-----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, G4ku/Gn+cF+hdpZYYq4yen1WWqv+7MMiQDyESaOKRmeZ1S84d9Y7pZZnI9nIJhNy M75UoLY0HKqLKPA06zcZQA== 0000886475-99-000026.txt : 19991123 0000886475-99-000026.hdr.sgml : 19991123 ACCESSION NUMBER: 0000886475-99-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COACTIVE MARKETING GROUP INC CENTRAL INDEX KEY: 0000886475 STANDARD INDUSTRIAL CLASSIFICATION: [9995] IRS NUMBER: 061340408 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20394 FILM NUMBER: 99762022 BUSINESS ADDRESS: STREET 1: 415 NORTHERN BLVD CITY: GREAT NECK STATE: NY ZIP: 11021-4812 BUSINESS PHONE: 5164654600 MAIL ADDRESS: STREET 1: 415 NORTHERN BLVD CITY: GREAT NECK STATE: NY ZIP: 11021-4812 FORMER COMPANY: FORMER CONFORMED NAME: INMARK ENTERPRISES INC DATE OF NAME CHANGE: 19951012 FORMER COMPANY: FORMER CONFORMED NAME: HEALTH IMAGE MEDIA INC DATE OF NAME CHANGE: 19930328 10-Q 1 COACTIVE MARKETING GROUP, INC. FORM 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) _x_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-20394 COACTIVE MARKETING GROUP, INC. ---------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 06-1340408 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 415 Northern Boulevard Great Neck, New York 11021 - --------------------------------------- -------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (516) 622-2800 ------------- Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _x_ No ___ On November 13, 1999, 4,515,356 shares of the Registrant's Common Stock, par value $.001 a share, were outstanding. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INDEX COACTIVE MARKETING GROUP, INC. AND SUBSIDIARIES PART I - FINANCIAL INFORMATION Page - ------------------------------ ---- Item 1. Consolidated Financial Statements of CoActive Marketing Group, Inc. (Unaudited) Consolidated Balance Sheets - September 30, 1999 and March 31, 1999 3 Consolidated Statements of Operations - Three month and six month periods ended September 30, 1999 and September 30, 1998 4 Consolidated Statement of Stockholders' Equity - Six month period ended September 30, 1999 5 Consolidated Statements of Cash Flows - Six month periods ended September 30, 1999 and September 30, 1998 6 Notes to Unaudited Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 PART II - OTHER INFORMATION 13 Item 1. Legal Proceedings Items 2, 3 and 5. Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit No. Description of Exhibit 3.1 Certificate of Incorporation, as amended, of the Registrant 3.2 By-Laws, as amended, of the Registrant 27 Financial Data Schedule (b) Reports on Form 8-K. None SIGNATURES 15
2 PART I - FINANCIAL INFORMATION COACTIVE MARKETING GROUP, INC. Consolidated Balance Sheets September 30, 1999 and March 31, 1999 September 30, 1999 March 31, 1999* -------------------- ----------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 676,163 2,687,575 Accounts receivable 9,520,673 7,042,640 Unbilled contracts in progress 3,465,458 9,537,540 Prepaid taxes 1,152,091 1,502,431 Prepaid expenses and other current assets 856,880 376,593 ----------------- ----------------- Total current assets 15,671,265 21,146,779 ----------------- ----------------- Furniture, fixtures and equipment, net 2,121,337 1,820,479 Less accumulated depreciation 654,095 453,341 ----------------- ----------------- 1,467,242 1,367,138 ----------------- ----------------- Notes receivable from officer 225,000 225,000 Goodwill, net 19,038,109 19,548,929 Deferred financing costs 87,150 99,600 Other assets 66,822 64,997 ----------------- ----------------- Total assets $ 36,555,588 42,452,443 ================= ================= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 3,275,123 3,499,388 Deferred revenue 4,030,131 3,096,698 Accrued job costs 4,725,991 8,841,958 Accrued compensation 245,431 320,273 Other accrued liabilities 509,426 991,137 Deferred taxes payable 625,884 625,884 Notes payable bank - current 625,000 - Subordinated notes payable - current 625,000 625,000 ----------------- ----------------- Total current liabilities 14,661,986 18,000,338 Notes payable bank - long term 8,035,000 10,000,000 Subordinated notes payable - long term 1,875,000 1,875,000 ----------------- ----------------- Total liabilities 24,571,986 29,875,338 ----------------- ----------------- Stockholders' equity: Class A convertible preferred stock, par value $.001; authorized 650,000 shares; none issued and outstanding - - Class B convertible preferred stock, par value $.001; authorized 700,000 shares; none issued and outstanding - - Preferred stock, undesignated; authorized 3,650,000 shares; none issued and outstanding - - Common stock, par value $.001; authorized 25,000,000 shares; issued and outstanding 4,515,356 shares at September 30, 1999 and 4,513,481 shares at March 31, 1999 4,515 4,513 Additional paid-in capital 5,699,631 5,697,458 Retained earnings 6,279,456 6,875,134 ----------------- ----------------- Total stockholders' equity 11,983,602 12,577,105 ----------------- ----------------- Total liabilities and stockholders' equity $ 36,555,588 42,452,443 ================= =================
* The consolidated balance sheet as of March 31, 1999 has been summarized from the Company's audited balance sheet as of that date. See accompanying notes to unaudited consolidated financial statements. 3 COACTIVE MARKETING GROUP, INC. Consolidated Statements of Operations Three Month and Six Month Periods Ended September 30, 1999 and September 30, 1998 (Unaudited) Three Months Ended Six Months Ended September 30, September 30, 1999 1998 1999 1998 ----------------- --------------- --------------- ---------------- Sales $ 9,159,310 10,151,232 $ 17,942,740 22,403,002 Direct expenses 6,299,500 6,702,499 12,495,276 14,995,703 --------------- --------------- --------------- --------------- Gross Profit 2,859,810 3,448,733 5,447,464 7,407,299 --------------- --------------- --------------- --------------- Salaries 1,547,166 1,097,900 3,033,478 2,171,322 Selling, general and administrative expense 1,583,709 1,112,631 3,013,340 2,218,594 --------------- --------------- --------------- --------------- Total operating expenses 3,130,875 2,210,531 6,046,818 4,389,916 --------------- --------------- --------------- --------------- Operating income (loss) (271,065) 1,238,202 (599,354) 3,017,383 Interest expense, net 183,540 127,917 393,442 298,553 --------------- --------------- --------------- --------------- Income (loss) before income taxes (454,605) 1,110,285 (992,796) 2,718,830 Provision (benefit) for income taxes (181,842) 445,000 (397,118) 1,088,000 --------------- --------------- --------------- --------------- Net income (loss) $ (272,763) 665,285 $ (595,678) 1,630,830 =============== =============== =============== =============== Net income (loss) per common and common equivalent share:** Basic $ (.06) $ .15 $ (.13) $ .36 ================ =============== =============== ============ Diluted $ (.06) $ .12 $ (.13) $ .29 ================ =============== =============== ============ Weighted average number of common and common equivalent shares outstanding:** Basic 4,515,064 4,479,891 4,514,268 4,477,621 =============== =============== =============== ============ Diluted 4,515,064 5,593,517 4,514,268 5,675,847 =============== =============== =============== ============ Reconciliation of weighted average shares used for basic and diluted computation is as follows: Weighted average shares - Basic 4,515,064 4,479,891 4,514,268 4,477,621 Dilutive effect of options and - 1,113,626 - 1,198,226 warrants --------------- --------------- --------------- -------------- Weighted average shares - Diluted 4,515,064 5,593,517 4,514,268 5,675,847 =============== =============== =============== ==============
