the Shares................................1 SECTION 1.02. Certain Transfers of Assets....................................1 SECTION 1.03. Closing Date...................................................3 SECTION 1.04. Transactions To Be Effected at the Closing.....................3 SECTION 1.05. Exclusion of Liabilities.......................................4 SECTION 1.06. Partial Transfer...............................................4 SECTION 1.07. Post-Closing Purchase Price Adjustment.........................5 ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER SECTION 2.01. Organization and Standing of Parent and Seller.................9 SECTION 2.02. Capital Stock of the Company and its Subsidiaries..............9 SECTION 2.03. Authority; Execution and Delivery; Enforceability.............10 SECTION 2.04. No Conflicts or Violations; No Consents or Approvals Required.10 SECTION 2.05. The Shares....................................................11 SECTION 2.06. Benefit Plans.................................................12 SECTION 2.07. Financial Statements..........................................13 SECTION 2.08. Assets Other than Real Property Interests.....................14 SECTION 2.09. Real Property.................................................14 SECTION 2.10. Intellectual Property.........................................15 SECTION 2.11. Contracts.....................................................16 SECTION 2.12. Permits.......................................................18 SECTION 2.13. Taxes.........................................................19 SECTION 2.14. Litigation....................................................20 SECTION 2.15. Absence of Changes or Events..................................21 SECTION 2.16. Compliance with Applicable Laws...............................21 SECTION 2.17. Voting Requirements...........................................21 SECTION 2.18. No Barter Receivables or Obligations..........................21 SECTION 2.19. Transactions with Affiliates..................................22 SECTION 2.20. Warrants......................................................22 Contents, p. 2 ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER SECTION 3.01. Organization and Standing.....................................22 SECTION 3.02. Authority; Execution and Delivery; Enforceability.............22 SECTION 3.03. No Conflicts or Violations; No Consents or Approvals Required.23 SECTION 3.04. Proceedings...................................................24 SECTION 3.05. Securities Act................................................24 SECTION 3.06. No Knowledge of Misrepresentations or Omissions...............24 SECTION 3.07. Voting Requirements...........................................24 SECTION 3.08. Capital Stock of Purchaser and its Subsidiaries...............25 SECTION 3.09. SEC Documents; Undisclosed Liabilities........................25 ARTICLE IV COVENANTS SECTION 4.01. Covenants Relating to Conduct of Business.....................26 SECTION 4.02. Access to Information.........................................28 SECTION 4.03. Confidentiality ..............................................28 SECTION 4.04. Efforts.......................................................29 SECTION 4.05. Brokers or Finders............................................31 SECTION 4.06. Employee Matters..............................................31 SECTION 4.07. Tax Matters...................................................33 SECTION 4.08. Publicity.....................................................38 SECTION 4.09. Resignations..................................................38 SECTION 4.10. No Use of Certain Names.......................................38 SECTION 4.11. Support Services..............................................39 SECTION 4.12. Litigation Matters............................................39 SECTION 4.13. Intercompany Arrangements.....................................40 SECTION 4.14. Accounts......................................................40 SECTION 4.15. Records.......................................................40 SECTION 4.16. Sub-Lease.....................................................41 SECTION 4.17. Certain Liabilities...........................................41 SECTION 4.18. Bank Accounts.................................................41 ARTICLE V CONDITIONS PRECEDENT SECTION 5.01. Conditions to Each Party's Obligation.........................42 SECTION 5.02. Conditions to Obligation of Purchaser.........................42 SECTION 5.03. Conditions to Obligation of Seller............................43 SECTION 5.04. Frustration of Closing Conditions.............................43 Contents, p. 3 ARTICLE VI TERMINATION, AMENDMENT AND WAIVER SECTION 6.01. Termination...................................................44 SECTION 6.02. Effect of Termination.........................................45 ARTICLE VII INDEMNIFICATION SECTION 7.01. Tax Indemnification...........................................45 SECTION 7.02. Other Indemnification by Seller...............................46 SECTION 7.03. Other Indemnification by Purchaser and the Company............47 SECTION 7.04. Indemnification Procedures....................................48 SECTION 7.05. Limitations on Indemnification................................50 SECTION 7.06. Calculation of Indemnity Payments.............................52 SECTION 7.07. Tax Treatment of Indemnification..............................52 SECTION 7.08. Audit Adjustments Relating to Income Taxes....................53 ARTICLE VIII GENERAL PROVISIONS SECTION 8.01. Assignment....................................................53 SECTION 8.02. No Third-Party Beneficiaries..................................53 SECTION 8.03. Expenses......................................................53 SECTION 8.04. Notices.......................................................54 SECTION 8.05. Headings; Certain Definitions.................................55 SECTION 8.06. Counterparts..................................................56 SECTION 8.07. Integrated Contract; Exhibits/Schedules.......................56 SECTION 8.08. Severability; Enforcement.....................................57 SECTION 8.09. Governing Law.................................................57 SECTION 8.10. Jurisdiction..................................................57 SECTION 8.11. Service of Process............................................58 SECTION 8.12. Waiver of Jury Trial..........................................58 SECTION 8.13. Amendments....................................................58 SECTION 8.14. Survival of Representations and Warranties....................58 SECTION 8.15. Further Assurances............................................58 SECTION 8.16. Joint and Several.............................................58 GLOSSARY OF DEFINED TERMS LOCATION OF DEFINITION DEFINED TERMS Acquisition......................................................Section 1.01 Actions..........................................................Section 4.12 Adjusted Purchase Price.......................................Section 1.07(c) Affected Employee.............................................Section 4.06(a) affiliate.....................................................Section 8.05(b) Agreement............................................................Preamble Ancillary Agreements.............................................Section 2.03 Applicable Law...................................................Section 2.04 Articles......................................................Section 8.05(a) Balance Sheet.................................................Section 2.07(a) BALBOA...............................................................Preamble business day..................................................Section 8.05(b) Closing..........................................................Section 1.03 Closing Date.....................................................Section 1.03 Closing Date Payment..........................................Section 1.04(b) Closing Working Capital.......................................Section 1.07(a) Code..........................................................Section 2.13(a) Commonly Controlled Entity....................................Section 2.06(c) Company..............................................................Preamble Company Benefit Plans.........................................Section 2.06(a) Company Contracts.............................................Section 2.11(c) Company Intellectual Property.................................Section 2.10(a) Company Material Adverse Effect...............................Section 8.05(b) Company Property.................................................Section 2.09 Company's 401(k) Plan.........................................Section 4.06(d) Confidentiality Agreement........................................Section 4.03 Consent..........................................................Section 2.04 Contract......................................................Section 1.02(d) Current Assets................................................Section 1.07(d) Current Liabilities...........................................Section 1.07(d) DOJ...........................................................Section 4.04(b) ERISA.........................................................Section 2.06(a) Elections.....................................................Section 4.07(k) Emap.............................................................Section 4.10 Employment Contracts..........................................Section 2.11(b) Environmental Laws............................................Section 2.16(b) Excluded Assets..................................................Section 1.02 Excluded Employees...............................................Section 1.02 Excluded Liabilities.............................................Section 1.05 Exhibits......................................................Section 8.05(a) FHM..............................................................Section 4.10 FHM Business.....................................................Section 1.02 FHM Intellectual Property.....................................Section 1.02(e) FTC...........................................................Section 4.04(b) Financial Statements..........................................Section 2.07(a) First Union...................................................Section 1.07(g) Form 8023..................................................Section 4.07(k)(i) GAAP..........................................................Section 2.07(a) Governmental Entity..............................................Section 2.04 HSR Act..........................................................Section 2.04 Glossary, p 2 Income Tax....................................................Section 2.13(a) Income Taxes..................................................Section 2.13(a) includes......................................................Section 8.05(b) including.....................................................Section 8.05(b) Indemnified Party.............................................Section 7.04(a) Indemnifying Party............................................Section 7.04(a) Independent Expert.........................................Section 1.07(b)(2) Intellectual Property.........................................Section 2.10(c) IRS...........................................................Section 2.06(a) Judgment.........................................................Section 2.04 knowledge of the Company......................................Section 8.05(b) Leased Property..................................................Section 2.09 Legal Restraint...............................................Section 5.01(b) Letter of Credit..............................................Section 1.07(g) Liens.........................................................Section 2.08(a) Losses...........................................................Section 7.02 Metro............................................................Section 4.10 Names............................................................Section 4.10 Notice of Objection........................................Section 1.07(b)(1) Outside Date.....................................................Section 6.01 Parent...............................................................Preamble Pension Plan..................................................Section 2.06(a) Permits..........................................................Section 2.12 Permitted Liens...............................................Section 2.08(a) person........................................................Section 8.05(b) Post-Closing Tax Period.......................................Section 4.07(f) Pre-Closing Tax Period........................................Section 2.13(a) Prime Lease......................................................Section 4.16 Proceeding.......................................................Section 2.14 Pro Forma Financial Statements................................Section 2.07(c) Purchase Price...................................................Section 1.01 Purchase Entities.....................................................4.07(k) Purchaser............................................................Preamble Purchaser Indemnitees.........................................Section 7.01(a) Purchaser Material Adverse Effect................................Section 3.01 Purchaser SEC Document...........................................Section 3.09 Purchaser Shares.................................................Section 3.08 Purchaser Tax Act.............................................Section 7.01(a) Purchaser Welfare Plans.......................................Section 4.06(e) Purchaser's Accountants....................................Section 1.07(b)(1) Records.......................................................Section 1.02(c) Schedules.....................................................Section 8.05(a) Sections......................................................Section 8.05(a) Seller...............................................................Preamble Seller Indemnitees............................................Section 7.01(b) Shares...............................................................Recitals Shares Purchase Price.........................................Section 1.07(c) Statement.....................................................Section 1.07(a) Straddle Period............................................Section 4.07(b)(i) Sub-Lease........................................................Section 4.16 subsidiary....................................................Section 8.05(b) Target Working Capital........................................Section 1.07(c) Tax...........................................................Section 2.13(a) Glossary, p 3 Tax Claim.....................................................Section 7.04(b) Taxes.........................................................Section 2.13(a) Tax Indemnified Party.........................................Section 7.04(b) Tax Indemnifying Party........................................Section 7.04(b) Tax Return....................................................Section 2.13(a) Taxing Authority..............................................Section 2.13(a) Third Party Claim.............................................Section 7.04(a) Transfer Taxes................................................Section 2.13(a) Transition Services Agreement....................................Section 2.03 ..............................................................Section 4.07(k) Warrant Agreement.............................................Section 1.04(c) Warrants.........................................................Section 1.01 Welfare Plan..................................................Section 2.06(a) Working Capital...............................................Section 1.07(d) Exhibit A-Form of Transition Services Agreement Exhibit B-Form of Sub-Lease Agreement Exhibit C-Warrant Term Sheet STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT dated as of July 1, 2001 (this "AGREEMENT"), among EMAP PLC ("PARENT"), a corporation organized under the laws of the United Kingdom, EMAP AMERICA PARTNERS, a Delaware general partnership ("SELLER"), EMAP, INC., a Delaware corporation and a wholly owned subsidiary of Seller ("BALBOA" and, excluding the FHM Business (as defined below), the "COMPANY") and PRIMEDIA INC., a Delaware corporation ("PURCHASER"). Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser, all the issued and out standing shares of common stock, par value $0.01 per share (the "SHARES"), of the Company on the terms and conditions set forth in this Agreement. Accordingly, the parties hereby agree as follows: ARTICLE I PURCHASE AND SALE OF THE SHARES; CLOSING; AND POST-CLOSING PURCHASE PRICE ADJUSTMENT SECTION 1.01. PURCHASE AND SALE OF THE SHARES. On the terms and subject to the conditions of this Agreement, at the Closing (as defined in Section 1.03), Seller shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase from Seller, the Shares for an aggregate purchase price of $505,000,000 plus warrants to purchase 2,000,000 shares of Purchaser's common stock on substantially the terms set forth on Exhibit C hereto (the "WARRANTS") (collectively, the "PURCHASE PRICE"), subject to adjustment as provided in Section 1.07. Purchaser shall pay the Purchase Price on the Closing Date (as defined in Section 1.03) by wire transfer of immediately available funds to accounts designated in writing by Seller one business day before the Closing Date and by delivery of the Warrants. The purchase of the Shares is referred to herein as the "ACQUISITION". SECTION 1.02. CERTAIN TRANSFERS OF ASSETS. Prior to the Closing, Seller shall effect such transfers as are necessary to remove all Excluded Assets and all excluded employees as set forth on Schedule 1.01(a) (the "EXCLUDED EMPLOYEES") from the Company and the Excluded Assets shall 2 not be sold, conveyed or delivered to Purchaser and the Excluded Employees shall no longer be employed by the Company and its subsidiaries after the Closing. Notwith standing anything in this Agreement to the contrary, the term "COMPANY", or any derivation thereof, including the phrases "the Company or its subsidiaries" or "the Company and its subsidiaries" shall be deemed to not include, in any way, the Excluded Assets or the Excluded Employees prior to or after such transfers. As used in this Agreement the term "EXCLUDED ASSETS" shall mean (i) all cash or cash equivalents and (ii) all the right, title and interest in the properties, assets, goodwill and rights of whatever kind and nature, real or personal, tangible or intangible, that are owned, leased or licensed by Balboa or its subsidiaries and used or held for use primarily in the operation or conduct of the business of producing, marketing or distributing the FHM magazine and the FHM digital services (the "FHM BUSINESS"), including: (a) office and other supplies and vehicles and equipment used or held for use primarily in connection with the operation or conduct of the FHM Business; (b) the inventories of the FHM Business, and raw materials, wrappings, supply and packaging items relating thereto; (c) all books of account, ledgers, general, financial, accounting and personnel records, files, customers and suppliers lists, prospect lists, sub scription or circulation lists, sales and promotional literature, customer and supplier correspondence, manuals, files, data, papers, personnel and employment records and other information, whether in hard copy or computer or other format (collectively "RECORDS"), in each case primarily relating to the FHM Business; (d) any contract, lease, sublease, license, agreement, purchase order or other commitment or arrangement, written or unwritten, ("CONTRACT") that is used or held for use primarily in the operation or conduct of the FHM Business; (e) all Intellectual Property (as defined in Section 2.10(c)) primarily relating to the FHM Business, including the Intellectual Property listed on Schedule 1.01(e)(the "FHM INTELLECTUAL PROPERTY"); (f) all Permits that are used or held for use primarily in the conduct or operation of the FHM Business; 3 (g) all receivables constituting the right to receive payments in respect of goods or services as and to the extent arising out of or relating to the operation or conduct of the FHM Business; (h) all goodwill generated by or associated with the FHM Business; (i) all credits, prepaid expenses, deferred charges, advance payments, security deposits and pre paid items as and to the extent used or held for use in, or that arise out of, the operation or conduct of the FHM Business; (j) all other tangible and intangible assets of Balboa and its subsidiaries primarily related to the FHM Business; and (k) all subscriptions