** Adjusted for the five-for-four stock split paid in the form of a stock dividend to shareholders of record May 14, 1998. See accompanying notes to unaudited consolidated financial statements. 4 COACTIVE MARKETING GROUP, INC. Consolidated Statement of Stockholders' Equity Six months ended September 30, 1999 (Unaudited) Additional Total Common Stock Paid-in Retained Stockholders' par value $.001 Capital Earnings Equity -------------------------------- ------------- ------------ ------------- Shares Amount ------------- ------------ Balance, March 31, 1999 4,513,481 $ 4,513 $ 5,697,458 $ 6,875,134 $ 12,577,105 Exercise of stock options 1,875 2 2,173 - 2,175 Net loss - - - (595,678) (595,678) ------------ ------------ ------------ ----------- ------------ Balance, September 30, 1999 4,515,356 $ 4,515 $ 5,699,631 $ 6,279,456 $ 11,983,602 ============ ============ ============ =========== ============
See accompanying notes to unaudited consolidated financial statements. 5 COACTIVE MARKETING GROUP, INC. Consolidated Statements of Cash Flows Six Months Ended September 30, 1999 and 1998 (Unaudited) 1999 1998 --------------- ---------------- Cash flows from operating activities: Net income (loss) $ (595,678) 1,630,830 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 724,024 531,428 Changes in operating assets and liabilities, net of effects of acquisitions: Increase in accounts receivable (2,478,033) (224,222) Decrease (increase) in unbilled contracts in progress 6,072,082 (5,382,443) Increase in prepaid expenses and other assets (482,113) (412,084) Decrease in prepaid taxes 350,340 205,022 Decrease in accounts payable (224,265) (845,929) Increase in deferred revenue 933,433 - (Decrease) increase in accrued job costs (4,115,967) 4,826,722 Decrease in other accrued liabilities (481,710) (137,976) Decrease in accrued taxes payable - (94,260) Decrease in accrued compensation (74,842) (66,408) --------------- ---------------- Net cash provided by (used in) operating activities (372,729) 30,680 --------------- ---------------- Cash flows from investing activities: Purchases of fixed assets (300,858) (189,012) Costs related to purchase of Optimum Group, Inc. - (18,126) --------------- ---------------- Net cash used in investing activities (300,858) (207,138) --------------- ---------------- Cash flows from financing activities: Repayments of bank borrowings - long term, net (1,340,000) - Proceeds from exercise of stock options 2,175 5,600 --------------- ---------------- Net cash provided (used in) by financing activities (1,337,825) 5,600 --------------- ---------------- Net decrease in cash (2,011,412) (170,858) Cash and cash equivalents at beginning of period 2,687,575 1,459,909 --------------- ---------------- Cash and cash equivalents at end of period $ 676,163 1,289,051 =============== ================ Supplemental disclosure: Interest paid during the period $ 482,358 335,864 =============== ================ Income tax paid during the period $ 46,570 952,536 =============== ================
See accompanying notes to unaudited consolidated financial statements. 6 CoActive Marketing Group, Inc. and Subsidiaries Notes to the Unaudited Consolidated Financial Statements September 30, 1999 and 1998 (1) Basis of Presentation --------------------- The interim financial statements of CoActive Marketing Group, Inc. (the "Company") for the three and six month periods ended September 30, 1999 and 1998 have been prepared without audit. In the opinion of management, such financial statements reflect all adjustments, consisting of normal recurring accruals, necessary to present fairly the Company's results for the interim periods presented. The results of operations for the three and six month periods ended September 30, 1999 are not necessarily indicative of the results for a full year. On December 29, 1998, U.S. Concepts, Inc, a wholly-owned subsidiary of the Company, acquired the business of Murphy Liquidating Corporation, formerly known as U.S. Concepts, Inc. The acquisition has been accounted for as a purchase by the Company as at December 29, 1998. Accordingly, the results of operations of the Company for the three and six month periods ended September 30, 1999 reflect the consolidated operations of the Company including U.S. Concepts, Inc. whereas the operations for the three and six month periods ended September 30, 1998 are that of the Company excluding U.S. Concepts, Inc. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 1999. (2) Earnings Per Share ------------------ Earnings per share of common stock for the three and six month periods ended September 30, 1999 and 1998 have been calculated according to the guidelines of Statement No. 128 "Earnings per Share". All earnings per share calculations have been adjusted for the five-for-four stock split paid in the form of a stock dividend June 15, 1998 to shareholders of record May 14, 1998. Basic earnings per share for the three and six month periods have been computed by dividing net income for each of the respective periods by the weighted average number of shares of common stock outstanding for each such period. Diluted earnings per share for the three and six month periods have been computed by dividing net income for each of the periods by the weighted average number of shares of common stock and common stock equivalents outstanding for each such period, plus the assumed exercise of stock options and warrants, less the number of treasury shares assumed to be purchased from the proceeds of such exercises using the average market price of the Company's common stock during the respective period. Stock options and warrants have been excluded from the calculation of diluted earnings per share in any period in which they would be antidilutive. 7 (3) Unbilled Contracts in Progress ------------------------------ Unbilled contracts in progress represents revenue recognized in advance of billings rendered based on work performed to date on certain contracts. Accrued job costs are also recorded for such contracts to properly match costs and revenue. (4) Deferred Revenue ---------------- Represents contract amounts billed and client advances in excess of costs incurred and estimated profit earned. (5) Notes Payable, Bank ------------------- At September 30, 1999, the Company was not in compliance with three of the financial covenants of its bank loan agreement; namely the minimum EBITDA, the defined maximum senior debt leverage ratio and fixed charge ratio. On November 19, 1999, the Company and the bank executed an amendment to the loan agreement pursuant to which the bank waived the Company's non-compliance with respect to such financial covenants as of September 30, 1999 and the financial covenants were modified to be consistent with the Company's business plan. (6) Income Taxes ------------ The provision for income taxes for the three and six month periods ended September 30, 1999 and 1998 is based upon the Company's estimated effective tax rate for the respective year. Item 2. Management's Discussion and Analysis of Financial Condition ----------------------------------------------------------- and Results of Operations. -------------------------- On December 29, 1998, U.S. Concepts, Inc. ("U.S. Concepts", a wholly-owned subsidiary of the Company, acquired the business of Murphy Liquidating Corporation, formerly known as U.S. Concepts, Inc. (the "U.S. Concepts Acquisition"). The U.S. Concepts Acquisition has been accounted for as a purchase by the Company as at December 29, 1998. Accordingly, the results of operations discussed below for the three and six month periods ended September 30, 1999 reflect the consolidated operations of the Company including U.S. Concepts, whereas the operations for the three and six month periods ended September 30, 1998 are that of the Company excluding U.S. Concepts. The information herein should be read together with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 1999. 8 Results of Operations The following table presents operating data of the Company, expressed as a percentage of sales for each of the three and six month periods ended September 30, 1999 and 1998: Three Months Ended Six Months Ended September 30, September 30, ---------------------------------- ----------------------------------- 1999 1998 1999 1998 --------------- -------------- --------------- ---------------- Statement of Operations Data: Sales 100.0% 100.0% 100.0% 100.0% Direct expenses 68.8% 66.0% 69.6% 66.9% Gross profit 31.2% 34.0% 30.4% 33.1% Salaries 16.9% 10.8% 16.9% 9.7% Selling, general and administrative expense 17.3% 11.0% 16.8% 9.9% Total operating expense 34.2% 21.8% 33.7% 19.6% Operating income (loss) (3.0%) 12.2% (3.3%) 13.5% Interest expense, net 2.0% 1.3% 2.2% 1.3% Income (loss) before provision for taxes (5.0%) 10.9% (5.5%) 12.1% Provision (benefit) for income taxes (2.0%) 4.4% (2.2%) 4.9% Net income (loss) (3.0%) 6.6% (3.3%) 7.3% Other Data: EBITDA 1.1% 14.8% 0.7% 15.8%
The following table presents operating data of the Company, expressed as a comparative percentage of change for the three and six month periods ended September 30, 1999 compared to the three and six month periods ended September 30, 1998 and the three and six month periods ended September 30, 1998 compared to the three and six month periods ended September 30, 1997: Three Months Ended Six Months Ended September 30, September 30, ---------------------------------- ----------------------------------- 1999 1998 1999 1998 --------------- -------------- --------------- ---------------- Statement of Operations Data: Sales (9.8%) 106.1% (19.9%) 106.6% Direct expenses (6.0%) 105.7% (16.7%) 105.6% Gross profit (17.1%) 106.9% (26.5%) 108.6% Salaries 40.9% 57.9% 39.7% 57.1% Selling, general and administrative expense 42.3% 151.8% 35.8% 142.0% Total operating expense 41.6% 94.4% 37.7% 91.0% Operating income (loss) (121.9%) 133.8% (119.9%) 141.0% Interest expense, net 43.5% (617.2%) 31.8% 362.7% Income (loss) before provision for taxes (140.9%) 100.3% (136.5%) 106.5% Provision (benefit) for income taxes (140.9%) 239.7% (136.5%) 228.4% Net income (loss) (141.0%) 57.1% (136.5%) 65.5% Other Data: EBITDA (93.3%) 139.7% (96.5%) 147.7%
9 Sales. Sales for the quarter ended September 30, 1999 were $9,159,000, inclusive of $3,888,000 of sales of U.S. Concepts, compared to sales of $10,151,000 for the prior year quarter ended September 30, 1998, a decrease of $992,000. Sales for the six months ended September 30, 1999 were $17,943,000, inclusive of $7,058,000 of sales of U.S. Concepts, compared to sales of $22,403,000 for the six months ended September 30, 1998, a decrease of $4,460,000. The decrease in sales for the quarter and six month periods were primarily attributable to a lesser than anticipated amount of contracted sales materializing during the respective periods. At September 30, 1999, the Company's sales backlog, inclusive of approximately $3,363,000 attributable to U.S. Concepts, amounted to approximately $9,160,000 compared to a sales backlog of approximately $9,355,000 at September 30, 1998. Direct Expenses. Direct expenses for the quarter ended September 30, 1999 were $6,299,000, inclusive of $3,075,000 of direct expenses of U.S. Concepts, compared to $6,702,000 for the comparable prior year quarter, a decrease of $403,000. Direct expenses for the six months ended September 30, 1999 were $12,495,000, inclusive of $5,465,000 direct expenses of U.S. Concepts, compared to $14,996,000 for the comparable prior year six month period, a decrease of $2,500,000. The decrease in direct expenses for the quarter and six month period ended September 30, 1999 was primarily attributable to the decrease in sales for the respective periods. The increase in direct expenses as a percentage of sales for both the quarter and six month period ended September 30, 1999 was primarily the result of the aggregate added mix of client programs of U.S. Concepts having a lower gross profit margin than the mix of the Company's projects in both the respective comparable prior year quarter and six month period. As a result of these changes in sales and direct expenses, gross profit for the quarter and six month periods ended September 30, 1999 decreased to $2,860,000 and $5,447,000, respectively, from $3,449,000 and $7,407,000 for the prior year respective periods. Operating Expenses. Operating expenses for the quarter ended September 30, 1999 increased by $920,000 to $3,131,000 compared to $2,211,000 for the quarter ended September 30, 1998. Operating expenses for the six months ended September 30, 1999 increased by $1,657,000 to $6,047,000 compared to $4,390,000 for the comparable prior year six month period. The increase in operating expenses for the quarter ended September 30, 1999 was primarily the result of (A) the inclusion of $577,000 of operating expenses of U.S. Concepts and (B) increases, primarily related to supporting and maintaining an anticipated increase in the level of operations, of $146,000 in salaries, accrued bonuses and related employee payroll expenses and $197,000 in selling, general and administrative expenses. The increase in operating expenses for the six months ended September 30, 1999 was primarily the result of (A) the inclusion of $1,022,000 of operating expenses of U.S. Concepts and (B) increases, primarily related to supporting and maintaining an anticipated increase in the level of operations, of $296,000 in salaries, accrued bonuses and related employee payroll expenses and $339,000 in selling, general and administrative expenses. Interest Expense. Interest expense for the quarter and six month period ended September 30, 1999 increased by $56,000 and $95,000 respectively, compared