in connection with the FHM Business, including subscriptions for the FHM magazine and the FHM digital services. SECTION 1.03. CLOSING DATE. The closing of the Acquisition (the "CLOSING") shall take place at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019, at 10:00 a.m. on the second business day following the satisfaction (or, to the extent permitted, the waiver) of the conditions set forth in Article V, or at such other place, time and date as may be agreed by Seller and Purchaser. The date on which the Closing occurs is referred to in this Agreement as the "CLOSING DATE". The Closing shall be deemed to be effective as of the close of business on the Closing Date. SECTION 1.04. TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At the Closing: (a) Seller shall deliver to Purchaser certificates representing the Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in blank in proper form for transfer and with all necessary stock transfer stamps attached thereto and canceled; (b) Purchaser shall deliver to Seller, in the manner set forth in Section 1.01, immediately available funds in an amount equal to the cash portion of the Purchase Price plus or minus an estimate, reasonably prepared by Seller and delivered to Purchaser at least two business days prior to the Closing Date, of any adjustment to the Purchase Price under Section 1.07 (the cash portion of the Purchase Price plus or minus 4 such estimate of any adjustment under Section 1.07 being hereinafter called the "CLOSING DATE PAYMENT"); (c) Purchaser shall deliver the Warrants to Seller, and a duly executed Warrant Agreement (the "WARRANT AGREEMENT") substantially on the terms set forth in Exhibit C hereto; and (d) at the option of Purchaser, the shares of Emap Digital shall be transferred to any affiliate of Purchaser at the Closing. SECTION 1.05. EXCLUSION OF LIABILITIES. Notwith standing any provisions of this Agreement to the contrary, the Excluded Liabilities shall not be assumed by Purchaser and all such Excluded Liabilities shall be retained by and shall be obligations and commitments of Parent and its sub sidiaries (other than the Company and its subsidiaries). Notwithstanding anything in this Agreement to the contrary, the term "Company," or any derivation thereof, including the phrases "the Company or its subsidiaries" or "the Company and its subsidiaries" shall be deemed to not include, in any way, the Excluded Liabilities prior to or after such trans fers. As used in this Agreement, the term "EXCLUDED LIABILITIES" shall mean any liability, obligation or commitment of Balboa or its subsidiaries that relates primarily to, or arises primarily out of any Excluded Asset or arises out of the distribution of such Excluded Asset to Parent or its subsidiaries (except the Company or its sub sidiaries) in accordance with the first sentence of Section 1.02. SECTION 1.06. PARTIAL TRANSFER. In the case of Contracts that do not constitute Excluded Assets, but which relate to the FHM Business, the parties hereto shall use their reasonable best efforts to assign to Parent or its subsidiaries (other than the Company or its subsidiaries) that portion of such Contracts as and to the extent it relates to the FHM Business. In the event that such assignments cannot be obtained, Purchaser and Parent shall use reasonable best efforts to effect such alternative arrangements as may be required to ensure that the FHM Business is provided with the services or licenses that are the subject of such Contracts by a vendor reasonably acceptable to Parent and in substantially the same manner as provided to the FHM Business prior to the Closing Date. The cost for any such service or the fee for any such license shall be paid by the FHM Business in accordance with the Transition Services Agreement. The set-up cost, if any, for engaging any such alternative arrangement shall be shared equally by the FHM Business and Purchaser. In furtherance 5 and not in limitation of the foregoing, it is understood and agreed that the Contracts set forth on Schedule 1.06(a) shall be subject to this Section 1.06. SECTION 1.07. POST-CLOSING PURCHASE PRICE ADJUSTMENT. (a) THE STATEMENT. Within 60 days after the Closing Date, Parent shall prepare and deliver to Purchaser a statement (the "STATEMENT"), setting forth the Working Capital (as defined in Section 1.07(d)) as of the close of business at the end of the day immediately preceding the Closing Date ("CLOSING WORKING CAPITAL") determined in accordance with the accounting principles, practices, methodologies and policies used in the preparation of the Balance Sheet (as defined in Section 2.07)(except as provided on Schedule 1.07). After the Closing Date, Purchaser shall assist, and shall cause the Company and its subsidiaries to assist, Parent and its representatives in the preparation of the Statement and shall provide Parent and its representatives any information reasonably requested and shall provide them access at all reasonable times to the personnel, properties, books and records of the Company and its subsidiaries for such purpose. (b) OBJECTIONS; RESOLUTION OF DISPUTES. (1) Unless Purchaser notifies Parent in writing within 30 days after Parent's delivery of the Statement of any objection to any component of the computation of Closing Working Capital set forth therein (the "NOTICE OF OBJECTION"), such computation shall be final and binding. During such 30-day period Purchaser and its representatives shall be permitted to review the working papers of Parent relating to the Statement. Any Notice of Objection shall specify in reasonable detail the basis for the objections set forth therein and shall include a special purpose report of Deloitte & Touche ("PURCHASER'S ACCOUNTANTS") stating that they concur with the matters set forth in such Notice of Objection and that such Notice of Objection has been prepared in accordance with this Section 1.07. Any Notice of Objection shall include only objections based on (i) mathematical errors in the computation of Closing Working Capital or (ii) Closing Working Capital not having been calculated in accordance with the consistent application of the accounting principles, practices, methodologies and policies used in the preparation of the Balance Sheet (after taking into consideration the provisions of Schedule 1.07). Parent and Purchaser acknowledge that (i) the sole purpose of the determination of Closing Working Capital is to adjust the Closing Date Payment so as to reflect the change in Working Capital resulting only from the operation of the business of the Company and its subsidiaries and (ii) such change can be 6 measured only if the calculation is done using the same accounting principles, practices, methodologies and policies as those used in preparing the Balance Sheet (except as provided on Schedule 1.07). (2) If Purchaser provides the Notice of Objection to Parent within such 30-day period, Purchaser and Parent shall, during the 15-day period following Parent's receipt of the Notice of Objection, attempt in good faith to resolve Purchaser's objections. During such 15-day period, Parent and its representatives shall be permitted to review the working papers of Purchaser and Purchaser's Accountants relating to the Notice of Objection and the basis therefor. If Purchaser and Parent are unable to resolve all such objections within such 15-day period, the matters remaining in dispute shall be submitted to Arthur Andersen (or, if such firm declines to act, to another nationally recognized public accounting firm mutually agreed upon by Purchaser and Parent and, if Purchaser and Parent are unable to so agree within 10 days after the end of such 15-day period, then Purchaser and Parent shall each select such a firm and such firms shall jointly select a third nationally recognized firm to resolve the disputed matters (such determining firm being the "INDEPENDENT EXPERT")). The parties shall instruct the Independent Expert to render its written decision as promptly as practicable but in no event later than 30 days after its selection. The resolution of disputed items by the Independent Expert shall be final and binding, and the determination of the Independent Expert shall constitute an arbitral award that is final, binding and non-appealable and upon which a judgment may be entered by a court having jurisdiction thereover. The fees and expenses of the Independent Expert shall be borne equally by Purchaser and Parent. After final determination of Closing Working Capital, Purchaser shall have no further right to make any claims against Parent or Seller in respect of any element of Closing Working Capital that Purchaser raised, or could have raised, in the Notice of Objection. (c) ADJUSTMENT PAYMENT. Subject to Section 1.07(f), the Purchase Price shall be increased by the amount by which Closing Working Capital exceeds negative $8,385,000 (the "TARGET WORKING CAPITAL"), and the Purchase Price shall be decreased by the amount by which Closing Working Capital is less than the Target Working Capital (the Purchase Price as so increased or decreased being herein after called the "ADJUSTED PURCHASE PRICE"). Within 10 days after the Closing Working Capital has been finally determined in accordance with Section 1.07(b), (i) if the Closing Date Payment is less than the Adjusted Purchase Price, Purchaser shall pay to Parent by wire transfer to an 7 account specified by Parent in immediately available funds an amount equal to such difference, plus interest thereon at a rate of 6% per annum, compounded every three months, and calculated on the basis of a year of 365 days and the actual number of days elapsed from the Closing Date to the date of payment, and (ii) if the Closing Date Payment is greater than the Adjusted Purchase Price, Seller shall pay to Purchaser by wire transfer to an account specified by Purchaser in immediately available funds an amount equal to such difference, plus interest thereon at a rate of 6% per annum, compounded every three months, and calculated on the basis of a year of 365 days and the actual number of days elapsed from the Closing Date to the date of payment (the Closing Date Payment as so increased or decreased being hereinafter called the "SHARES PURCHASE PRICE"). (d) WORKING CAPITAL. The term "WORKING CAPITAL" means Current Assets minus Current Liabilities. The terms (i) "CURRENT ASSETS" means total current assets exclusive of cash and cash equivalents but including the non-current portion of deferred subscription acquisition costs and (ii) "CURRENT LIABILITIES" means the total current liabilities exclusive of (x) subject to Section 4.18, all liabilities with respect to Kick Media Corporation and (y) any employee benefits and related costs payable as a direct result of the Acquisition with respect to the individuals listed on Schedule 2.06(e) but including the non-current portion of unearned subscription revenues, of the Company and its consolidated subsidiaries, calculated in the same way, using the same accounting principles, practices, methodologies and policies, as the line items comprising current assets and current liabilities, respectively, on the Balance Sheet (except as provided on Schedule 1.07). For the avoidance of doubt, the allowance for doubtful debts shall be calculated in accordance with the accounting principles, practices and methodologies set forth on Schedule 1.07. Current Assets and Current Liabilities relating to Income Taxes (as defined in Section 2.13(a)) and deferred taxes shall not be taken into account in determining Working Capital. (e) POST-CLOSING BOOKS AND RECORDS. Following the Closing, Purchaser shall not take any action with respect to the accounting books and records of the Company and its subsidiaries on which the Statement is to be based that is not consistent with the past practices of the Company and its subsidiaries. Without limiting the general ity of the foregoing, no changes shall be made in any reserve or other account existing as of the date of the Balance Sheet except as a result of events occurring after the date of the Balance Sheet and, in such event, only in a 8 manner consistent with the past practices of the Company and its subsidiaries. (f) POST-CLOSING ADJUSTMENT THRESHOLD. Notwith standing the foregoing provisions of this Section 1.07, no adjustment to the Closing Date Payment pursuant to this Section 1.07 shall be made unless such adjustment would exceed $100,000 and, if the adjustment would exceed $100,000, then the full amount of the adjustment shall be made. (g) The parties acknowledge that Seller intends to cause all cash and cash equivalents held by the Company and its subsidiaries to be distributed to Seller. To the extent that (i) any such cash and cash equivalents are not so distributed prior to the Closing, there shall be an upward adjustment to the Adjusted Purchase Price in an amount equal to the amount of such undistributed cash and cash equivalents and (ii) to the extent that, prior to Closing, (x) the landlord of the property located at 110 5th Avenue, New York, New York, draws upon the Company's (or its predecessor's) letter of credit with First Union National Bank ("FIRST UNION") in respect of the Prime Lease (as defined in Section 4.16) (the "LETTER OF CREDIT"), or (y) the Company is required by First Union to make a deposit of cash collateral in connection with the Letter of Credit, there shall be an upward adjustment to the Adjusted Purchase Price in an amount equal to the draw (or draws) thereunder or any deposits made in connection therewith to the extent not part of the calculation of Closing Working Capital. The parties acknowledge that the Company is being sold free of any indebtedness for borrowed money. To the extent that any such indebtedness for borrowed money exists at the time of Closing, there shall be a downward adjustment to the Adjusted Purchase Price in an amount of such indebtedness to the extent not part of the calculation of Closing Working Capital. The amount and timing of such adjustments pursuant to the provisions of this paragraph shall be on the same time frame and in a manner analogous to that applicable to the calculation of the Closing Working Capital, except that there shall be no minimum amount required as a precondition to making any such adjustment. 9 ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER Each of Parent and Seller, jointly and severally, hereby represents and warrants as follows: SECTION 2.01. ORGANIZATION AND STANDING OF PARENT AND SELLER. (a) Seller is a general liability partnership validly existing and in good standing under the laws of the State of Delaware. Parent is a corporation validly existing under the laws of the United Kingdom. (b) ORGANIZATION AND STANDING OF THE COMPANY. Each of the Company and its subsidiaries is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation, which jurisdiction is set forth opposite its name on Schedule 2.01(b). Each of the Company and its subsidiaries has full corporate power and authority to enable it to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted (excluding the FHM Business). Each of the Company and its subsidiaries is duly qualified and in good standing to do business as a foreign corporation in each jurisdiction in which the conduct or nature of its business or the ownership, leasing or holding of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. SECTION 2.02. CAPITAL STOCK OF THE COMPANY AND ITS SUBSIDIARIES. Schedule 2.02 sets forth, for each of the Company and its subsidiaries (i) the amount of its author ized capital stock, (ii) the par value of such capital stock, (iii) the number of shares of capital stock issued and outstanding as of the date of this Agreement and (iv) the record owners of all outstanding capital stock. Except for the Shares, there are no shares of capital stock or other equity securities of the Company issued, reserved for issuance or outstanding. Except as set forth in Schedule 2.02, the Company has no subsidiaries and there are no shares of capital stock or other equity securities of any subsidiary of the Company issued or outstanding. All of the outstanding capital stock of the Company and its subsidiaries is duly authorized, validly issued, fully paid and nonassessable, free of preemptive rights and are owned free from any Liens or restrictions on transfer. There are no outstanding contractual obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise 10 acquire any shares of capital stock of the Company or any of its subsidiaries. There are no outstanding options, warrants, convertible securities, subscriptions or other commitments or rights to acquire any shares of capital stock of the Company or any of its subsidiaries. SECTION 2.03. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. Each of Parent, Seller and the Company has full corporate power and authority to execute and deliver this Agreement, the transition services agreement to be dated as of the Closing Date substantially in the form annexed hereto as Exhibit A (the "TRANSITION SERVICES AGREEMENT"), the Warrant Agreement and the other agreements and instruments executed and delivered in connection with this Agreement (collectively with the Transition Services Agreement and the Warrant Agreement, the "ANCILLARY AGREEMENTS") to which it is, or is specified to be, a party and to consummate, in the case of Seller and the Company, the Acquisition and the other transactions contemplated by this Agreement and the Ancillary Agreements. Each of Parent, Seller and the Company has taken all corporate action required to authorize the execution and delivery of this Agreement and the Ancillary Agreements to which it is, or is specified to be, a party and to authorize the consummation of, in the case of Seller and the Company, the Acquisition and the other transactions contemplated by this Agreement and the Ancillary Agreements, except, in each case, obtaining the Required Shareholder Approval (as defined below). Each of Parent, Seller and the Company has duly executed and delivered this Agreement and prior to the Closing will have duly executed and delivered each Ancillary Agreement to which it is, or is specified to be, a party, and this Agreement constitutes, and each Ancillary Agreement to which it is, or is specified to be, a party will after the Closing constitute, its legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors' rights generally and to general equitable principles. SECTION 2.04. NO CONFLICTS OR VIOLATIONS; NO CONSENTS OR APPROVALS REQUIRED. Except as set forth as Schedule 2.04, the execution and delivery by each of Parent, Seller and the Company of this Agreement does not, the execution and delivery by each of Parent, Seller and the Company of each Ancillary Agreement to which it is, or is specified to be, a party will not, and the consummation of the Acquisition and the other transactions contemplated by this Agreement and the Ancillary Agreements, will not conflict with, or result in any breach of or constitute a 11 violation, default or an event of default under, or require Consent (as defined below) under, or give rise to a right of acceleration, termination or cancellation under or increased, additional, accelerated or guaranteed rights or entitlements of any person under or result in the creation of any Lien (as defined in Section 2.08) upon any of the Shares or any of the properties or assets of the Company or its subsidiaries under any provision of (i) the Certificates of Incorporation, By-laws, or similar governing documents of Parent, Seller or the Company or any of its subsidiaries, respectively, (ii) any Contract, note, instrument or financing obligation to which any of Parent, Seller or the Company is a party or by which any of its properties or assets are bound or (iii) any judgment, order or decree ("JUDGMENT") or statute, law, ordinance, rule or regulation promulgated by any Governmental Entity ("APPLICABLE LAW") applicable to Parent, Seller or the Company or their respective properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or otherwise materially adversely affect Parent's or Seller's ability to consummate the transactions hereby. Except as set forth on Schedule 2.04, no consent, approval or authorization ("CONSENT") of, or registration, declaration or filing with, any Federal, state, local or foreign court of competent jurisdiction, governmental agency, authority, instrumental ity or regulatory body (a "GOVERNMENTAL ENTITY") is required to be obtained or made in connection with the execution, delivery and performance of this Agreement or the consummation of the Acquisition, other than (A) compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), (B) compliance with and filings and notifications under applicable Environmental Laws (as defined in Section 2.16(b)), (C) the Required Shareholder Approval and (D) those the failure of which to obtain or make would not reasonably be expected to have a Company Material Adverse Effect. SECTION 