to interest expense of $128,000 and $299,000 respectively for the quarter and six month period ended September 30, 1998. The increase in interest expense for the quarter and six month period ended September 30, 1999 was primarily related to the Company's increased bank borrowings in conjunction with the U.S. Concepts Acquisition. Benefit/Provision For Income Taxes. Both the respective benefit and provision for federal, state and local income taxes for the respective quarters and six month periods ended September 30, 1999 and 1998 were based upon the Company's estimated effective tax rate for the respective fiscal year. Net Income (Loss). As a result of the items discussed above, net loss for the quarter ended September 30, 1999 was $(273,000) compared to net income of $665,000 for the comparable prior year 10 quarter and net loss for the six months ended September 30, 1999 was $(596,000) compared to net income of $1,631,000 for the comparable prior year six month period. Liquidity and Capital Resources. The Company has an outstanding bank credit facility (the "Loan Agreement") consisting of a $3,660,000 term loan (the "Term Loan") and a $5,000,000 revolving credit facility (the "Revolving Credit Facility"). At September 30, 1999, the aggregate of the Company's Term Loan and Revolving Credit Facility notes payable amounted to $8,660,000 and, at that date, the Company was not in compliance with three of the financial covenants of the Loan Agreement; namely the minimum EBITDA, the defined maximum senior debt leverage ratio and fixed charge coverage ratio. On November 19, 1999, the Loan Agreement was amended pursuant to which the bank waived the Company's non-compliance with such financial covenants as of September 30, 1999 and the financial covenants were modified to be consistent with the Company's business plan. There can be no assurance that the Company will be able to satisfy, on an ongoing basis, the modified financial covenants of the Loan Agreement. For the six months ended September 30, 1999, the Company's activities were funded with existing working capital and amounts available under its revolving credit bank line. At September 30, 1999, the Company had cash and cash equivalents totaling $676,000 and working capital of $1,009,000 compared to cash and cash equivalents of $2,688,000 and working capital of $3,146,000 at March 31, 1999. The decrease in working capital at September 30, 1999 compared to March 31, 1999 was primarily the result of the Company's repayment of $1,340,000 of long term bank notes payable and the re-classification of $625,000 of the remaining bank notes payable as a current payable. Stockholders' equity decreased to $11,984,000 as a result of the Company's net loss for the six months ended September 30, 1999. For the six months ended September 30, 1999, (i) cash used in operating activities amounted to $373,000, primarily as a result of an increase in accounts receivable and accrued job costs which were offset by a decrease in unbilled contracts in progress and deferred revenue; (ii) cash used in investing activities to purchase fixed assets amounted to $301,000; and net cash used in financing activities primarily to repay bank borrowings amounted to $ 1,338,000. As a result of the net effect of the aforementioned, the Company's cash and cash equivalents at September 30, 1999 decreased by $2,011,000. The Company believes that its current working capital position is sufficient to support its existing and anticipated levels of operation. To the extent that the Company should be required to seek external equity or additional debt financing, there can be no assurance that the Company will be able to obtain any such additional funding. Other Matters. Year 2000 issues relate to the potential for system and processing failures of date related data as a result of computer controlled systems using two digits rather than four to define the applicable year. The result could be system failure or miscalculations which could cause disruptions to operations of the Company, its customers and suppliers. The Company relies on computer, voice and telecommunication systems and applications for most of its operations. The Company has evaluated its systems and has determined that they require software upgrades to make them Year 2000 compliant. Where applicable, the Company has purchased Year 2000 vendor software upgrades to make existing systems compliant and has purchased and is in the process of purchasing and installing newer systems which have been tested as being Year 2000 compliant. The Company believes that, based on its testings to date, its systems currently in use are Year 2000 compliant. The Company does not anticipate incurring any significant incremental costs related to Year 2000 compliance. The 11 Company's computer systems are not interdependent with the computer systems of its vendors and others with which the Company transacts business. The Company has initiated formal communications with its significant vendors and service suppliers to determine the extent to which the Company is vulnerable to those third parties' failures to remediate their systems, business processes and supply chains. The most reasonably likely risk confronting the Company would relate to a third party failure beyond the control of the Company such as telecommunications and related electrical failures. Upon further analysis of responses of Year 2000 readiness surveys received from vendors and suppliers, the Company intends to prepare contingency plans before calendar year end to minimize the potential impact of operational disruptions. Forward-Looking Statements. This report contains or incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. When used in this report, the words "estimate," "project," "believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should," "will," the negative thereof or other variations thereon or comparable terminology are intended to identify forward- looking statements. Such statements reflect the current views of the Company with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in those forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1999 under "Risk Factors", including but not limited to "Dependence on Key Personnel," "Customers," " Unpredictable Revenue Patterns,""Competition," "Risk Associated with Acquisitions," "Expansion Risk," "Control by Executive Officers and Directors," "Outstanding Indebtedness; Security Interest," and "Shares Eligible for Future Sale." Other factors may be described from time to time in the Company's public filings with the Securities and Exchange Commission, news releases and other communications. The forward-looking statements contained in this report speak only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- The Company's earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from its investment of available cash balances in money market funds with portfolios of investment grade corporate and U.S. government securities and, secondarily, from its long-term debt arrangements. Under its current policies, the Company does not use interest rate derivative instruments to manage exposure to interest rate changes. 