2.05. THE SHARES. Seller has good and valid title to the Shares, free and clear of all Liens. The shares of capital stock of each of the Company's subsidi aries are free and clear of all Liens. Assuming Purchaser has the requisite power and authority to be the lawful owner of the Shares, upon delivery to Purchaser at the Closing of certificates representing the Shares, duly endorsed by Seller for transfer to Purchaser, and upon Seller's receipt of the Closing Date Payment, good and valid title to the Shares will pass to Purchaser, free and clear of any Liens, other than those arising from acts of Purchaser or its 12 affiliates. Other than this Agreement, the Shares are not subject to any voting trust agreement or other Contract restricting or otherwise relating to the voting, dividend rights or disposition of the Shares. SECTION 2.06. BENEFIT PLANS. (a) Schedule 2.06(a) includes a list of each material "employee pension benefit plan" (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) (a "PENSION PLAN"), material "employee welfare benefit plan" (as defined in Section 3(1) of ERISA) (a "WELFARE PLAN") and each other material plan, arrangement or policy relating to stock options, stock purchases, deferred compensation, severance, fringe benefits or other employee benefits, in each case maintained by the Company or any of its subsidiaries for the benefit of any present or former directors, officers or employees of the Company or any of its subsidiaries (all the foregoing being herein called "COMPANY BENEFIT PLANS"). Seller has delivered or made available to Purchaser copies of (i) each Company Benefit Plan, (ii) the most recent annual report on Form 5500 filed with the Internal Revenue Service ("IRS") with respect to each Company Benefit Plan (if any such report was required), (iii) the most recent summary plan description for each Company Benefit Plan for which such a summary plan description is required and (iv) each trust agreement and group annuity contract relating to any Company Benefit Plan. (b) The Company's 401(k) Plan (as defined in Section 4.06(d)) has been administered substantially in accordance with its terms, except where the failure to be so administered would not reasonably be expected to have a Company Material Adverse Effect (as defined in Section 8.05(b)). The Company and its subsidiaries and the Company's 401(k) Plan are in substantial compliance with all applicable provisions of ERISA and the Code (as defined in Section 2.13(a)), except for instances of possible non compliance that would not reasonably be expected to have a Company Material Adverse Effect. The Company's 401(k) Plan has received a favorable determination letter from the IRS dated November 26, 1997, to the effect that it is qualified and exempt from Federal Income Taxes under Sections 401(a) and 501(a), respectively, of the Code, and no such determination letter has been revoked nor, to the knowledge of the Company, has revocation been threatened. Except as would not reasonably be expected to have a Company Material Adverse Effect, there is no pending or, to the knowledge of Seller, threatened litigation relating to the Company Benefit Plans. 13 (c) Except as would not reasonably be expected to have a Company Material Adverse Effect, neither the Company nor any person or entity that, together with the Company or any of its subsidiaries, is treated as a single employer (a) "COMMONLY CONTROLLED ENTITY") under Section 414(b), (c), (m) or (o) of the Code has incurred or would reasonably be expected to incur any liability under Title IV of ERISA. (d) Except as would not reasonably be expected to have a Company Material Adverse Effect, each Company Benefit Plan that is a Welfare Plan, to the extent applicable, complies in all material respects with the applicable requirements of Section 4980B(f) of the Code. (e) Except as set forth in Schedule 2.06(e), no employee of the Company or any of its subsidiaries will be entitled to any additional benefits or any acceleration of the time of payment or vesting of any benefits under any Company Benefit Plan as a result of the transactions contem plated by this Agreement. SECTION 2.07. FINANCIAL STATEMENTS. (a) Schedule 2.07(a) sets forth the audited consolidated balance sheets of Balboa as of March 31, 2001 (the "BALANCE SHEET"), the audited consolidated balance sheet of Balboa as of March 31, 2000, the audited consolidated statements of income of Balboa for each of the twelve-month periods ended March 31, 2001 and March 31, 2000, together with the notes to such financial statements, (such financial statements, together with the notes to such financial statements, the "FINANCIAL STATEMENTS"). The Financial Statements have been prepared in conformity with generally accepted accounting principals in effect at the time of application ("GAAP"), consistently applied (except in each case as described in the notes thereto). The Financial Statements fairly present in all material respects the consolidated financial condition and results of operations of Balboa as of the respective dates thereof and for the respective periods indicated. (b) Neither Balboa nor any of its subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent, or otherwise) required by GAAP to be set forth on a consolidated balance sheet of Balboa and its consolidated subsidiaries or notes thereto that individually or in the aggregate, would be expected to have a Company Material Adverse Effect, except (i) as disclosed on Schedule 2.07(b), (ii) as disclosed or reserved for in the Financial Statements, (iii) for liabilities or obligations incurred in the ordinary course of business 14 since the date of the Balance Sheet or (iv) which is reflected in the Closing Working Capital. (c) Schedule 2.07(c) sets forth the unaudited pro forma consolidated balance sheet of the Company and its subsidiaries (excluding the FHM Business) as of March 31, 2001 and the unaudited pro forma consolidated statements of income of the Company and its subsidiaries (excluding the FHM Business) for the twelve-month periods ended March 31, 2000 and March 31, 2001 (collectively, the "PRO FORMA FINANCIAL STATEMENTS"). The Pro Forma Financial Statements have been prepared in conformity with GAAP consistently applied. The Pro Forma Financial Statements fairly present in all material respects the pro forma consolidated financial condition and results of operations of the Company and its subsidiaries (excluding the FHM Business). SECTION 2.08. ASSETS OTHER THAN REAL PROPERTY INTERESTS. (a) The Company or one of its subsidiaries has good and valid title to all the material assets reflected on the Balance Sheet or thereafter acquired, other than those set forth in Schedule 2.08 or otherwise disposed of since the date of the Balance Sheet, in each case free and clear of all mortgages, liens, charges, claims, pledges or other encumbrances (collectively, "LIENS"), except (i) such Liens as are set forth in Schedule 2.08, (ii) mechanics', carriers', workmen's, repairmen's or other like Liens arising or incurred in the ordinary course of business, (iii) Liens arising under original purchase price condi tional sales contracts and equipment leases with third parties entered into in the ordinary course of business, (iv) Liens for Taxes (as defined in Section 2.13(a)) and other governmental charges that are not due and payable or that may thereafter be paid without penalty, (v) Liens that secure debt that is reflected as a liability on the Balance Sheet or the existence of which is referred to in the notes to the Balance Sheet and (vi) other imperfections of title, licenses or encumbrances, if any, which, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect (the Liens described in clauses (i) through (vi) above, together with the Liens referred to in clauses (ii) through (vi) of Section 2.09, are referred to collectively as "PERMITTED LIENS"). (b) This Section 2.08 does not relate to real property or interests in real property, such items being the subject of Section 2.09, or to Intellectual Property, such items being the subject of Section 2.10. SECTION 2.09. REAL PROPERTY. Neither the Company nor any of its subsidiaries own any real properties. 15 Schedule 2.09 sets forth a list that includes all material real property leased by the Company or any of its subsidi aries with annual rental payments in excess of $250,000 (a "LEASED PROPERTY" or "COMPANY PROPERTY"). The Company or one of its subsidiaries has valid leasehold interests in the Company Properties, in each case free and clear of all Liens, except (i) Permitted Liens, (ii) such Liens as are set forth in Schedule 2.09, (iii) subleases and similar agreements set forth in Schedule 2.09, (iv) easements, covenants, rights-of-way and other similar restrictions of record, (v) any conditions that may be shown by a current, accurate survey or that would be apparent as part of a physical inspection of any Company Property made prior to the Closing and (vi) (A) zoning, building and other similar restrictions, (B) Liens that have been placed by any developer, landlord or other third party and subordination or similar agreements relating thereto and (C) unrecorded easements, covenants, rights-of-way and other similar restrictions. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect with respect to each Leased Property, such lease is pursuant to a written lease which is in full force and effect. This Section 2.09 does not relate to environmental matters, such items being the subject of Section 2.16. SECTION 2.10. INTELLECTUAL PROPERTY. (a) Schedule 2.10 sets forth a list that includes all material Intellectual Property (as defined in Section 2.10(d)), owned, registered by, filed by or licensed to the Company or any of its subsidiaries, exclusive of the FHM Intellectual Property. The Intellectual Property set forth on Schedule 2.10, but exclusive of the Intellectual Property of the FHM Business, is collectively referred to in this Agreement as the "COMPANY INTELLECTUAL PROPERTY". With respect to the Company Intellectual Property that is registered or subject to an application for registration, Schedule 2.10 sets forth a list that includes the jurisdic tions where such Company Intellectual Property is registered or where applications have been filed. Except as set forth in Schedule 2.10, all Company Intellectual Property owned by the Company or its subsidiaries is owned free and clear of all Liens except Permitted Liens. (b) Neither the Company nor any of its subsidi aries is bound by or a party to any option, license or similar Contract relating to any material Intellectual Property of any other person for the use of such Intellectual Property in the conduct of the business of the Company and its subsidiaries, except as set forth in Schedule 2.10 and except for so-called "shrink-wrap" license agreements relating to computer software licensed to the 16 Company or one of its subsidiaries in the ordinary course of business. Except as set forth in Schedule 2.10, no claims are pending or, to the knowledge of Parent and Seller, threatened, as of the date of this Agreement against the Company or any of its subsidiaries by any person claiming infringement by use of the Company Intellectual Property. Except as set forth in Schedule 2.10, and to the knowledge of Parent and Seller, there is no continuing infringement by any other person of the Company Intellectual Property. (c) "INTELLECTUAL PROPERTY" means any patent, patent application, trademarks, trademark registrations, trademark applications, service marks, service mark registrations, service mark applications, trade dress, trade secrets, domain names and related rights, copyrights, copy right registrations and copyright applications (including all reissues, divisions, continuations and extensions, modifications, or renewals of any such registration or application thereof in any jurisdiction). SECTION 2.11. CONTRACTS. (a) Except as set forth on Schedule 2.11(a), or except contracts which constitute Excluded Assets or any Ancillary Agreement, neither the Company nor any of its subsidiaries is a party to or bound by any: (i) employee collective bargaining agreement or other Contract with any labor union; (ii) covenant not to compete (other than (A) pur suant to any radius restriction contained in any lease, reciprocal easement or development, construction, operating or similar agreement and (B) any such covenant contained in any distribution agreement with a distributor, "independent operator", "wholesaler" or "multiple") that materially limits the conduct of the business of the Company as currently conducted; (iii) (A) continuing Contract for the future purchase by the Company or its subsidiaries of materials, supplies or equipment (other than purchase Contracts and orders for inventory in the ordinary course of business) or (B) service or consulting Contract (other than Contracts for services in the ordinary course of business) for the provision of services to the Company or its subsidiaries which has an aggregate future liability by the Company or its subsidiaries to any person (other than the Company or one of its subsidiaries), individually, in excess of $500,000 and is not terminable by the Company or one of its subsidiaries by notice of not more than 180 days; 17 (iv) Contract under which the Company or one of its subsidiaries has borrowed any money from, or issued any note, bond, debenture or other evidence of indebtedness to, any person (other than the Company or one of its subsidiaries) or any other note, bond, debenture or other evidence of indebtedness of the Company or one of its subsidiaries (other than in favor of the Company or one of its subsidiaries) in any such case which, individually, involves in excess of $500,000 of indebtedness; (v) Contract (other than intercompany relation ships) under which (A) any person (other than the Company or one of its subsidiaries) has directly or indirectly guaranteed indebtedness, liabilities or obligations of the Company or one of its subsidiaries or (B) the Company or one of its subsidiaries has directly or indirectly guaranteed indebtedness, liabilities or obligations of any person, other than the Company or another subsidiary of the Company (in each case other than endorsements for the purpose of collection in the ordinary course of business), in any such case which, individually, involves in excess of $500,000 of indebtedness; (vi) material Contract granting a Lien upon any Company Property, which Lien is not set forth in Schedule 2.08 or which is not a Permitted Lien; (vii) lease, sublease or similar Contract with any person (other than the Company or one of its subsidi aries) under which the Company or one of its subsidi aries is a lessor or sublessor of, or makes available for use to any person (other than the Company or one of its subsidiaries), (A) any Leased Property or (B) any portion of any premises otherwise occupied by the Company or one of its subsidiaries that, in either case, specifies annual payments in excess of $500,000 and which is not terminable by the Company or its sub sidiaries by notice of not more than 180 days; (viii) lease or similar Contract with any person (other than the Company or one of its subsidiaries) under which the Company or one of its subsidiaries is lessee of, or holds or uses, any machinery, equipment, vehicle or other tangible personal property owned by any person which lease or similar Contract has an aggregate future liability in excess of $500,000 and which is not terminable by the Company or one of its subsidiaries by notice of not more than 180 days; 18 (ix) (A) advertising agreement or arrangement, (B) distribution agreement or arrangement or (C) printing or publishing agreement or arrangement, in each case, individually, involving annual payments by or to the Company and its subsidiaries in excess of $500,000 and which is not terminable by the Company or its subsidiaries on notice of not more than 180 days; or (x) other Contract that has an aggregate future liability to any person (other than the Company or one of its subsidiaries) in excess of $500,000 and is not terminable by the Company or one of its subsidiaries by notice of not more than 180 days (other than purchase orders or sales orders). (b) Set forth on Schedule 2.11(b) is each written employment agreement, employment contract, special incentive agreement or severance agreement to which the Company or one of its subsidiaries is a party that has an aggregate future liability of the Company or its subsidiaries in excess of $500,000 (collectively, the "EMPLOYMENT CONTRACTS"). (c) Except as indicated with respect to the Contracts set forth in Schedule 2.11(a) (such Contracts, together with the Employment Contracts, the "COMPANY CONTRACTS"), all Company Contracts are valid, binding and in full force and effect and are enforceable by the Company or the applicable subsidiary of the Company in accordance with their terms (subject to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors' rights generally and to general equitable principles), except for such failures to be valid, binding, in full force and effect or enforceable that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. Except as set forth in Schedule 2.11(c), the Company or the applicable sub sidiary of the Company is not in breach or default under any Company Contract and, to the knowledge of Parent or Seller, no other party to any Company Contract, as of the date hereof, is in breach or default thereunder, except to the extent that such breach or default, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. SECTION 2.12. PERMITS. Except as set forth in Schedule 2.12, (i) each of the Company and its subsidiaries possesses all material certificates, licenses, permits, authorizations and approvals from any Governmental Entity ("PERMITS") necessary to enable it to own or lease its properties or assets and to carry on its business as 19 presently conducted, and the Company or the applicable sub sidiary of the Company is in compliance with the terms and conditions thereof, except for any non-compliance that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect and (ii) none of such Permits would reasonably be expected to be subject to suspension, modification, revocation or non renewal as a result of the execution and delivery of this Agreement or the consummation of the Acquisition, except for any such suspensions, modifications, revocations or non renewals that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. This Section 2.12 does not relate to environmental matters, such items being the subject of Section 2.16(b). SECTION 2.13. TAXES. (a) For purposes of this Agreement: "CODE" shall mean the Internal Revenue Code of 1986, as amended. "INCOME TAX" or "INCOME TAXES" shall mean (i) all income or franchise Taxes imposed on or measured by income and (ii) any interest, penalties and additions associated with the amounts described in clause (i) hereof. "PRE-CLOSING TAX PERIOD" shall mean all taxable periods ending on or before the Closing Date and the portions ending on the Closing Date of all Straddle Periods (as defined in Section 4.07(b)). "TAX" or "TAXES" shall mean all forms of taxation imposed by any Federal, state, local, foreign or other Taxing Authority, including income, franchise, property, sales, use, excise, employment, unemployment, payroll, social security, estimated, value added, ad valorem, trans fer, recapture, withholding and other taxes of any kind, including any interest, penalties and additions thereto. "TAXING AUTHORITY" shall mean any Federal, state, local or foreign government, any subdivision, agency, commission or authority thereof or any quasi-governmental body exercising tax regulatory authority. "TAX RETURN" shall mean any report, return, document, declaration or other information or filing required to be supplied to any Taxing Authority with respect to Taxes, including any amendment made with respect thereto. "TRANSFER TAXES" shall mean all sales (including bulk sales), use, transfer, recording, ad valorem, 20 privilege, documentary, gross receipts, registration, conveyance, excise, license, stamp or similar Taxes and fees arising out of, in connection with or attributable to the transactions effectuated pursuant to this Agreement. (b) Except as set forth in Schedule 2.13(b), (i) the Company and each of its subsidiaries has prepared, completed and timely filed or caused to be filed (taking into account any applicable extension periods) all material Tax Returns required to be filed by it, (ii) all material Taxes with respect to taxable periods covered by such Tax Returns, and all other material Taxes for which the Company or any of its subsidiaries is or might otherwise be liable, have been timely paid in full or will be timely paid in full by the due date thereof and (iii) there are no material Liens for Taxes with respect to any of the assets or properties of the Company or any of its subsidiaries that are not adequately provided for in the Balance Sheet, except liens for Taxes not yet due and payable or that may thereafter be paid without penalty. (c) Except as set forth in Schedule 2.13(c), as of the date hereof, no material Tax Return of the Company or any of its subsidiaries is under audit, examination or the subject of any legal controversy by or with any Taxing Authority, and no notice of such an audit, examination or controversy has been received by the Company or any of its subsidiaries. (d) Seller is a domestic corporation, for U.S. federal income tax purposes and is the common parent of a consolidated group of which the Company is a member. (e) Seller is not a "foreign person" within the meaning of Section 1445 of the Code. SECTION 2.14. LITIGATION. Schedule 2.14 sets forth a list as of the date of this Agreement of each pending, or to the knowledge of Parent or Seller, threatened material suit or legal action (each, a "PROCEEDING") against the Company or any of its subsidiaries and pursuant to which a party seeks more than $500,000 from the Company or its subsidiaries. Except as set forth in Schedule 2.14, neither the Company nor any of its subsidiaries is subject to, or in default under, any unsatisfied Judgment, other than for such Judgments that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. This Section 2.14 does not relate to environmental matters or Intellectual Property matters, such items being the subject of Sections 2.16(b) and 2.10, respectively. 