12 PART II - OTHER INFORMATION --------------------------- Item 1. Legal Proceedings On April 30, 1999, the Registrant's wholly-owned subsidiary U.S. Concepts, Inc. ("U.S. Concepts"), was sued in the Superior Court of the State of California, County of San Francisco, by Ms. Star Norman for damages in excess of $25,000 plus unspecified punitive and other damages. The complaint arises out of Plaintiff's claim of sex discrimination in violation of California Fair Employment and Housing Act and the California constitution and wrongful discharge in violation of public policy. On September 24, 1999, the suit was amended to include the Company as an additional Defendant and Ms. Erica Smith as an additional Plaintiff alleging race discrimination in addition to the aforementioned claims of Ms. Norman. With the exception of certain acts complained of by Ms. Smith, all of the acts complained of took place prior to the date of incorporation of U.S. Concepts in Delaware and at a time when the subject business was being conducted by a New York corporation, then named U.S. Concepts, Inc. and now named Murphy Liquidating Corporation ("Murphy Liquidating"). The subject business was acquired by U.S. Concepts from Murphy Liquidating on December 28, 1998. The Registrant intends to defend this case vigorously on the grounds that (i) U.S. Concepts has no liability for the acts complained of since all of such acts with respect to Ms. Norman and to a significant extent those of Ms. Smith are alleged to have taken place prior to the existence of U.S. Concepts as an entity and (ii) the claims are without merit. Further, the Registrant has notified Murphy Liquidating and its shareholder that it claims indemnification from them for any loss arising from this matter pursuant to indemnification agreements entered into in connection with the acquisition. Items 2, 3 and 5. Not Applicable Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The Annual Meeting of Stockholders of the Company was held on September 14, 1999 at the Company's offices at 415 Northern Boulevard, Great Neck, New York 11021 at 10:a.m. A majority of the Company's voting shares were present at the meeting, either in person or by proxy. At such meeting, the stockholders: 1. elected Paul A. Amershadian, John P. Benfield, Donald A. Bernard, Herbert M. Gardner, Joseph S. Hellman, Thomas E. Lachenman and Brian Murphy to the Board of Directors. All of these individuals will serve on the Board of Directors until the next annual meeting of stockholders and until their successors are duly elected and qualified. Directors Votes For Votes Against --------- --------- ------------- Paul A. Amershadian 4,171,683 30,839 John P. Benfield 4,171,683 30,839 Donald A. Bernard 4,171,683 30,839 Herbert M. Gardner 4,171,683 30,839 Joseph S. Hellman 4,171,683 30,839 Thomas E. Lachenman 4,171,683 30,839 2. approved an amendment to the Company's Certificate of Incorporation changing the Company's name to CoActive Marketing Group, Inc. Votes For Votes Against Votes Abstained --------- ------------- ---------------- 4,150,960 44,325 7,237 13 3. approved an amendment to the Company's 1992 Stock Option Plan (the "1992 Plan") to increase the number of shares of the Company's Common Stock (the "Shares") for which options may be granted pursuant to the 1992 Plan from 1,125,000 to 1,500,000 and limit the number of Shares with respect to which options may be granted under the 1992 Plan to any single participant in any single plan year to 150,000. Votes For Votes Against Votes Abstained --------- ------------- --------------- 2,639,011 47,141 56,299 4. approved and ratified on a retroactive basis the Company's 1997 Executive Officer Stock Option Plan. Votes For Votes Against Votes Abstained --------- ------------- --------------- 2,603,636 78,766 60,049 Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits. Exhibit No. Description of Exhibits ----------- ----------------------- 3.1 Certificate of Incorporation, as amended, of the Registrant 3.2 By-Laws, as amended, of the Registrant 27 Financial Data Schedule
(b) Reports on Form 8-K. None 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COACTIVE MARKETING GROUP, INC. Dated: November 19, 1999 By: /s/ John P. Benfield --------------------------------------- John P. Benfield, President (Principal Executive Officer) and Director Dated: November 19, 1999 By: /s/ Donald A. Bernard ---------------------------------------- Donald A. Bernard, Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer) and Director 15 EX-27 2 FDS EX-27
5 0000886475 COACTIVE MARKETING GROUP, INC. 1 6-MOS Mar-31-2000 Apr-01-1999 Sep-30-1999 676,163 0 12,986,131 0 0 15,671,265 2,121,337 654,095 36,555,588 14,661,986 0 0 0 4,515 11,979,087 36,555,588 17,942,740 17,942,740 12,495,276 12,495,276 6,046,818 0 393,442 (992,796) (397,118) (595,678) 0 0 0 (595,678) (.13) (.13)
EX-3.(I) 3 CERTIFICATE OF INCORPORATION, AS AMENDED CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF INMARK ENTERPRISES, INC. ---------------------------------------------- Under Section 242 of the Delaware General Corporation Law ---------------------------------------------- Pursuant to the provisions of Section 242 of the General Corporation Law of the State of Delaware, the undersigned, being the President, Chief Executive Officer and Chairman of the Board of Inmark Enterprises, Inc., does hereby certify that: FIRST: The name of the corporation is Inmark Enterprises, Inc. (hereinafter referred to as the "Corporation"). SECOND: The Certificate of Incorporation of the Corporation is hereby amended to change the name of the Corporation from Inmark Enterprises, Inc. to CoActive Marketing Group, Inc., so that Article FIRST of the Certificate of Incorporation of the Corporation is amended to read as follows: "FIRST: The name of the corporation is CoActive Marketing Group, Inc." THIRD: This amendment to the Certificate of Incorporation of the Corporation was duly adopted by the Board of Directors and by a majority of the stockholders of the Corporation entitled to vote thereon in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment to the Certificate of Incorporation of the Corporation this 15th day of September, 1999. s/ JOHN P. BENFIELD ---------------------------- John P. Benfield, President, Chief Executive Officer and Chairman of the Board of Inmark Enterprises, Inc. CERTIFICATE OF AMENDMENT of CERTIFICATE OF INCORPORATION of HEALTH IMAGE MEDIA, INC. (Pursuant to Section 242 of the Delaware General Corporation Law) HEALTH IMAGE MEDIA, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware. DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of HEALTH IMAGE MEDIA, INC. resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation declaring said amendment to be advisable and directing that said proposed amendment be considered by the stockholders of said corporation at the next annual meeting. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Certificate of Incorporation of this Corporation be amended by changing the Article thereof numbered "ONE (1)" so that, as amended, said Article shall be and read as follows: "The name of the Corporation is INMARK ENTERPRISES, INC." SECOND: That, pursuant to resolution of its Board of Directors, the annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of said corporation shall not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, said HEALTH IMAGE MEDIA, INC. has caused this Certificate to be signed by JOHN P. BENFIELD, the President, and COURTLANDT G. MILLER, its Secretary, this 29th day of September, 1995. By: s/John P. Benfield ---------------------------------- John P. Benfield, President By: s/Courtlandt G,. Miller ---------------------------------- Courtlandt G. Miller, Secretary CERTIFICATE OF AMENDMENT of CERTIFICATE OF INCORPORATION HEALTH IMAGE MEDIA, INC. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY that the Board of Directors and the stockholders of the Corporation entitled to vote thereon, by a Joint Action by Consent in Writing, adopted the following resolution amending the Corporation's Certificate of Incorporation, and further certifies that said resolution was duly adopted in accordance with the provisions of Section 141, 228 and 242 of the General Corporation Law of the State of Delaware and written notice of such action has been given to stockholders who have not consented in writing, as provided in Section 228 of the General Corporation Law of the State of Delaware: RESOLVED, that Section FOURTH of the Certificate of Incorporation of the Corporation, be and it is hereby amended by the addition of the following to Article Fourth: FOURTH: On the effective date of the Certificate of Amendment to the Certificate of Incorporation of the Corporation containing the provisions herein set forth (the "Effective Date"), each share of Common Stock, par value $.001 per share ("Common Stock"), outstanding prior to the Effective Date, each share of Class A Convertible Preferred Stock, par value $.001 per share ("Class A Preferred Stock"), outstanding prior to the Effective Date and each share of Class B Convertible Preferred Stock, par value $.001 per share ("Class B Preferred Stock"), outstanding prior to the Effective Date is hereby reclassified as and converted into, without any further act by any person, fifty-five one-hundredths (.55) of a share of Common Stock, Class A Preferred Stock and Class B Preferred Stock, respectively. From and after the Effective Date, and until exchanged for certificates representing Common Stock, Class A Preferred Stock and Class B Preferred Stock issued and delivered after the Effective Date, certificates representing each share of Common Stock, Class A Preferred Stock and Class B Preferred Stock prior to the Effective Date shall be deemed to represent a number of shares equal to the product of (x) .55 times (y) the number of shares represented thereby. Any fractions of shares resulting form this reclassification and conversion shall not be issued, but instead those who would be entitled to receive a fraction of a share shall receive, in lieu thereof, cash in an amount equal to the product of such fraction times six dollars ($6.00). IN WITNESS WHEREOF, HEALTH IMAGE MEDIA, INC. has caused this Certificate of Amendment to be signed by its President and attested to by its Assistant Secretary this 2nd of July, 1992. HEALTH IMAGE MEDIA, INC. By: s/ KARAMJEET S. PAUL ----------------------- Attest: By: s/ LAURENCE WEILHEIMER ------------------------- CERTIFICATE OF INCORPORATION of HEALTH IMAGE MEDIA, INC. FIRST: The name of the corporation is HEALTH IMAGE MEDIA, INC. (the "Corporation"). SECOND: The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is the Corporation Trust Company. THIRD: The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware and to possess and exercise all of the powers and privileges granted by such law and any other law of Delaware. FOURTH: A. The total number of shares that this Corporation shall have authority to issue is Thirty Million (30,000,000) shares, of which Twenty-Five Million (25,000,000) shares shall be designated as Common Stock with a par value of $.001 per share, and of which Five Million (5,000,000) shares shall be Preferred Stock. The Board of Directors may issue, in one or more classes or series, shares of Preferred Stock, with full, limited, multiple, fractional or no voting rights, and with such designations, preferences, qualifications, privileges, limitations, restrictions, options, conversion rights or other special or relative rights as shall be fixed from time to time by the Board of Directors by resolution. B. Of the Five Million (5,000,000) shares of Preferred Stock authorized by this Corporation, Six Hundred and Fifty Thousand (650,000) shares shall be designated as Class A Convertible Preferred Stock with a par value of $.001 per share ("Class A Preferred Stock") and Seven Hundred Thousand (700,000) shares shall be designated as Class B Convertible Preferred Stock with a par value of $.001 per share ("Class B Preferred Stock"), which shall have such rights, preferences and characteristics in relation to the Common Stock as set forth below: (1) Voting Rights. The holders of Common Stock shall be entitled to one vote per share of Common Stock on all matters on which shareholders are entitled to vote thereon. Except as expressly provided by law, the holders of Class B Preferred Stock 1 shall have full voting rights and powers; they shall be entitled to vote on all matters as to which holders of Common Stock shall be entitled to vote, voting together with the holders of Common Stock as one class, and they shall be entitled to one vote for each share of Common Stock into which each share of Class B Preferred Stock may be converted in accordance with subsection 4 herein. Except as expressly provided by law, the holders of Class A Preferred Stock shall have no voting rights and powers. (2) Dividends. The holder of Common Stock, the holders of Class A Preferred Stock and the holders of Class B Preferred Stock shall be entitled to receive, when and as declared in the discretion of the Board of Directors, such cash dividends as the Board of Directors may from time to time determine out of such funds that are legally available therefor; provided, that no cash dividends shall be declared or paid on one class of capital stock unless parallel action shall be taken simultaneously therewith with respect to the other classes of capital stock. (3) Preemptive Rights; No Cumulative Voting. Stockholders shall not have preemptive rights to purchase additional shares of capital stock and shall not have the right to vote cumulatively in the election of directors. (4) Conversion Rights of Class A Preferred Stock and Class B Preferred Stock. (a) Conversion at the Option of the Holder. (i) Conversion Rate. Each share of Class A Preferred Stock shall be convertible at the option of the holder thereof into one fully paid and non-assessable share of Common Stock, subject to adjustment as described below. Each share of Class B Preferred Stock shall be convertible at the option of the holder thereof into one fully paid and non-assessable share of Common Stock, subject to adjustment as described below. The number of shares of Common Stock into which the Class A Preferred Stock and Class B Preferred Stock may be converted shall be the "Conversion Rate." Conversion of the Class A Preferred Stock or Class B Preferred Stock at the option of the holder thereof shall be the "Optional Conversion." 