21 SECTION 2.15. ABSENCE OF CHANGES OR EVENTS. Except as set forth in Schedule 2.15, since the date of the Balance Sheet there has not occurred any event or condition that has had a Company Material Adverse Effect. Purchaser acknowledges that there may be disruption to the Company's and its subsidiaries' business as a result of the announcement by Seller of its intention to sell the Company (and there may be further disruption to the Company's and its subsidiaries' business as a result of the execution of this Agreement and the consummation of the transactions contemplated hereby), and Purchaser agrees that any such disruptions do not and shall not constitute a breach of this Section 2.15. SECTION 2.16. COMPLIANCE WITH APPLICABLE LAWS. (a) To the knowledge of Parent and Seller, the Company and its subsidiaries are in compliance with all Applicable Laws, except for instances of noncompliance that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. Neither Parent nor Seller has received any written notice that any investigation by a Governmental Entity of the Company or its subsidiaries is pending, except where the outcome of any such investigation, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. This Section 2.16 does not relate to matters with respect to Taxes, which are the subject of Section 2.13, or to environ mental matters, which are the subject of Section 2.16(b). (b) Except as set forth in Schedule 2.16(b), and except for any matter that would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and its subsidiaries are in compliance with all Applicable Laws relating to protection of the environment ("ENVIRONMENTAL LAWS"), (ii) the Company and its sub sidiaries possess and are in compliance with all Permits required under Environmental Laws for the conduct of their respective operations and (iii) there are no pending Proceedings against the Company or its subsidiaries alleging a violation of Environmental Laws. SECTION 2.17. VOTING REQUIREMENTS. No vote of the holders of any class or series of Parent's capital stock is necessary to approve this Agreement, the Ancillary Agreements and to consummate the transactions contemplated by this Agreement. SECTION 2.18. NO BARTER RECEIVABLES OR OBLIGATIONS. Except as set forth in Schedule 2.18, there are no material "barter" agreements relating to the Company or its subsidiaries, and none of the Parent, Seller or Company or 22 its subsidiaries is liable for any outstanding material barter obligations relating to the Company or its subsidi aries, or is the owner of any material outstanding barter receivables. SECTION 2.19. TRANSACTIONS WITH AFFILIATES. There are (i) no material services currently being provided by Parent or Seller or their respective affiliates (other than the Company and its subsidiaries) to the Company and its subsidiaries and (ii) no material Contracts, agreements or instruments (other than this Agreement and the Ancillary Agreements) between the Company or its subsidiaries, on the one hand, and Parent or Seller or an affiliate of Parent or Seller (other than the Company and its subsidiaries), on the other hand. SECTION 2.20. WARRANTS. Parent shall not and shall cause its subsidiaries not to, offer to sell or otherwise dispose of, such Warrants in violation of any of the registration requirements of the Securities Act of 1933, as amended. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser hereby represents and warrants to Seller as follows: SECTION 3.01. ORGANIZATION AND STANDING. Purchaser is a corporation validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full corporate power and authority to enable it to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted. Purchaser is duly qualified and in good standing to do business as a foreign corporation in each jurisdiction in which the conduct or nature of its business or the owner ship, leasing or holding of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not reasonably be expected to prevent or materially impede or delay the Acquisition or otherwise have a material adverse effect on the ability of Purchaser to consummate the Acquisition (a "PURCHASER MATERIAL ADVERSE EFFECT"). SECTION 3.02. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. Purchaser has full corporate power and authority to execute and deliver this Agreement, the 23 Ancillary Agreements and the Warrants to which it is, or is specified to be, a party and to consummate the Acquisition and the other transactions contemplated hereby and thereby. Purchaser has taken all corporate action required by its organizational documents to authorize the execution and delivery of this Agreement, the Ancillary Agreements and the Warrants to which it is, or is specified to be, a party and to authorize the consummation of the Acquisition and the other transactions contemplated hereby and thereby. Purchaser has duly executed and delivered this Agreement and prior to the Closing will have duly executed and delivered each Ancillary Agreement and the Warrants to which it is, or is specified to be, a party, and this Agreement constitutes, and each Ancillary Agreement and the Warrants to which it is, or is specified to be, a party will after the Closing constitute its legal, valid and binding obligation, enforce able against it in accordance with its terms subject to applicable bankruptcy, insolvency, moratorium, reorganiza tion or similar laws affecting creditors' rights generally and to general equitable principles. When issued, the Warrants and any shares of common stock of Purchaser or its affiliates into which such Warrants are exercisable will be free of all Liens or any restrictions on transfer except restrictions under U.S. and state securities laws. SECTION 3.03. NO CONFLICTS OR VIOLATIONS; NO CONSENTS OR APPROVALS REQUIRED. The execution and delivery by Purchaser of this Agreement do not, the execution and delivery by Purchaser of each Ancillary Agreement or the Warrants to which it is, or is specified to be, a party will not, and the consummation of the Acquisition and the other transactions contemplated hereby and thereby will not conflict with, or result in any breach of or constitute a violation, default or event of default under, or result in the creation of any Lien upon any of the properties or assets of Purchaser or any of its subsidiaries under, or require Consent under, or give rise to a right of acceleration, termination or cancellation under or increased, additional, accelerated or guaranteed rights or entitlements of any person under, any provision of (i) its or any of its subsidiaries' Certificate of Incorporation, By-laws or similar governing document, (ii) any Contract, note, instrument or financing obligation to which Purchaser or any of its subsidiaries is a party or by which any of their respective properties or assets is bound or (iii) any Judgment or Applicable Law applicable to Purchaser or any of its subsidiaries or their respective properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that would not reasonably be expected to have a Purchaser Material Adverse Effect or otherwise materially adversely affect Purchaser's ability to consummate the 24 transactions contemplated hereby. No Consent of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to Purchaser or any of its subsidiaries in connection with the execution, delivery and performance of this Agreement or the consummation of the Acquisition other than (A) compliance with and filings under the HSR Act, (B) compliance with and filings and notifications under applicable Environmental Laws and (C) those the failure of which to obtain or make would not reasonably be expected to have a Purchaser Material Adverse Effect. SECTION 3.04. PROCEEDINGS. To the knowledge of Purchaser, neither it nor any of its subsidiaries is a party to any Proceeding pursuant to which a party seeks injunctive relief prohibiting the consummation of the Acquisition. Neither Purchaser nor any of its subsidiaries is a party or subject to, or in default under, any unsatisfied Judgment, other than for Judgments that would, individually or in the aggregate, not reasonably be expected to have a Purchaser Material Adverse Effect. SECTION 3.05. SECURITIES ACT. The Shares purchased by Purchaser pursuant to this Agreement are being acquired for investment only and not with a view to any public distribution thereof, and Purchaser shall not offer to sell or otherwise dispose of the Shares so acquired by it in violation of any of the registration requirements of the Securities Act of 1933, as amended. SECTION 3.06. NO KNOWLEDGE OF MISREPRESENTATIONS OR OMISSIONS. After due inquiry and investigation, including review of the material and information made available by Parent to Purchaser in the data rooms at the offices of Cravath, Swaine & Moore and Morgan Stanley & Co. Incorporated (i) Purchaser does not have any knowledge that any of the representations and warranties of Parent, Seller or the Company or its subsidiaries made in this Agreement are not true and correct and (ii) Purchaser does not have any knowledge of any material errors in, or material omissions from, any Schedule. SECTION 3.07. VOTING REQUIREMENTS. No vote of the holders of any class or series of Purchaser's capital stock is necessary (i) to approve this Agreement or the Ancillary Agreements, (ii) for the issuance of the Warrants or exercise thereof (including the issuance of shares of common stock of the Purchaser in connection therewith) or (iii) to consummate the transactions contemplated by this Agreement. 25 SECTION 3.08. CAPITAL STOCK OF PURCHASER AND ITS SUBSIDIARIES. As of March 31, 2001, (i) the authorized capital stock of Purchaser (the "PURCHASER SHARES") and (ii) the number of shares of capital stock of Purchaser issued and outstanding is as set forth on the Purchaser SEC Documents dated March 31, 2001. All of the outstanding capital stock of Purchaser is, and the Purchaser Shares when issued pursuant to the Warrants will be, duly authorized, validly issued, fully paid and nonassessable. The Warrants and the Purchaser Shares into which they are exercisable are not, and will not be, subject to any preemptive rights of any kind. There are no outstanding contractual obligations of Purchaser to repurchase, redeem or otherwise acquire any shares of capital stock of Purchaser. There are no outstanding options, warrants, convertible securities, subscriptions or other commitments or rights to acquire any shares of capital stock of Purchaser. SECTION 3.09. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. Purchaser has filed all reports, schedules, forms, statements and other documents required to be filed by Purchaser with the SEC since January 1, 2001 (the "PURCHASER SEC DOCUMENTS"). Except to the extent that information contained in any Purchaser SEC Document has been revised or superseded by a later filed Purchaser SEC Document, none of Purchaser SEC Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of Purchaser included in Purchaser SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Purchaser and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Neither Purchaser nor any of its subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent, or otherwise) required by GAAP to be set forth on a consolidated balance sheet of Purchaser and its consolidated subsidiaries or notes thereto that individually or in the aggregate, would be expected to have a material adverse effect on Purchaser, except (i) as disclosed on Schedule 3.10, (ii) as disclosed or reserved 26 for in the Purchaser SEC Documents or (iii) for liabilities or obligations incurred in the ordinary course of business since December 31, 2000. ARTICLE IV COVENANTS SECTION 4.01. COVENANTS RELATING TO CONDUCT OF BUSINESS. Except for matters (x) set forth in Schedule 4.01, (y) consented to by Purchaser (such consent not to be unreasonably withheld or delayed) or (z) otherwise contemplated by the terms of this Agreement, from the date of this Agreement to the Closing Date, Parent and Seller shall cause the Company and its subsidiaries to conduct their respective businesses in the ordinary course in a manner substantially consistent with past practice; PROVIDED, that nothing contained in this Agreement shall be deemed to require the expenditure of funds in a manner inconsistent with past practice. In addition, except as set forth in Schedule 4.01 or as otherwise contemplated by the terms of this Agreement, Parent and Seller shall not permit any of the Company or its subsidiaries to do any of the following without the prior consent of Purchaser (which consent shall not be unreasonably withheld or delayed): (i) amend its Certificate of Incorporation or By-laws or other comparable organizational documents; (ii) declare, set aside or pay any non-cash dividend or make any other non-cash distribution to its stockholders whether or not upon or in respect of any shares of its capital stock or issue any capital stock; PROVIDED, HOWEVER, that (A) dividends and distributions may continue to be made by the subsidiaries of the Company to the Company or to other wholly-owned sub sidiaries of the Company and (B) dividends and distributions of cash may continue to be made by the Company to Seller; (iii) redeem or otherwise acquire any shares of its capital stock or issue any capital stock or any option, warrant or right relating thereto or any securities convertible into or exchangeable for any shares of capital stock; (iv) adopt or amend in any material respect any Benefit Plan in respect of any Affected Employee (as defined in Section 4.06(a)) or former employee of the 27 Company and its subsidiaries, except as required by Applicable Law; (v) grant to any executive officer any increase in compensation or benefits, except in the ordinary course of business consistent with past practice or as may be required under existing agreements and except for any increases for which Seller or Parent shall be solely obligated; (vi) incur or assume any liabilities, obligations or indebtedness for borrowed money or guarantee any such liabilities, obligations or indebtedness, other than (A) in the ordinary course of business consistent with past practice, or (B) in connection with refinancing or repayment of the indebtedness listed on Schedule 4.01(a)(vi); (vii) subject any of its assets to any Lien of any nature whatsoever that would have been required to be set forth in Schedule 2.08 or 2.09 if existing on the date of this Agreement; (viii) waive any claims or rights of material value; (ix) make any change in any method of accounting or accounting practice or policy other than those required or permitted by GAAP or required by Applicable Law; (x) acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire any assets (other than inventory) that are material to the Company and its subsidiaries, taken as a whole; (xi) make or incur any capital expenditure that is either (A) not currently approved in writing or (B) contemplated by the Company's fiscal 2001 budget (a copy of which has previously been furnished to Purchaser) which, individually, is in excess of $500,000, or make or incur any such expenditures which, in the aggregate, are in excess of $750,000; (xii) sell, lease, license or otherwise dispose of any asset that is material to the Company and its sub sidiaries, taken as a whole, except (A) inventory and obsolete or excess equipment sold or disposed of in the ordinary course of business and (B) leases entered into 28 in the ordinary course of business with aggregate annual lease payments not in excess of $500,000; (xiii) settle any litigation in a manner that imposes an equitable remedy against the Company or its sub sidiaries materially constraining the business of the Company or its subsidiaries; or (xiv) agree, whether in writing or otherwise, to do any of the foregoing. SECTION 4.02. ACCESS TO INFORMATION. (a) To the extent permitted by Applicable Law, the Company shall, and shall cause its subsidiaries to, afford to Purchaser and its accountants, counsel and other representatives reasonable access, upon reasonable notice during normal business hours during the period prior to the Closing, to the personnel, properties, books, contracts, commitments and other Records of the Company and its subsidiaries; PROVIDED, HOWEVER, that such access does not unreasonably disrupt the normal operations of the Company and its subsidiaries. (b) After the Closing, Purchaser shall, and shall cause its affiliates to, give Parent and Seller and their accountants, counsel and other representatives reasonable access, upon reasonable notice during normal business hours, to the personnel, properties, books, contracts, commitments and other Records of the Company and its subsidiaries relating to (i) Seller's operation of the Company prior to the Closing, (ii) the Excluded Assets or (iii) the Excluded Liabilities, and to furnish copies thereof, which Parent or Seller or their representatives or agents reasonably request; PROVIDED, HOWEVER, that such access does not unreasonably disrupt the normal operations of the Company and its subsidiaries. Purchaser shall, and shall cause its affiliates to, furnish reasonable assistance (including access to personnel) to Parent and Seller and their representatives and agents in connection with any claims, proceedings, actions, investigations, audits, and other regulatory or legal proceedings in connection with any of the items listed in the foregoing sentence; PROVIDED that Seller shall be responsible for all reasonable out-of-pocket expenses in connection therewith. Purchaser shall not, and shall not permit any of its affiliates to destroy any such records. SECTION 4.03. CONFIDENTIALITY. (a) Purchaser acknowledges that the information being provided to it in connection with the Acquisition and the consummation of the other transactions contemplated hereby is subject to the terms of a confidentiality agreement between Purchaser and 29 Parent (the "CONFIDENTIALITY AGREEMENT"), the terms of which are incorporated herein by reference. Effective upon, and only upon, the Closing, the Confidentiality Agreement shall terminate with respect to information relating solely to the Company and its subsidiaries; PROVIDED, HOWEVER, that Purchaser acknowledges that any and all other information provided to it by Parent or Seller or Parent's or Seller's representatives concerning Parent, Seller or the FHM Business shall remain subject to the terms and conditions of the Confidentiality Agreement after the Closing Date. (b) After the Closing, each of Parent and Seller and its respective affiliates shall not divulge, furnish or make available to anyone (other than Purchaser) any knowledge or information with respect to any proprietary information of the Company and its subsidiaries and which solely relates to the business of the Company and its subsidiaries. This Section 4.03(b) shall not apply to any such proprietary information which (i) shall have entered the public domain or become available through no act or omission of Parent or Seller or any of their affiliates after the Closing, (ii) shall have become available to Parent or Seller or any of their affiliates from a third party whom the Parent or Seller or such affiliate reasonably believes is not obligated to the Company or its subsidiaries or Purchaser to keep such proprietary information confidential or (iii) shall be required by law, legal process, legal proceeding or any Governmental Authority (including stock exchanges) to be disclosed, PROVIDED that Parent and Seller shall give reasonably prompt notice of such requirement to Purchaser so that Purchaser may seek an appropriate protective order. SECTION 4.04. EFFORTS. (a) Subject to the terms and conditions of this Agreement, including Section 4.04(c), each of Parent, Seller and the Company and Purchaser and its affiliates shall use its reasonable best efforts to cause the Closing to occur, including using its reasonable best efforts to obtain all material consents, Permits, authorizations and approvals of, and to make all necessary filings, notifications or registrations with, all Governmental Entities which are necessary for the consummation of the transactions contemplated by this Agreement. None of Parent, Seller, the Company and Purchaser shall, and none shall permit any of their respective affiliates to, take any actions that would, or that could reasonably be expected to result in any of the conditions set forth in Article V not being satisfied, including affecting any acquisitions. 