2 (ii) Adjustment to Conversion Rate for Certain Changes in the Company's Capitalization. If there shall be issued additional shares of Common Stock solely by reason of stock dividends, stock splits, combinations or exchanges of shares, the Board of Directors of this Corporation shall adjust the Conversion Rate to reflect such issuance of shares of Common Stock such that immediately after any of the foregoing events, the Class A Preferred Stock and the Class B Preferred Stock shall be convertible into the same proportion of issued and outstanding shares of Common Stock into which the Class A Preferred Stock and the Class B Preferred Stock would have been convertible prior to such event; provided, however, that in no event shall fractional shares of Common Stock be issuable in respect of any conversion. (b) Mandatory Conversion. The Corporation shall have the right, at its option, to cause the conversion (the "Mandatory Conversion") of all, but not less than all of the shares of Class A Preferred Stock and Class B Preferred Stock then issued and outstanding into fully paid and non-assessable shares of Common Stock (other than fractional shares) at the Conversion Rate then in effect upon the occurrence of the Corporation's public offering or private offering of equity securities of the Corporation which yields to the Corporation not less than Five Million Dollars ($5,000,000) in net proceeds (other than an offering related to the offer and sale of securities of the Corporation to employees of, or other persons providing services to, the Corporation pursuant to an employee benefit plan, stock option plan, stock purchase plan, or otherwise). (c) Mergers, Consolidations, Etc. In the event the Corporation shall merge, consolidate or take any other similar action in which the Common Stock shall be exchanged for securities or assets, whether of the Corporation or of another entity, the Class A Preferred Stock and the Class B Preferred Stock shall be convertible into such other securities or assets as if the Class A Preferred Stock and the Class B Preferred Stock had been converted into Common Stock immediately prior to such merger, consolidation or such other similar action. 3 (d) Mechanics of Conversion. (i) Mandatory Conversion. If the Corporation exercises its Mandatory Conversion right pursuant to subsection 4(b), all holders of record of shares of Class A Preferred Stock and all holders or record of shares of Class B Preferred Stock shall be given ten (10) days prior written notice of the date on which the Corporation shall exercise its Mandatory Conversion right (the "Mandatory Conversion Date"). Such notice also shall specify the place designated for exchanging shares of Class A Preferred Stock and Class B Preferred Stock for shares of Common Stock. On or before the Mandatory Conversion Date, each holder of Class A Preferred Stock and each holder of Class B Preferred Stock shall surrender his certificate or certificates for all such shares to the Corporation or the transfer agent at the place designated in such notice, and thereafter shall receive certificates for the number of shares of Common Stock to which such holder is entitled at the Conversion Date, all certificates representing shares of Class A Preferred Stock and shares of Class B Preferred Stock shall be deemed canceled by the Corporation, and any holder of Class A Preferred Stock or Class B Preferred Stock who fails to deliver his certificate or certificates for Mandatory Conversion shall be entitled only to receive shares of Common Stock to which such holder would be entitled had delivery of his certificate or certificates been made on or prior to the Mandatory Conversion Date. (ii) Optional Conversion. If a holder of shares of Class A Preferred Stock or Class B Preferred Stock desires to exercise his right of Optional Conversion pursuant to subsection 4(a), such holder shall give written notice to the Corporation of his election to convert a stated number of shares of Class A Preferred Stock and/or Class B Preferred Stock into shares of Common Stock, at the Conversion Rate then in effect, which notice shall be accompanied by the certificate or certificates representing such shares of Class A Preferred Stock 4 and/or Class B Preferred Stock which shall be converted into Common Stock. The notice also shall contain a statement of the name or names in which the certificate or certificates for common stock shall be issued. Promptly after the receipt of the aforesaid notice and certificate or certificates representing the Class A Preferred Stock and/or Class B Preferred Stock surrendered for conversion, the Corporation shall issue and deliver to the holder of the Class A Preferred Stock and/or Class B Preferred Stock surrendered for conversion or to his nominee or nominees, a certificate or certificates for the number of shares of Common Stock issuable upon conversion of such Class A Preferred Stock and/or Class B Preferred Stock and the certificates representing shares of Class A Preferred Stock an/or Class B Preferred Stock surrendered for conversion shall be canceled by the Corporation. If the number of shares represented by the certificate or certificates surrendered for conversion shall exceed the number of shares to be converted, the Corporation shall issue and deliver to the person entitled thereto a certificate representing the balance of any unconverted shares. (e) Reservation of Common Stock The Corporation shall at all times reserve and keep available out its authorized but unissued Common stock, solely for issuance upon conversion of shares of Class A Preferred Stock and Class B Preferred Stock as herein provided, such number of shares of Common Stock as shall be issuable from time to time upon the conversion of all of the shares of Class A Preferred Stock and Class B Preferred Stock at that time issued and outstanding. (f) Notices. Any notice required to be given pursuant to this Section 4 shall be deemed to be given if deposited in the United States mail, first-class postage prepaid, and addressed to the holder of record at his address appearing on the books of the Corporation. (5) Liquidation Rights. In the event of any liquidation, dissolution or winding up (either voluntary or involuntary) of the Corporation, the holders of Class A Preferred Stock shall be entitled to receive, after payment by the Corporation of all sums 5 due creditors, an amount equal to $1.75 per share plus all declared but unpaid dividends before any amount shall be paid to the holders of Class B Preferred Stock or of Common Stock. After such payment has been made, the holders of Class B Preferred Stock shall be entitled to receive $.72 per share before any amounts are paid to the holders of Common Stock or further amounts are paid to holders of Class A Preferred Stock. After such payments shall have been made in full to the holders of Class A Preferred Stock and to