30 (b) Each of Parent, Seller and Purchaser shall as promptly as practicable, but in no event later than five business days following the execution and delivery of this Agreement, file or cause to be filed with the United States Federal Trade Commission (the "FTC") and the United States Department of Justice (the "DOJ") the notification and report form required for the transactions contemplated hereby and any supplemental information requested in connection therewith pursuant to the HSR Act. Any such notification and report form and supplemental information shall be in substantial compliance with the requirements of the HSR Act. Each of Parent, Seller and Purchaser shall furnish to the other such necessary information in its possession and reasonable assistance as the other may request in connection with its preparation of any filing or submission that is necessary under the HSR Act. Parent, Seller and Purchaser shall keep each other appraised of the status of any communications with, and any inquiries or requests for additional information from, the FTC and the DOJ and shall comply promptly with any such inquiry or request and shall promptly provide any supplemental information requested in connection with the filings made hereunder pursuant to the HSR Act. Each party shall promptly substantially comply with any request for any additional information or materials. Each party shall use its best efforts to obtain any clearance required under the HSR Act for the consummation of the transactions contemplated by this Agreement. Parent, Seller and Purchaser shall also cooperate to make any required filings outside the United States as promptly as practicable after the execution and delivery of this Agreement but in no event later than 15 days after the Closing. For purposes of this Section 4.04, the "efforts" of Purchaser shall include promptly (i) opposing any motion or action for a temporary, preliminary or permanent injunction against the Acquisition and (ii) if Purchaser loses such motion or action for a preliminary or permanent injunction, entering into a consent decree containing Purchaser's agreement to hold separate and divest the products and assets of the Company and its subsidiaries or Purchaser and its affiliates, as the case may be, as required by the FTC, the DOJ or any other Governmental Entity. (c) Purchaser acknowledges that certain consents and waivers with respect to the transactions contemplated by this Agreement may be required from parties to the Contracts listed on the Schedules hereto and that such consents and waivers have not been obtained. Purchaser agrees that Parent, Seller and their respective affiliates shall not have any liability whatsoever to Purchaser arising out of or relating to the failure to obtain any consents or waivers 31 that may be required in connection with the transactions contemplated by this Agreement or because of the termination of any Contract as a result thereof. Purchaser further agrees that no representation, warranty or covenant of Parent, Seller or the Company or its subsidiaries contained herein shall be breached or deemed breached, and no condition shall be deemed not satisfied, as a result of (i) the failure to obtain any such consent or waiver, (ii) any such termination or (iii) any lawsuit, action, pro ceeding or investigation commenced or threatened by or on behalf of any person arising out of or relating to the failure to obtain any such consent or any such termination. Prior to the Closing, Parent, Seller and the Company shall, and shall cause the subsidiaries of the Company to, cooperate with Purchaser, upon the request of Purchaser, in any reasonable manner in connection with Purchaser obtaining any such consents and waivers; PROVIDED, HOWEVER, that such cooperation shall not include any requirement of Purchaser, Parent, Seller or any of their respective affiliates (including the Company and the subsidiaries of the Company) to expend money, commence, defend or participate in any litigation or offer or grant any accommodation (financial or otherwise) to any third party. SECTION 4.05. BROKERS OR FINDERS. Each of Purchaser, Parent and Seller represents, as to itself and its affiliates, that no agent, broker, investment banker or other firm or person is or will be entitled to any broker's or finder's fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement, except, as to Parent and Seller, Morgan Stanley & Co. Incorporated, whose fees and expenses will be paid by Parent and Seller and, as to Purchaser and its affiliates, Merrill Lynch & Co., whose fees and expenses will be paid by Purchaser. SECTION 4.06. EMPLOYEE MATTERS. (a) CREDITED SERVICE; SECONDED EMPLOYEES. On and after the Closing Date, Purchaser shall give the Affected Employees full credit for all purposes (including for purposes of eligibility to participate, early retirement eligibility and early retirement subsidies and vesting) under any employee benefit plans or arrangements maintained by Purchaser and its sub sidiaries, for the Affected Employees' service with Seller and its subsidiaries to the same extent recognized by Seller and its subsidiaries immediately prior to the Closing Date. For purposes of this Agreement, "AFFECTED EMPLOYEE" means each individual (other than an Excluded Employee) who is selected by Purchaser in accordance with the next sentence and is employed by the Company and its subsidiaries on the Closing Date, including any such individuals on approved 32 leave of absence (including maternity and paternity leave, vacation, sick leave, short-term disability, military leave, jury duty and death leave). Seller shall permit Purchaser, at its discretion, to make offers of employment, within the five day period immediately following the date of this Agreement, to the individuals listed on Schedule 4.06(a); PROVIDED, THAT if any such individual accepts employment with and becomes an employee of Purchaser, he or she shall be considered an Affected Employee for purposes of this Agreement and Purchaser shall assume all liabilities of Parent and Seller and their subsidiaries in respect of any and all relocation and termination costs associated there with; PROVIDED FURTHER, that if Purchaser elects to not make offers of employment to the individuals listed on Schedule 4.06(a), Purchaser shall have no liability with respect to such employees. (b) CONTINUATION OF BENEFITS. Purchaser agrees to honor, and to cause its subsidiaries to honor, in accordance with their current terms, the Company Benefit Plans, the Employment Contracts and each other employment, deferred compensation, severance, termination or other agreement or arrangement between the Company or any of its subsidiaries, on the one hand, and any current or former director or employee of the Company and its subsidiaries, on the other hand. For the one-year period immediately following the Closing Date, Purchaser shall, or shall cause its subsidiaries to, provide (i) each Affected Employee with salaries that are no less favorable to such Affected Employee than those in effect immediately prior to the Closing Date; and (ii) Affected Employees shall be eligible to participate in the employee benefits programs no less generous than those available to employees of the magazine division of the magazine business of McMullen Argus Publishing Inc. (c) SEVERANCE. Notwithstanding anything to the contrary in this Agreement, Purchaser agrees to provide each Affected Employee whose employment is terminated by Purchaser or its subsidiaries with severance benefits that are no less favorable than those generally available to employees of the magazine division of McMullen Argus Publishing Inc. (d) 401(k) PLAN. From and after the Closing Date, Purchaser shall continue to sponsor and maintain the emap usa, inc. 401(k) Plan (the "COMPANY'S 401(k) PLAN"), or shall establish or maintain a defined contribution plan that Affected Employees shall be eligible to participate in the Primedia Thrift and Retirement Plan up to the same 33 contribution limits as employees of the magazine division of McMullen Argus Publishing Inc. (e) CERTAIN WELFARE BENEFITS MATTERS. Purchaser shall (A) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to any Affected Employee and his or her dependents under any welfare benefit plans of Purchaser and its subsidiaries ("PURCHASER WELFARE PLANS") in which the Affected Employees and their dependents may be eligible to participate after the Closing Date to the extent waived under the applicable corresponding Company Benefit Plan for such Affected Employee and his or her dependents immediately prior to the Closing Date and (B) provide each Affected Employee with credit for any co-payments and deductibles paid prior to the Closing Date in the calendar year in which the Closing Date occurs (or, if later, in the calendar year in which Affected Employees and their dependents commence participation in the applicable Purchaser Welfare Plan) for purposes of satisfying any applicable deductible or out-of-pocket requirements under any Purchaser Welfare Plans in which the Affected Employees and their dependents are eligible to participate after the Closing Date. (f) ADMINISTRATION. Following the date of this Agreement, Seller and Purchaser shall reasonably cooperate in all matters reasonably necessary to effect the trans actions contemplated by this Section 4.06, including exchanging information and data relating to workers compensation, employee benefits and employee benefit plan coverages, and in obtaining any governmental approvals required hereunder. SECTION 4.07. TAX MATTERS. (a) PRE-CLOSING TAX PERIOD TAX RETURNS. (i) As to all Tax Returns of the Company and its subsidiaries due on or before the Closing Date, Parent and Seller shall prepare and timely file such Returns and pay Taxes shown as due thereon. (ii) As to the Federal Income Tax Return of the Company and its subsidiaries for the tax period ending on the Closing Date and at the request of Seller for the tax period ending on March 31, 2001, Purchaser shall cause the Company to prepare a pro forma Return in accordance with past practice and deliver such Return to Parent and Seller at least 30 days before the corresponding Federal Income Tax Return of Seller is due. Parent and Seller shall have sole discretion to modify such pro forma Return for use in its own consolidated Federal Income Tax Returns, except in the event that the election contemplated by Section 4.07(k) is 34 made in which case Purchaser shall have the right to object to any modifications that directly relate to the deemed sale arising from such election. (iii) As to Income Tax Returns (other than Federal) of the Company and its subsidiaries due after the Closing Date for tax periods ending on or before the Closing Date, Purchaser shall cause the Company and its subsidiaries to prepare and timely file such Returns in accordance with past practice; PROVIDED, HOWEVER, (1) Purchaser shall deliver any such Return to Seller at least 30 days before it is due, (2) Seller shall have sole discretion to approve or modify such Return by notice given at least five business days before such Return is due, (3) such Return shall be filed (as so approved or modified) on a timely basis by the Company or its subsidiaries, as applicable, and (4) Seller shall reimburse Purchaser the amount shown to be due on the final version of any such Return prior to the filing thereof. (iv) As to Tax Returns (other than Income Tax Returns) of the Company and its subsidiaries due after the Closing Date for tax periods ending on or before the Closing Date, Purchaser shall cause the Company and its subsidiaries to prepare and timely file such Returns; PROVIDED, HOWEVER, (1) Purchaser shall deliver any such Return to the Seller at least 30 days before it is due, (2) Seller shall have the right to examine and comment on any such Return prior to the filing thereof, and such Return will not be filed without the prior written consent of the Seller, which consent shall not be unreasonably withheld, (3) Seller shall either provide such written consent or notice of objection no later than 15 days before the Return is due and (4) Seller shall reimburse Purchaser the amount shown to be due on the final version of any such Return prior to the filing thereof. (v) Any dispute between the parties under this Section 4.07(a) shall be resolved by the Independent Expert under the principles of Section 1.07(b)(2), except that every effort shall be made by the parties and the Independent Expert to resolve the dispute prior to the due date for the applicable Tax Return. (b) STRADDLE PERIOD TAX RETURNS. (i) As to any Tax Return of the Company and its subsidiaries for a tax period that begins before and ends after the Closing Date (a "STRADDLE PERIOD"), Purchaser shall cause the Company and its subsidiaries to prepare and timely file such Return and pay all Taxes due with respect thereto; PROVIDED, HOWEVER, that Seller shall reimburse Purchaser for any amount owed by Seller with respect to such Return five days before the 35 filing date of such Return. The proviso contained in Section 4.07(a)(iv) shall apply to any such Return. (ii) All Tax Returns for any tax period that includes the Closing Date shall be filed on the basis that the relevant tax period ended as of the close of business on the Closing Date (and thus that Section 4.07(b)(i) does not apply), unless such a Tax Return would be clearly contrary to Applicable Law. (iii) Any dispute between the parties under this Section 4.07(b) shall be resolved by the Independent Expert under the principles of Section 1.07(b)(2), except that every effort shall be made by the parties and the Independent Expert to resolve the dispute prior to the due date for the applicable Tax Return. (c) TRANSFER TAX RETURNS. Purchaser shall pay all Transfer Taxes; PROVIDED, HOWEVER, that each of Parent, Seller, the Company and Purchaser shall use reasonable efforts to avail itself of any available exemptions from any such Transfer Taxes, and to cooperate with the other parties in providing any information and documentation that may be necessary to obtain such exemption. (d) AMENDED TAX RETURNS. After the Closing Date, the Company and its subsidiaries shall not, without the prior written consent of Seller and Parent, file any amended Tax Return for a Pre-Closing Tax Period if Seller would be liable for additional Taxes on such return under Section 7.01. (e) COOPERATION. Seller, the Company and Purchaser shall reasonably cooperate, and shall cause their respective affiliates, officers, employees, agents, auditors and representatives reasonably to cooperate, in preparing and filing all Tax Returns of the Company or its subsidiaries, including maintaining and making available to each other all records necessary in connection with Taxes and in resolving all disputes and audits with respect to all taxable periods relating to Taxes. Seller and its affiliates will need access, from time to time after the Closing Date, to certain accounting and Tax records and information held by the Company and its subsidiaries to the extent such records and information pertain to events occurring prior to the Closing Date; therefore, Purchaser and the Company shall, and shall cause each subsidiary of the Company to, (i) use its best efforts to properly retain and maintain such records until such time as Parent and Seller agree that such retention and maintenance is no longer necessary, and (ii) allow Parent and Seller and their 36 agents and representatives (and agents or representatives of any of their affiliates), upon reasonable notice during normal business hours, to inspect, review and make copies of such records as Parent and Seller may deem necessary or appropriate from time to time, PROVIDED, HOWEVER, that such access does not unreasonably disrupt normal operations of Purchaser or the Company and its subsidiaries. (f) REFUNDS AND CREDITS. Any refund or credit of Income Taxes of the Company or any of its subsidiaries for any Pre-Closing Tax Period shall be for the account of Seller. Purchaser shall promptly notify Seller of any refunds or credits it has received for any Pre-Closing Tax Period. Any refund or credit of Income Taxes of the Company or any of its subsidiaries for any taxable period (or portion thereof) beginning after the Closing Date (a "POST- CLOSING TAX PERIOD") shall be for the account of Purchaser. Purchaser shall, if Seller so requests and at Seller's expense, cause the Company or any of its subsidiaries to file for and obtain any refunds or credits to which Seller is entitled under this Section 4.07(f). Purchaser and the Company shall permit Seller to control the prosecution of any such refund claim. If Seller pays (or causes the Company or any of its subsidiaries to pay prior to the Closing Date) estimated Income Taxes for any Straddle Period in excess of the amount ultimately determined to be due for the portion of such Straddle Period ending on the Closing Date and Purchaser obtains the benefit of such excess payment, Purchaser shall promptly refund such excess to the Seller. (g) TAX SHARING AGREEMENTS. Seller shall cause the provisions of any Tax sharing agreement between Seller or any of its affiliates (other than the Company and its subsidiaries), and the Company or any of its subsidiaries, to be terminated on or before the Closing Date. After the Closing Date, no party shall have any rights or obligations under any such Tax sharing agreement. (h) CLOSING DATE. On the Closing Date, Purchaser shall cause the Company and each subsidiary of the Company to conduct its business in the ordinary course in sub stantially the same manner as presently conducted and on the Closing Date shall not permit the Company or any of its sub sidiaries to effect any extraordinary transactions (other than any such transactions expressly required by Applicable Law or by this Agreement) that could result in Tax liability to the Company or any of its subsidiaries in excess of Tax liability associated with the conduct of its business in the ordinary course. 37 (i) FIRPTA CERTIFICATE. Seller shall deliver to Purchaser at the Closing a certificate in form and substance satisfactory to Purchaser, duly executed and acknowledged, certifying that such Seller is exempt from withholding under Section 1445 of the Code. (j) Purchaser and Seller shall attempt in good faith to agree within 60 days following the Closing Date as to the value of the Warrants on the Closing Date. If Purchaser and Seller cannot agree, the dispute shall be resolved by the Independent Expert under the principles of Section 1.07(b)(2). (k) SECTION 338(h)(10) ELECTIONS. On or prior to the Closing Date, Purchaser shall notify Seller of its intent for Purchaser and Seller to make elections under Section 338(h)(10) of the Code. If such notification is made, Purchaser and Seller shall (i) join in making elections under Section 338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations promulgated thereunder (the "TREASURY REGULATIONS") and any comparable election under state or local Tax law with respect to the Company and each of the subsidiaries listed on Schedule 2.02 subpart A (collectively, the "PURCHASED ENTITIES") (the "ELECTIONS"); (ii) provide to the other the necessary information to permit the Elections to be made; and (iii) as promptly as practicable following the Closing Date, take all actions necessary and appropriate (including filing any necessary forms, returns, elections, schedules and other documents) as may be required to effect and preserve timely Elections. (i) PURCHASE PRICE ALLOCATIONS. If Purchaser notifies Seller of its intent to make the Elections on or prior to Closing, (i) within 120 calendar days following the Closing Date, Purchaser shall deliver to Seller (A) a proposed allocation of the Purchase Price among the assets of the Purchased Entities and (B) a completed IRS Form 8023 and the required schedules thereto ("FORM 8023"), providing for the elections under Section 338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations. If Seller disputes any of such allocations or any of the computations reflected on Form 8023, Seller and Purchaser will attempt in good faith to promptly agree on allocations and/or revised Form 8023. If the parties cannot resolve any such dispute within 60 calendar days of the delivery of such allocations and Form 8023, the items remaining in dispute shall be submitted to the Independent Expert. Seller and Purchaser shall be bound by the allocation of such items as determined by the Independent Expert. The Independent Expert shall make any such determination within 30 calendar 38 days after submission of the remaining disputed items. The fees and expenses of the Independent Expert shall be borne 50% by Purchaser, on the one hand, and 50% by Seller, on the other hand. (ii) Purchaser and Seller agree to file all Tax Returns consistent with the elections, allocations and forms described in this Section 4.07. Purchaser and Seller further agree not to take any position inconsistent therewith for any Tax purpose. SECTION 4.08. PUBLICITY. From the date hereof through the Closing Date, no public release or announcement concerning the transactions contemplated hereby shall be issued by any party without the prior consent of the other parties (which consent shall not be unreasonably withheld or delayed), except as such release or announcement may be required by law or the rules or regulations of any United States or foreign securities exchange; PROVIDED, HOWEVER, that each of the parties may make internal announcements to their respective employees that are consistent with the parties' prior public disclosures regarding the transactions contemplated hereby. SECTION 4.09. RESIGNATIONS. On the Closing Date, Seller shall cause to be delivered to Purchaser duly signed resignations (from the applicable board of directors), effective immediately after the Closing, of all directors of the Company and each of its subsidiaries who are not employees of the Company or one of its subsidiaries and shall take such other action as is necessary to accomplish the foregoing. SECTION 4.10. NO USE OF CERTAIN NAMES. Purchaser shall, and shall cause the Company and its subsidiaries promptly, and in any event (a) within 30 days after the Closing, to revise print advertising and labeling to delete and destroy all references to the Names (as defined below) and (b) within 30 days after the Closing, to change signage and stationery and otherwise discontinue use of the Names. In no event shall Purchaser, the Company or its subsidiaries use any Names after the Closing in any manner or for any purpose different from the use of such Names by the Company during the 30-day period preceding the Closing. With respect to product inventory manufactured by the Company or its subsidiaries prior to the Closing, the Company or its subsidiaries may continue to sell such inventory, notwith standing that it bears one or more of the Names, for a reasonable time after the Closing (not to exceed 60 days). Within 5 days after the Closing, Purchaser shall cause the Company and its subsidiaries to file applications to amend 39 or terminate any certificate of assumed name or d/b/a filings so as to eliminate the right of the Company and its subsidiaries to use the Names. Immediately prior to the Closing, Seller shall cause the names of the Company and its subsidiaries (to the extent they make use of the Names) to be changed to names (that do not include the Names) selected by Purchaser. "NAMES" means "EMAP", "METRO", and "FHM", any variations and derivatives thereof and any other logos or trademarks of Parent or Seller or its affiliates not included in Schedule 2.10. SECTION 4.11. SUPPORT SERVICES. (a) Purchaser agrees that as of the Closing Date and with respect to the Excluded Assets, it shall provide to Seller or its subsidiary the support and other services with respect to the FHM Business as more fully set forth in the Transition Services Agreement in the form attached hereto as Exhibit A, which Agreement shall be entered into by Parent, Seller and the Purchaser as of the Closing Date. (b) Purchaser acknowledges that as of the Closing Date, neither Parent nor Seller shall have any obligation to provide any support or other services to Purchaser, the Company or any of their subsidiaries (including any of the services for which allocations were previously paid by the Company as set forth in the notes to the Financial Statements). SECTION 4.12. LITIGATION MATTERS. Prior to the Closing Date, Purchaser and Seller shall enter into arrangements such that on and after the Closing Date, Purchaser or the Company shall assume full responsibility for (a) the prosecution, defense and/or settlement and all other aspects of the administration of any suit, action, proceeding or arbitration by or primarily against the Company or any of its subsidiaries except in respect of the Excluded Liabilities or Excluded Assets (including the matters set forth on Schedule 2.14) (collectively, the "ACTIONS") and (b) the timely payment of any and all losses, damages, liabilities, obligations or expenses related to or arising out of the Actions. After the Closing, Seller shall (x) promptly deliver to Purchaser (or the Company if so requested) the case files relating to the Actions and (y) provide reasonable cooperation and assistance in connection with the assumption by Purchaser of the Actions contemplated by this Section 4.12. Purchaser shall reimburse Seller for reasonable out-of-pocket costs and expenses (including reasonable attorney's fees and costs of investigation) incurred in assisting Purchaser pursuant to this Section 4.12. Seller shall not be required by this Section 4.12 to take any action that would interfere with 40 the conduct of its business or disrupt its normal operations. In the event that Seller or any of its affiliates (other than the Company and its subsidiaries) is a party to any Action, Seller may, at its own cost and expense, continue to control the prosecution, defense and/or settlement and all other aspects of the administration of that portion of such Action that relates to Seller or any of its affiliates (other than the Company and its subsidiaries). SECTION 4.13. INTERCOMPANY ARRANGEMENTS. Except as contemplated by the Transition Services Agreement, Parent, Seller and Purchaser acknowledge and agree that, immediately prior to the Closing, all Contracts (other than this Agreement and the other Ancillary Agreements) between the Company and its subsidiaries, on the one hand, and Parent or Seller or any of their subsidiaries (exclusive of the Company and its subsidiaries), on the other hand, including all intercompany loans, shall be terminated or settled, as the case may be, and be of no further force or effect, notwithstanding any terms thereof to the contrary. The parties agree that the Max Power license shall be terminated without liability to Parent or its subsidiaries prior to Closing. SECTION 4.14. ACCOUNTS. All payments and reimbursements received by Purchaser or its affiliates in connection with or arising out of the Excluded Assets or Excluded Liabilities after the Closing shall be held by such person in trust for the benefit of Parent and Seller and, immediately upon receipt by such person of any such payment or reimbursement, such person shall pay over to Seller the amount of such payment or reimbursement without right of set off. SECTION 4.15. RECORDS. On the Closing Date, Parent and Seller shall deliver or cause to be delivered to Purchaser all Records, if any, in the possession of Parent or Seller or their subsidiaries (other than the Company and its subsidiaries) primarily relating to the business and operations of the Company and its subsidiaries not then in the possession of the Company and its subsidiaries, subject to the following exceptions: (i) Purchaser recognizes that certain Records may contain incidental information relating to the Company and its subsidiaries, and that Parent and Seller may retain such Records and shall provide copies of the relevant portions thereof to Purchaser; 41 (ii) Parent and Seller may retain all Records prepared in connection with the sale of the Shares, including bids received from other parties and analyses relating to the Company and its subsidiaries; (iii) Parent and Seller may retain any Tax Returns, and Purchaser shall be provided with copies of such Tax Returns only as and to the extent that they relate to the Company or its subsidiaries' separate Tax Returns; and (iv) Parent and Seller may, and may cause the Company and its subsidiaries to, redact any information as and to the extent such information relates to the FHM Business or any other business other than the Company's business which is contained in any of the Records. SECTION 4.16. SUB-LEASE. On Closing, Purchaser, as sublessor, shall enter into a sub-lease substantially in the form annexed hereto as Exhibit B (the "SUB-LEASE") with Seller or its designated subsidiary, as sublessee, with respect to a portion of the premises demised under an existing lease dated March 18, 1997, as amended (the "PRIME LEASE") covering office space in the building known as 110 Fifth Avenue, New York, New York, as more fully set forth in the Sub-Lease in the form attached hereto as Exhibit B. Purchaser, with Seller's cooperation but at no out of pocket cost to Seller, shall exercise commercially reasonable efforts to obtain the Prime Lease landlord's consent to the Sub-Lease. SECTION 4.17. CERTAIN LIABILITIES. After the Closing, Parent and Seller shall reimburse Purchaser for all amounts drawn down by Kick Media Corporation with respect to advertising and promotional services pursuant to the Advertising Agreement, dated December 28, 1999, between the Company and Kick Media Corporation, PROVIDED, HOWEVER, that Purchaser shall use reasonable best efforts to minimize the amount of such reimbursement and shall promptly notify Parent and Seller of any claims and related negotiations with respect to such reimbursement, and PROVIDED, FURTHER, that the amount of such reimbursement shall not exceed $4 million. SECTION 4.18. BANK ACCOUNTS. On or prior to the Closing Date, Seller shall segregate the bank accounts of the Company and its subsidiaries from those of Seller and its affiliates. 42 ARTICLE V CONDITIONS PRECEDENT SECTION 5.01. CONDITIONS TO EACH PARTY'S OBLIGATION. The obligation of Purchaser to purchase and pay for the Shares and the obligation of Seller to sell the Shares is subject to the satisfaction (or waiver by Purchaser and Seller) on or prior to the Closing Date of the following conditions: (a) GOVERNMENTAL APPROVALS. The waiting period under the HSR Act shall have expired or been terminated. All other material Consents of, or registrations, declarations or filings with, or expirations of waiting periods imposed by, any Governmental Entity necessary for the consummation of the Acquisition shall have been obtained or filed or shall have occurred excluding those the obtaining or making of which is necessary but the failure of which to obtain would not prohibit the consummation of the Acquisition. (b) NO INJUNCTIONS OR RESTRAINTS. No Applicable Law or injunction enacted, entered, promulgated, enforced or issued by any Governmental Entity or other legal restraint or prohibition (each, a "LEGAL RESTRAINT") preventing the consummation of the Acquisition shall be in effect; PROVIDED, HOWEVER, that each of the parties shall have used its reasonable best efforts (as required by Section 4.04) to prevent the occurrence or entry of any such Legal Restraint and to remove or appeal as promptly as possible any such Legal Restraint. SECTION 5.02. CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of Purchaser to purchase and pay for the Shares is subject to the satisfaction (or waiver by Purchaser) on or prior to the Closing Date of the following conditions: (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Parent and Seller in this Agreement shall be true and correct in all material respects, as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects, on and as of such earlier date), in each case except for breaches as to matters that would not reasonably be expected to have a Company Material Adverse Effect, and Purchaser shall have received a certificate dated as of the Closing Date signed by an 43 authorized officer of Parent or Seller, as applicable, to such effect. (b) PERFORMANCE OF OBLIGATIONS. Parent and Seller shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by it, by the time of the Closing, and Purchaser shall have received a certificate dated as of the Closing Date signed by an authorized officer of Parent, Seller and the Company, as applicable, to such effect. SECTION 5.03. CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to sell the Shares is subject to the satisfaction (or waiver by Seller) on or prior to the Closing Date of the following conditions: (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Purchaser made in this Agreement shall be true and correct in all material respects, as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects, on and as of such earlier date), in each case except for breaches as to matters that would not reasonably be expected to have a Purchaser Material Adverse Effect, and Parent and Seller shall have received a certificate dated as of the Closing Date signed by an authorized officer of Purchaser to such effect. (b) PERFORMANCE OF OBLIGATIONS OF PURCHASER. Purchaser shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Purchaser by the time of the Closing, and Parent and Seller shall have received a certificate dated as of the Closing Date signed by an authorized officer of Purchaser to such effect. (c) TRANSITION SERVICES AGREEMENT. Purchaser shall have executed and delivered to Parent and Seller the Transition Services Agreement. (d) SUB-LEASE. Purchaser shall have executed and delivered to Parent and Seller the Sub-Lease or a license on comparable terms. SECTION 5.04. FRUSTRATION OF CLOSING CONDITIONS. None of Purchaser, Parent or Seller may rely on the failure of any condition set forth in this Article V to be satisfied if such failure was caused by such party's failure to act in 44 good faith or to use its reasonable best efforts to cause the Closing to occur, as required by Section 4.04. ARTICLE VI TERMINATION, AMENDMENT AND WAIVER SECTION 6.01. TERMINATION. (a) Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the Acquisition and the other trans actions contemplated by this Agreement abandoned at any time prior to the Closing: (i) by mutual written consent of Parent, Seller and Purchaser; (ii) by Parent or Seller if any of the conditions set forth in Sections 5.01 or 5.03 shall have become incapable of fulfillment, and shall not have been waived by Seller; (iii) by Purchaser if any of the conditions set forth in Sections 5.01 or 5.02 shall have become incap able of fulfillment, and shall not have been waived by Purchaser; (iv) by any of Parent, Seller or Purchaser, if a Legal Restraint has become final and non-appealable; or (v) by Seller or Purchaser, if the Closing does not occur on or prior to a date six months from the date hereof (the "OUTSIDE DATE"); PROVIDED that Parent may extend the Outside Date by up to an additional three months in the event of any actions described in the last sentence of Section 4.04(b). PROVIDED, HOWEVER, that the party seeking termination pursuant to clause (ii), (iii) or (iv) is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement. (b) In the event of termination by Seller or Purchaser pursuant to this Section 6.01, written notice thereof shall forthwith be given to the other parties and the transactions contemplated by this Agreement shall be terminated, without further action by any party. If the 45 transactions contemplated by this Agreement are terminated as provided herein: (i) Purchaser shall return all documents and other material received from Parent, Seller, the Company or any other affiliate of Parent or Seller relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof; and (ii) all confidential information received by Purchaser with respect to the business of Parent, Seller and their affiliates (including the Company and its subsidiaries) shall be treated in accordance with the Confidentiality Agreement, which shall remain in full force and effect notwithstanding the termination of this Agreement. SECTION 6.02. EFFECT OF TERMINATION. If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in Section 6.01, this Agreement shall become null and void and of no further force and effect, except for the provisions of (i) Section 4.03 relating to the obligation of Purchaser to keep confidential certain information and data obtained by it, (ii) Section 8.03 relating to certain expenses, (iii) Section 4.05 relating to finder's fees and broker's fees, (iv) Section 6.01 and this Section 6.02, (v) Section 4.08 relating to publicity, (vi) Section 8.09 relating to governing law, (vii) Section 8.10 relating to jurisdiction, (viii) Section 8.11 relating to service of process and (ix) Section 8.12 relating to waiver of jury trial. Nothing in this Section 6.02 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement. ARTICLE VII INDEMNIFICATION SECTION 7.01. TAX INDEMNIFICATION. (a) From and after the Closing Date, Parent and Seller, jointly and severally, shall indemnify Purchaser and its affiliates and each of their respective officers, directors, employees, stockholders, members, partners, agents and representatives and their respective successors and assigns (the "PURCHASER INDEMNITEES") against and hold them harmless from (i) all liability for Taxes of the Company and its subsidiaries for 46 the Pre-Closing Tax Period, (ii) all liability (as a result of Treasury Regulation ss. 1.1502-6(a) (or any similar provision of state, local or foreign law)) for Income Taxes of Parent and Seller or any other corporation which is or has been affiliated with Parent and Seller (other than the Company or any of its subsidiaries), (iii) all liability for Taxes related to the Excluded Assets and (iv) all liability for reasonable legal fees and expenses attributable to any item in clause (i), (ii) or (iii) above. Notwithstanding the foregoing, Parent and Seller shall not indemnify and hold harmless any Purchaser Indemnitee from any liability for Taxes attributable to any action taken on or after the Closing Date by Purchaser, any of its affiliates (including the Company or any of its subsidiaries), or any transferee of Purchaser or any of its affiliates (other than any such action expressly required by Applicable Law or by this Agreement) (a "PURCHASER TAX ACT") or attributable to a breach by Purchaser of its obligations under this Agreement. (b) From and after the Closing Date, Purchaser shall indemnify Parent, Seller and their affiliates and each of their respective officers, directors, employees, stockholders, members, partners, agents and representatives and their respective successors and assigns (the "SELLER INDEMNITEES") against and hold them harmless from (i) all liability for Taxes of the Company and its subsidiaries for all taxable periods whether ending before, on or after the Closing Date other than Taxes described in 7.01(a)(i) through (iii), (ii) all liability for Taxes attributable to a Purchaser Tax Act or to a breach by Purchaser of its obligations under this Agreement, and (iii) all liability for reasonable legal fees and expenses attributable to any item in clause (i) or (ii) above. SECTION 7.02. OTHER INDEMNIFICATION BY SELLER. Subject to the limitations set forth in Section 7.05, from and after the Closing, Parent and Seller shall, jointly and severally, indemnify, defend and hold harmless the Purchaser Indemnitees against any and all claims, losses, damages, liabilities, obligations or expenses, including reasonable third-party legal fees and expenses (collectively, "LOSSES") (other than any Loss relating to Taxes, for which indemnifi cation provisions are set forth in Section 7.01), to the extent arising or resulting from any of the following: (i) any breach of any representation or warranty of Parent or Seller contained in this Agreement; (ii) any breach of any covenant of Parent or Seller contained in this Agreement; 47 (iii) any fees, expenses or other payments incurred or owed by Parent or Seller or the Company to any agent, broker, investment banker or other firm or person retained or employed by it in connection with the transactions contemplated by this Agreement; (iv) any of the Excluded Liabilities; (v) the operation or ownership of the Excluded Assets; and (vi) all monetary payments made, or any other costs incurred by, the Company or its subsidiaries in respect of Actions pending against the Company or its subsidiaries prior to the date hereof as and to the extent they cumulatively exceed $2,000,000; PROVIDED that (i) to the extent the aggregate monetary payments to be made, or any other costs incurred by Purchaser exceed $4,000,000 but are equal to or less than $6,000,000 the Purchaser shall not be indemnified for 50% of the amount in excess of $4,000,000 and (ii) to the extent that the aggregate monetary payments to be made or costs incurred by Purchaser exceeds $6,000,000 in the aggregate, Purchaser shall not be indemnified for any amount in excess of $6,000,000. For the avoidance of doubt, in no case shall Parent or Seller be responsible for more than $3,000,000 pursuant to this clause (vi). SECTION 7.03. OTHER INDEMNIFICATION BY PURCHASER AND THE COMPANY. From and after the Closing, Purchaser shall indemnify, defend and hold harmless the Seller Indemnitees from and against any and all Losses (other than any Loss relating to Taxes, for which indemnification provisions are set forth in Section 7.01), to the extent arising or resulting from any of the following: (i) any breach of any representation or warranty of Purchaser contained in this Agreement; (ii) any breach of any covenant of Purchaser or the Company contained in this Agreement; (iii) any guarantee or obligation to assure performance given or made by Parent or Seller or any affiliate of Parent or Seller (other than the Company or one of its subsidiaries) with respect to any obligation of the Company or any of its subsidiaries; (iv) all obligations, liabilities and commitments of whatever kind and nature, primary or secondary, 48 direct or indirect, express, implied, liquidated, absolute, contingent or otherwise, known or unknown, whether or not accrued, whether arising before, on or after the Closing Date, of the Company or any of its subsidiaries, including any such obligations or liabilities relating to (x) any Company Contract or any agreement, lease, license, permit, plan or commitment that, because it fails to meet the relevant threshold amount or term, is not included within the definition of Company Contracts, (y) any Company Benefit Plan or Company 401(K) Plan or (z) any Action, except, in the case of each of clauses (x) and (z), to the extent Parent and Seller are required to provide indemnification for such obligations, liabilities and commitments under Section 7.02; and (v) the operation or conduct of the Company and its subsidiaries after the Closing except to the extent Parent and Seller are required to provide indemnification for any such obligations, liabilities or commitments pursuant to Section 7.02. SECTION 7.04. INDEMNIFICATION PROCEDURES. (a) PROCEDURES. In order for an indemnified party (the "INDEMNIFIED PARTY") to be entitled to any indemnification provided for under this Agreement (except with respect to claims made pursuant to section 7.02(vi) to which such procedures shall not apply), such Indemnified Party shall, within 20 days following the discovery of the matters giving rise to any Loss, notify the indemnifying party (the "INDEMNIFYING PARTY") in writing of its claim for indemnification for such Loss, specifying in reasonable detail the nature of such Loss and the amount of the liability estimated to accrue therefrom; PROVIDED, HOWEVER, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnified Party failed to give such notice). Thereafter, the Indemnified Party shall deliver to the Indemnifying Party, promptly after the Indemnified Party's receipt thereof, all information and documentation reasonably requested by the Indemnifying Party with respect to such Loss; PROVIDED, HOWEVER, that failure to make such delivery shall not affect the indemnification provided here under except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure. If the indemnification sought pursuant hereto involves a claim made by a third party (which shall not 49 include Parent, Seller or any of their affiliates or Purchaser or its affiliates) against the Indemnified Party (a "THIRD PARTY CLAIM"), the Indemnifying Party shall be entitled to participate in the defense of such Third Party Claim and, if it so chooses, to assume the defense of such Third Party Claim with counsel selected by the Indemnifying Party. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof. If the Indemnifying Party chooses to defend or prosecute a Third Party Claim, all of the parties hereto shall cooperate in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the Indemnifying Party's request) the provision to the Indemnifying Party of records and information which are relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. If the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party will agree to any settlement, compromise or discharge of such Third Party Claim which the Indemnifying Party may recommend and which by its terms obligates the Indemnifying Party to pay the full amount of the liability in connection with such Third Party Claim; PROVIDED that if such settlement, compromise or discharge would impose a material order, material injunction or other material non-monetary damages on the Indemnified Party, the Indemnifying Party shall not settle or compromise such Third Party Claim without prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed). Whether or not the Indemnifying Party shall have assumed the defense of a Third Party Claim, the Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying Party's prior written consent. (b) PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS. (1) If one party is responsible for the payment of Taxes pursuant to Section 7.01 of this Agreement (the "TAX INDEMNIFYING PARTY"), and the other party to this Agreement (the "TAX INDEMNIFIED PARTY") receives a notice of deficiency, proposed adjustment, adjustment, assessment, audit, examination, suit, dispute or other claim (a "TAX CLAIM") with respect (in whole or in part) to such Taxes, the Tax Indemnified Party shall notify the Tax Indemnifying Party in writing of such Tax Claim in accordance with the procedures set forth in Section 7.04(a). 50 (2) The Tax Indemnifying Party shall assume and control the applicable audit or examination and the defense of a Tax Claim involving any Taxes for which it has an obligation to indemnify the Tax Indemnified Party pursuant to Section 7.01 of this Agreement, and the Tax Indemnified Party and its affiliates agree to cooperate with the Tax Indemnifying Party in pursuing such contest, including execution of any powers of attorney in favor of the Tax Indemnifying Party. Notwithstanding anything to the contrary contained herein, the Tax Indemnifying Party shall keep the Tax Indemnified Party informed of all material developments and events relating to such Tax Claim and the Tax Indemnified Party, at its own cost and expense and with its own counsel, shall have the right to participate in (but not control) the applicable audit or examination and defense of such Tax Claim. In no case shall any Tax Indemnified Party settle or otherwise compromise any Tax Claim without the Tax Indemnifying Party's prior written consent. Neither party shall settle a Tax Claim relating solely to Income Taxes of the Company or any of its subsidiaries for a Straddle Period without the other party's prior written consent. SECTION 7.05. LIMITATIONS ON INDEMNIFICATION. Notwithstanding the foregoing provisions of this Article VII, (i) except with respect to breaches of Section 2.02 or Section 2.05 (as to which the provisions of this subclause (i) shall not apply) neither Parent nor Seller shall be responsible, pursuant to Section 7.02(i) or Section 7.02(ii), for any Losses suffered by any Purchaser Indemnitee arising out of a breach of any of Parent's or Seller's representations or warranties or covenants to be performed prior to Closing unless a claim therefor is asserted in writing within one year after the Closing Date, failing which such claim shall be waived and extinguished, (ii) except with respect to breaches of Section 2.02 or Section 2.05 (as to which the provisions of this subclause (ii) shall not apply) neither Parent nor Seller shall be liable, pursuant to Section 7.02(i) or Section 7.02(ii) for any Losses suffered by any Purchaser Indemnitee arising out of a breach of any of Parent's or Seller's representations or warranties or covenants to be performed prior to Closing, in each case for (x) any Losses suffered by any Purchaser Indemnitee unless the aggregate of all Losses suffered by the Purchaser Indemnitees exceeds, on a cumulative basis, an amount equal to $5,050,000, and then only to the extent of any such excess or (y) any individual items where the Loss relating thereto is less than $50,000 (and such items shall not be aggregated for purposes of the immediately preceding clause (x)), (iii) except with respect to breaches of 51 Section 2.02 or Section 2.05 (as to which the provisions of this subclause (iii) shall not apply), the aggregate liability of Parent and Seller hereunder pursuant to Section 7.02(i) and Section 7.02(ii) for Losses suffered by the Purchaser Indemnitees shall in no event exceed $101,000,000, (iv) neither Parent nor Seller shall have any liability pursuant to Section 7.02(i) in respect of any breach if Purchaser had knowledge of such breach as of the date of this Agreement and (v) none of the parties hereto shall be liable to any other for indirect, special, incidental, consequential or punitive damages claimed by such other party. In no event shall Parent or Seller be obligated to indemnify Purchaser or any other person with respect to any matter to the extent that such matter was reflected in the calculation of the adjustment to the Closing Date Payment, if any, pursuant to Section 1.07(c). (b) Purchaser acknowledges that it, its affiliates and its representatives and agents have received or been afforded the opportunity to review prior to the date hereof all written materials which Parent or the Seller were required to deliver or make available, as the case may be, to Purchaser pursuant to this Agreement on or prior to the date hereof. Purchaser acknowledges that it, its affiliates and its representatives and agents have been permitted full and complete access to the Records, facilities, equipment, Tax Returns, Contracts, insurance policies (or summaries thereof) and other properties and assets of the Company and its subsidiaries that it, its affiliates and its representatives have desired or requested to see and/or review, and that it, its affiliates and its representatives and agents have had a full opportunity to meet with the officers and employees of the Company to discuss the businesses and assets of the Company and its subsidiaries. Purchaser further acknowledges and agrees that, (i) other than the representations and warranties of Parent and Seller specifically contained in this Agreement, neither Parent nor Seller or any other person has made any representation or warranty either expressed or implied (A) with respect to the Company and its subsidiaries or their respective assets and liabilities, the Excluded Assets, the Excluded Liabilities, the transactions contemplated hereby or the Shares or (B) as to the accuracy or completeness of any information regarding the Company and its subsidiaries furnished or made available to Purchaser, its affiliates, and its agents and representatives and (ii) Purchaser shall have no claim or right to indemnification pursuant to this Article VII and none of Parent, Seller, the Company, any subsidiary of the Company or any other person shall have or be subject to any liability to Purchaser or any other person with respect to any information, documents or materials furnished by Parent, 52 Seller, the Company or any of their respective affiliates, officers, directors, employees, agents, representatives or advisors to Purchaser, its affiliates and its agents and representatives, including the Confidential Memorandum dated April, 2001 and any information, documents or material made available to Purchaser in certain "data rooms", management presentations or any other form in expectation of the trans actions contemplated hereby. (c) Purchaser further acknowledges and agrees that, should the Closing occur, its sole and exclusive remedy with respect to any and all claims relating to this Agreement, the Company and its subsidiaries or their respective assets and liabilities, the Excluded Assets, the Excluded Liabilities, the transactions contemplated hereby and the Shares (other than claims of, or causes of action arising from, fraud) shall be pursuant to the indemnification provisions set forth in this Article VII. In furtherance of the foregoing, each of Purchaser and the Company hereby waives, from and after the Closing, any and all rights, claims and causes of action (other than claims of, or causes of action arising from, fraud) Purchaser, the Company or any of its subsidiaries or any other Purchaser Indemnitee may have against Parent, Seller or any of their respective affiliates arising under or based upon any Federal, state, local or foreign statute, law, ordinance, rule or regulation or otherwise (except pursuant to the indemnification provisions set forth in this Article VII). SECTION 7.06. CALCULATION OF INDEMNITY PAYMENTS. The amount of any Loss for which indemnification is provided under this Article VII shall be net of any amounts recovered or recoverable by the Indemnified Party under insurance policies with respect to such Loss and shall be (a) increased to take account of any net Tax cost actually incurred by the Indemnified Party arising from the receipt of indemnity payments hereunder (grossed up for such increase) and (b) reduced to take account of any net Tax benefit actually realized by the Indemnified Party arising from the incurrence or payment of any such indemnified amount. In computing the amount of any such Tax cost or Tax benefit, the Indemnified Party shall be deemed to recognize all other items of income, gain, loss, deduction or credit before recognizing any item arising from the receipt of any indemnity payment hereunder or the incurrence or payment of any indemnified amount. SECTION 7.07. TAX TREATMENT OF INDEMNIFICATION. For all Tax Purposes, Purchaser and Seller agree to treat any indemnity payment under this Agreement as an adjustment to the Purchase Price unless a final determination (which 53 shall include the execution of an IRS Form 870-AD or successor form) provides otherwise. SECTION 7.08. AUDIT ADJUSTMENTS RELATING TO INCOME TAXES. If as a result of an Income Tax audit that involves the Company or its subsidiaries there is an adjustment to an item which results in the Purchaser or Seller incurring a Tax detriment and the other party realizing a corresponding Tax benefit, then the party receiving such Tax benefit will pay to the other party the amount of such Tax benefit actually realized, but only to the extent of such Tax detriment. ARTICLE VIII GENERAL PROVISIONS SECTION 8.01. ASSIGNMENT. Neither this Agreement nor any of the rights and obligations of the parties here under may be assigned or delegated by any of the parties hereto without the prior written consent of each of the other parties hereto, except that (a) Purchaser may assign its right to purchase the Shares hereunder to any of its affiliates without the prior written consent of Seller, (b) Parent or Seller may assign any rights and obligations hereunder to any affiliates without the prior written consent of Purchaser and (c) an assignment by operation of law in connection with a merger or consolidation shall not require the consent of the other parties hereto. Notwith standing the foregoing, each of Parent, Seller and Purchaser shall remain liable for all of their respective obligations under this Agreement. Subject to the first sentence of this Section 8.01, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and no other person shall have any right, obligation or benefit hereunder. Any attempted assignment or transfer in violation of this Section 8.01 shall be void. SECTION 8.02. NO THIRD-PARTY BENEFICIARIES. Except as provided in Article VII, this Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such assigns, any legal or equitable rights hereunder. SECTION 8.03. EXPENSES. Whether or not the transactions contemplated by this Agreement are consummated, each of the parties hereto shall be responsible for the 54 payment of its own respective costs and expenses (which, in the case of Parent and Seller shall include any non-employee related costs and expenses of the Company and its sub sidiaries directly related to the Acquisition incurred prior to closing) incurred in connection with the negotiations leading up to and the performance of its respective obligations pursuant to this Agreement or the Ancillary Agreements, including the fees of any attorneys, accountants, brokers or advisors employed or retained by or on behalf of such party. SECTION 8.04. NOTICES. All notices, requests, permissions, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) five business days following sending by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile; PROVIDED that the facsimile transmission is promptly confirmed by telephone, (c) when delivered, if delivered personally to the intended recipient and (d) one business day following sending by overnight delivery via a national courier service and, in each case, addressed to a party at the following address for such party: (i) if to Parent or Seller, Emap plc 40 Bernard Street London, WC1 LW England Attention: Group Legal Director Fax: 011-44-02-0727-86941 with a copy to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, NY 10019-7475 Attention: Kevin J. Grehan Fax: (212)474-3700 (ii) if to Purchaser, Primedia Inc. 745 Fifth Avenue New York, NY 10151 Attention: Beverly C. Chell Facsimile: (212) 745-0100 55 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Attention: Gary I. Horowitz Facsimile: (212) 455-2502 or to such other address(es) as shall be furnished in writing by any such party to each of the other parties hereto in accordance with the provisions of this Section 8.04. SECTION 8.05. HEADINGS; CERTAIN DEFINITIONS. (a) The descriptive headings of the several Articles and Sections of this Agreement and the Disclosure Schedule to this Agreement and the Table of Contents to this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. All references herein to "Articles", "Sections", "Exhibits" or "Schedules" shall be deemed to be references to Articles or Sections hereof or Exhibits or Schedules hereto unless otherwise indicated. (b) For all purposes hereof: "AFFILIATE" of any party means any person or entity controlling, controlled by or under common control with such party. "BUSINESS DAY" shall refer to a day, other than a Saturday or a Sunday, on which commercial banks are not required or authorized to close in the City of New York. "COMPANY MATERIAL ADVERSE EFFECT" means a material adverse effect (i) on the financial condition or results of operations of the Company and its subsidiaries, taken as a whole or (ii) on the ability of Seller to consummate the Acquisition. For purposes of this Agreement, "Company Material Adverse Effect" shall exclude any effects on the Company or its subsidiaries to the extent resulting from (A) changes in the United States or foreign economies in general, (B) changes in the Company's and its subsidiaries' industries in general and not specifically relating to the Company or a subsidiary of the Company, (C) the announcement by Parent or Seller of its intention to sell the Company or pending status thereof or (D) the consummation of the trans actions contemplated hereby. 56 "INCLUDING" or "INCLUDES" means including, without limitation. "KNOWLEDGE OF THE COMPANY" means the actual knowledge of Tom Moloney, Keith Marriot and Steve Parr. "PERSON" means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Entity or other entity. "SUBSIDIARY" of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first person or by another subsidiary of such first person. SECTION 8.06. COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered, in person or by telecopier, receipt acknowledged, to the other parties hereto. SECTION 8.07. INTEGRATED CONTRACT; EXHIBITS/ SCHEDULES. This Agreement, including the Schedules (and the Introduction thereto) and Exhibits hereto, any written amendments to the foregoing satisfying the requirements of Section 8.13 hereof, the Confidentiality Agreement and the Ancillary Agreements, including the schedules and exhibits thereto, constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede any previous agreements and understandings between the parties with respect to such matters. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement. There are no restrictions, promises, representations, warranties, agreements or undertakings of any party hereto with respect to the transactions contemplated by this Agreement, the Confidentiality Agreement or the Ancillary Agreements other than those set forth herein or therein. In the event of any conflict between the provisions of this Agreement (including the Schedules (and the Introduction thereto) and Exhibits hereto), on the one hand, and the provisions of the Confidentiality Agreement or the Ancillary Agreements 57 (including the schedules and exhibits thereto), on the other hand, the provisions of this Agreement shall control. The disclosure of any matter in any Schedule to this Agreement shall be deemed to be a disclosure for any other Schedule for which such matter would reasonably be expected to be pertinent in light of the disclosure made, but shall expressly not be deemed to constitute an admission by Parent or Seller, or to otherwise imply, that any such matter is material for the purpose of this Agreement. SECTION 8.08. SEVERABILITY; ENFORCEMENT. The invalidity of any portion hereof shall not affect the validity, force or effect of the remaining portions hereof. If it is ever held that any restriction hereunder is too broad to permit enforcement of such restriction to its fullest extent, each party agrees that a court of competent jurisdiction may enforce such restriction to the maximum extent permitted by law, and each party hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction. SECTION 8.09. GOVERNING LAW. This Agreement and any disputes arising under or related thereto (whether for breach of contract, tortuous conduct or otherwise) shall be governed and construed in accordance with the internal laws of the State of New York. Nothing contained in the preceding sentence or elsewhere in this Agreement shall preclude the enforcement of any judgment or order in any jurisdiction where a party owns any assets or property. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (a) any Court of the State of New York sitting in New York County and (b) any United States Federal Court sitting in New York County, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. SECTION 8.10. JURISDICTION. Each party irrevocably agrees that any legal action, suit or proceeding against them arising out of or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto (whether for breach of contract, tortuous conduct or otherwise) shall be brought in the United States District Court for the Southern District of New York, or, if such court does not have subject matter jurisdiction, the state courts of New York located in New York County and hereby irrevocably accepts and submits 58 to the exclusive jurisdiction and venue of the aforesaid courts IN PERSONAM, with respect to any such action, suit or proceeding. SECTION 8.11. SERVICE OF PROCESS. Each of the parties agrees that service of any process, summons, notice or document by U.S. registered mail to such party's respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters for which it has sub mitted to jurisdiction pursuant to Section 8.10. SECTION 8.12. WAIVER OF JURY TRIAL. Each party hereby waives to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto. Each party (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 8.12. SECTION 8.13. AMENDMENTS. This Agreement may be amended, modified, superseded or canceled and any of the terms, covenants, representations, warranties or conditions hereof may be waived only by an instrument in writing signed by each of the parties hereto or, in the case of a waiver, by or on behalf of the party waiving compliance. SECTION 8.14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained in this Agreement shall survive the consummation of the trans actions contemplated by this Agreement through the period during which claims for indemnification in respect thereof may be made pursuant to Article VII; PROVIDED that if a claim is made prior to the end of such period the expiration of the related representation or warranty shall have no effect on the claim. SECTION 8.15. FURTHER ASSURANCES. On and after the Closing Date each party hereto shall take such other actions and execute such other documents and instruments of conveyance and transfer as may be reasonably requested by the other parties hereto from time to time to effectuate or confirm the transfer of the Shares to Purchaser in accordance with the terms of this Agreement. SECTION 8.16. JOINT AND SEVERAL. All obligations of Parent, Seller or Parent and Seller shall be the joint and several obligations of Parent and Seller. 59 IN WITNESS WHEREOF, Parent, Seller, the Company and Purchaser have duly executed this Agreement as of the date first written above. EMAP PLC, by /s/ Thomas Moloney -------------------------- (Thomas Moloney) CHIEF OPERATING OFFICER EMAP AMERICA PARTNERS, by /s/ Thomas Moloney -------------------------- (Thomas Moloney) AUTHORIZED OFFICER EMAP, INC., by /s/ Thomas Moloney -------------------------- (Thomas Moloney) AUTHORIZED OFFICER PRIMEDIA INC., by /s/ Beverly C. Chell -------------------------- (Beverly C. Chell) VICE CHAIRMAN EXHIBIT A [Form of Transition Services Agreement] A-1 EXHIBIT B [Form of Sub-Lease Agreement] A-2 EXHIBIT C [Warrant Term Sheet] A-3 EX-21.1 4 a2058770zex-21_1.txt EXHIBIT 21.1 Exhibit 21.1 PRIMEDIA INC SUBSIDIARIES About.com, Inc., a Delaware corporation Adams/Intertec International, Inc., a Delaware corporation Adams/Laux Company, Inc., a Delaware corporation AgriClick LLC, a Delaware corporation Auto Dealer Services, Inc. Bacon's Information, Inc., a Delaware corporation Bowhunter Magazine, Inc., a Pennsylvania corporation Canadian Red Book, Inc., a Canadian company Canoe & Kayak, Inc., a Delaware corporation Channel One Communications Corporation, a Delaware corporation Channel One Interactive, Inc., a Delaware corporation Climbing, Inc., a Delaware corporation Communication Concepts, Inc., a Nevada corporation ConsumerClick Corp., a Delaware corporation Cover Concepts Marketing Services, LLC, a Delaware limited liability company Cowles History Group, Inc., a Virginia corporation Creative Technologies LLC, a Delaware corporation CSK Publishing Company, Inc., a Delaware corporation Digibid LLC, a Delaware corporation Electrical Construction LLC, a Delaware corporation ENO Productions, Inc., a Delaware corporation Films for the Humanities & Sciences, Inc., a Delaware corporation Game & Fish Publications, Inc., a Delaware corporation Go Lo Entertainment, Inc., a California corporation GR8RIDE.com, Inc., a Delaware corporation Guias do Brasil Ltda., a Brazilian company Haas Publishing Companies, Inc., a Delaware corporation Hacienda Productions, Inc., a Delaware corporation Horse & Rider, Inc., a California corporation HPC Brazil, Inc., a Delaware corporation HPC do Brasil Ltda., a Brazilian company HPC Interactive, Inc., a Delaware corporation HPC Interactive, LLC, a Delaware corporation In New York LLC, a Delaware corporation IndustryClick Corp., a Delaware corporation IntelliChoice, Inc., a California corporation PRIMEDIA Business Magazines & Media Inc., a Delaware corporation Intertec Publishing (UK) Limited, a United Kingdom company Kagan Asia Media Ltd., a United Kingdom company Kagan Media Appraisals, Inc., a California corporation Kagan Seminars, Inc., a California corporation Kagan World Media, Inc., a Delaware corporation Kagan World Media Limited, a United Kingdom company 2 Kitplanes Acquisition Company, a Delaware corporation Liberty Management Corporation Liberty Productions, Inc. Low Rider Publishing Group, Inc., a California corporation MarketingClick LLC, a Delaware corporation McMullen Argus Publishing, Inc., a California corporation Media Central Acquisition, LLC, a Delaware corporation MediaCentral LLC, a Delaware corporation Miramar Communications, Inc., a California corporation New Car Shows, Inc. Paul Kagan Associates, Inc., a Delaware corporation PRIMEDIA California Digital Inc. PRIMEDIA Companies Inc., a Delaware corporation PRIMEDIA Digital Video Holdings LLC, a Delaware corporation PRIMEDIA Enterprises, Inc., a Delaware corporation PRIMEDIA Enthusiast Publications, Inc., a Pennsylvania corporation PRIMEDIA Finance Shared Services, Inc., a Delaware corporation PRIMEDIA Holdings III, Inc., a Delaware corporation PRIMEDIA Information, Inc., a Delaware corporation PRIMEDIA International, Inc., a Delaware corporation PRIMEDIA Leisure Group Inc. PRIMEDIA Magazines, Inc., a Delaware corporation PRIMEDIA Magazine Finance, Inc., a Delaware corporation PRIMEDIA Membership Clubs Inc. PRIMEDIA Productions Dallas LLC, a Delaware corporation PRIMEDIA Special Interest Publications, Inc., a Delaware corporation PRIMEDIA Specialty Group Inc. PRIMEDIA TeenClick Corporation, a Delaware corporation PRIMEDIA Ventures, Inc., a Delaware corporation PRIMEDIANet Inc., a Delaware corporation PRIMEDIA Workplace Learning LLC, a Delaware corporation PRIMEDIA Workplace Learning LP, a Delaware limited partnership PRIMEDIA Enthusiast Publications, Inc., a Pennsylvania corporation Pro Associates Simba Information, Inc., a Connecticut corporation Symbol of Excellence Publishers, Inc., an Alabama corporation TelecomClick LLC, a Delaware corporation The Virtual Flyshop, Inc., a Colorado corporation Westcott PRIMEDIA Limited, a United Kingdom company EX-23.2 5 a2058719zex-23_2.txt EXHIBIT 23.2 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment No. 1 to Registration Statement No. 333-67804 of PRIMEDIA Inc. on Form S-4 of our reports dated February 1, 2001 (February 28, 2001 as to Note 3), appearing in the Annual Report on Form 10-K of PRIMEDIA Inc. for the year ended December 31, 2000 and to the reference to us under the heading "Experts" in such Registration Statement. /s/ Deloitte & Touche LLP New York, New York September 6, 2001 EX-23.3 6 a2058719zex-23_3.txt EXHIBIT 23.3 Exhibit 23.3 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in Amendment No. 1 to the Registration Statement (Form S-4, No. 333-67804) and related Prospectus of PRIMEDIA Inc. for the registration of $500.0 million 8 7/8% Senior Notes due 2011 and to the incorporation by reference therein of our report dated January 29, 2001 (except Note 6, as to which the date is March 29, 2001) with respect to the consolidated financial statements of About.com, Inc. and subsidiaries included in PRIMEDIA Inc.'s Current Report on Form 8-K/A dated April 26, 2001, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP New York, New York September 6, 2001 EX-25.1 7 a2058770zex-25_1.txt EXHIBIT 25.1 Exhibit 25.1 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) --------------------------- PRIMEDIA Inc. (Exact name of obligor as specified in its charter) Delaware 13-3647573 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Adams/Intertec International, Inc. (Exact name of obligor as specified in its charter) Delaware 95-3549600 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Adams/Laux Company, Inc. (Exact name of obligor as specified in its charter) Delaware 04-3250143 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Bacon's Information, Inc. (Exact name of obligor as specified in its charter) Delaware 36-4011543 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Canoe & Kayak, Inc. (Exact name of obligor as specified in its charter) Delaware 41-1895510 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Channel One Communications Corporation (Exact name of obligor as specified in its charter) Delaware 13-3783278 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Climbing, Inc. (Exact name of obligor as specified in its charter) Delaware 41-1885204 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) -2- Cover Concepts Marketing Services, LLC (Exact name of obligor as specified in its charter) Delaware 04-3370389 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) CSK Publishing Company, Inc. (Exact name of obligor as specified in its charter) Delaware 13-3023395 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) ENO Productions, Inc. (Exact name of obligor as specified in its charter) Delaware 13-4162379 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Films for the Humanities & Sciences, Inc. (Exact name of obligor as specified in its charter) Delaware 13-1932571 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Game & Fish Publications, Inc. (Exact name of obligor as specified in its charter) Delaware 13-4082334 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) -3- Haas Publishing Companies, Inc. (Exact name of obligor as specified in its charter) Delaware 58-1858150 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Hacienda Productions, Inc. (Exact name of obligor as specified in its charter) Delaware 13-4167234 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) HPC Brazil, Inc. (Exact name of obligor as specified in its charter) Delaware 13-4083040 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Business Magazines & Media Inc. (Exact name of obligor as specified in its charter) Delaware 48-1071277 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Kitplanes Acquisition Company (Exact name of obligor as specified in its charter) Delaware 95-4617433 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) -4- Paul Kagan Associates, Inc. (Exact name of obligor as specified in its charter) Delaware 13-4140957 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Enterprises, Inc. (Exact name of obligor as specified in its charter) Delaware 13-4113525 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Finance Shared Services, Inc. (Exact name of obligor as specified in its charter) Delaware 13-4144616 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Holdings III, Inc. (Exact name of obligor as specified in its charter) Delaware 13-3617238 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Information, Inc. (Exact name of obligor as specified in its charter) Delaware 13-3555670 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) -5- PRIMEDIA Magazines, Inc. (Exact name of obligor as specified in its charter) Delaware 13-3616344 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Magazine Finance, Inc. (Exact name of obligor as specified in its charter) Delaware 13-3616343 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Special Interest Publications, Inc. (Exact name of obligor as specified in its charter) Delaware 52-1654079 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Workplace Learning LP (Exact name of obligor as specified in its charter) Delaware 13-4119787 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Bowhunter Magazine, Inc. (Exact name of obligor as specified in its charter) Pennsylvania 23-2667502 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) -6- PRIMEDIA Enthusiast Publications, Inc. (Exact name of obligor as specified in its charter) Pennsylvania 23-1577768 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Communication Concepts, Inc. (Exact name of obligor as specified in its charter) Nevada 88-0329261 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Cowles History Group, Inc. (Exact name of obligor as specified in its charter) Virginia 54-1606227 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Symbol Of Excellence Publishers, Inc. (Exact name of obligor as specified in its charter) Alabama 63-0845698 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) The Virtual Flyshop, Inc. (Exact name of obligor as specified in its charter) Colorado 84-1318377 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) -7- Go Lo Entertainment, Inc. (Exact name of obligor as specified in its charter) California 95-4301031 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Horse & Rider, Inc. (Exact name of obligor as specified in its charter) California 33-0480523 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) IntelliChoice, Inc. (Exact name of obligor as specified in its charter) California 77-0168905 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Kagan Media Appraisals, Inc. (Exact name of obligor as specified in its charter) California 77-0157500 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Kagan Seminars, Inc. (Exact name of obligor as specified in its charter) California 94-2515843 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) -8- Low Rider Publishing Group, Inc. (Exact name of obligor as specified in its charter) California 95-4307029 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) McMullen Argus Publishing, Inc. (Exact name of obligor as specified in its charter) California 95-2663753 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Miramar Communications, Inc. (Exact name of obligor as specified in its charter) California 95-2845391 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Simba Information, Inc. (Exact name of obligor as specified in its charter) Connecticut 06-1281600 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Kagan World Media, Inc. (Exact name of obligor as specified in its charter) Delaware 77-0225377 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) -9- MediaCentral LLC (Exact name of obligor as specified in its charter) Delaware 13-4113602 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Companies Inc. (Exact name of obligor as specified in its charter) Delaware 13-4177687 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Leisure Group Inc. (Exact name of obligor as specified in its charter) Delaware 51-0386031 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Specialty Group Inc. Delaware 36-4099296 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) PRIMEDIA Membership Clubs Inc. California 33-0759805 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Liberty Management Corporation Pennsylvania 23-2241870 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Liberty Productions, Inc. Pennsylvania 23-2075682 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Pro Associates, Inc. Pennsylvania 25-1587282 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) New Car Shows, Inc. Pennsylvania 23-2965172 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Auto Dealer Services, Inc. Pennsylvania 23-2257923 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 745 Fifth Avenue New York, New York 10151 (Address of principal executive offices) (Zip code) --------------------------- 8-7/8% Senior Notes due 2011 (Title of the indenture securities) = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = -10- 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.
- --------------------------------------------------------- -------------------------------------------- Name Address - --------------------------------------------------------- -------------------------------------------- Superintendent of Banks of the State of New York 2 Rector Street, New York, N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -11- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 5th day of July, 2001. THE BANK OF NEW YORK By: /s/ MING SHIANG ---------------------------------- Name: MING SHIANG Title: VICE PRESIDENT -12- Exhibit 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin.. $2,811,275 Interest-bearing balances........................... 3,133,222 Securities: Held-to-maturity securities......................... 147,185 Available-for-sale securities....................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell................................ 3,378,526 Loans and lease financing receivables: Loans and leases held for sale...................... 74,702 Loans and leases, net of unearned income............................................ 37,471,621 LESS: Allowance for loan and lease losses...................................... 599,061 Loans and leases, net of unearned income and allowance.............................. 36,872,560 Trading Assets......................................... 11,757,036 Premises and fixed assets (including capitalized leases)............................................. 768,795 Other real estate owned................................ 1,078 Investments in unconsolidated subsidiaries and associated companies................................ 193,126 Customers' liability to this bank on acceptances outstanding......................................... 592,118 Intangible assets...................................... Goodwill............................................ 1,300,295 Other intangible assets............................. 122,143 Other assets........................................... 3,676,375 ---------
Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing................................. 10,586,346 Interest-bearing.................................... 15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing................................. 373,085 Interest-bearing.................................... 24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)........................... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 ----------- Total liabilities...................................... $63,658,235 =========== EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 - ---------------------------------------------------------------------------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi Gerald L. Hassell Directors Alan R. Griffith - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----