the holders of Class B Preferred Stock, the holders of Common Stock, the holders of Class A Preferred Stock and the holders of Class B Preferred Stock shall be entitled to receive the remaining assets and funds of the Corporation in proportion to the number of shares of Common Stock held by holders of Common Stock, and the number of shares of Common Stock held by holders of Class A Preferred Stock and by holders of Class B Preferred Stock assuming the Class A Preferred Stock and Class B Preferred Stock had been converted into Common Stock immediately prior to the liquidation, dissolution or winding up of the Corporation. FIFTH: The name and mailing address of the incorporator is as follows: Name Address ---- ------- Hedy Wheleer 12th Floor, Packard Building 15th and Chestnut Streets Philadelphia, PA 19102 SIXTH: The Corporation is to have perpetual existence. SEVENTH: The By-laws of the Corporation may be altered, amended or repealed by the vote of a majority of all directors or by the vote of holders of a majority of the outstanding stock entitled to vote. EIGHTH: Election of directors need not be by written ballot unless the By- laws of the Corporation shall so provide. NINTH: The Corporation reserves the right to amend the provisions in this Certificate of Incorporation and in any certificate amendatory hereof in the manner now or hereafter prescribed by law, and all rights conferred on stockholders or others hereunder or thereunder are granted subject to such reservation. TENTH: If any action is to be taken by stockholders without a meeting, such action must be authorized by unanimous written consent signed by all of the holders of outstanding voting stock. 6 ELEVENTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such a manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the corporation, as the case may be, and also on the Corporation. TWELFTH: The directors of the Corporation shall be entitled to the benefits of all limitations on the liability of directors generally that are now or hereafter become available under the General Corporation Law of Delaware. Without limiting the generality of the foregoing, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Article 12 shall be prospective only, and shall not affect, to the detriment of any director, any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 11th day of March, 1992. S/ HEDY WHEELER --------------- Hedy Wheeler (SEAL) 7 EX-3.(II) 4 BY-LAWS, AS AMENDED AMENDED AND RESTATED BY-LAWS OF COACTIVE MARKETING GROUP, INC. ARTICLE I - OFFICES Section 1.1 Registered Office and Registered Agent. The Corporation shall maintain a registered office and registered agent within the State of Delaware, which may be changed by the Board of Directors (hereinafter referred to as the "Board of Directors" or the "Board") from time to time. Section 1.2. Other Offices. The Corporation may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time determine. ARTICLE II - STOCKHOLDERS' MEETINGS Section 2.1. Place of Stockholders' Meetings. Meetings of stockholders may be held at such place, either within or without the State of Delaware, as may be designated by the Board of Directors from time to time. If no such place is designated by the Board of Directors, meetings of the stockholders shall be held at the registered office of the Corporation in the State of Delaware. Section 2.2. Annual Meeting. (a) Time. A meeting of the stockholders of the Corporation shall be held in each calendar year, commencing with the year 1995, at a date and time fixed by the Board of Directors, or if the Board falls to set a date and time, on the second Tuesday of September at 10:00 a.m., if not a holiday on which national banks are or may elect to be closed ("Holiday"), and if such day is a Holiday, then such meeting shall be held on the next business day. (b) Election of Directors. At each annual meeting of stockholders there shall be held an election of directors to succeed the class of directors whose term expires at that meeting. Section 2.3. Special Meetings of Stockholders. Except as otherwise specifically provided by law, special meetings of the stockholders may be called at any time only by the Chief Executive Officer of the Corporation or the Board of Directors. Upon the written request of any person entitled to call a special -1- meeting under these By-laws or applicable law, which request specifies the purpose for which the meeting is desired, it shall be the duty of the Secretary to give prompt written notice of such meeting to be held at such time as the Secretary may fix, subject to the provisions of Section 2-4 hereof. If the Secretary shall fail to fix such date and give notice within 10 days after receipt of such request, the person or persons calling the meeting may do so. Section 2.4. Notice of Meetings and Adjourned Meetings. Written notice, complying with Article VI of these By-laws and stating the place, date and hour of any meeting and in the case of special meetings, the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, except as provided in Section 230 of the Delaware General Corporation Law, as amended from time to time (the "Delaware Code"). Such notice may be given by or at the direction of the person or persons authorized to call the meeting. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting Section 2.5. Business at Meetings of Stockholders. Except as otherwise provided by law (including but not limited to Rule 14a-8 of the Securities and Exchange Act of 1934, as amended, or any successor provision thereto) or in these By-laws, the business which shall be conducted at any meeting of the stockholders shall (a) have been specified in the written notice of the meeting (or any supplement thereto) given by the Corporation, (b) be brought before the meeting at the direction of the Board of Directors or the presiding officer of the meeting, or (c) have been specified in a written notice given to the Secretary of the Corporation, by or on behalf of any stockholder who shall have been a stockholder of record on the record date for such meeting and who shall continue to be entitled to vote thereat (the "Stockholder Notice"), in accordance with all of the following requirements: -2- (1) Each Stockholder Notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation (i) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than 60 days nor more than 90 days prior to such anniversary date, and (ii) in the case of an annual meeting that is called for a date that is not within 30 days before or after the anniversary date of the immediately preceding annual meeting, not later than the close of business on the tenth day following the day on which notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever occurs first; an (2) Each such Stockholder Notice must set forth: (i) the name and address of the stockholder who intends to bring the business before the meeting; (ii) the general nature of the business which he or she seeks to bring before the meeting; and (iii) a representation that the stockholder is a holder of record of the stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to bring the business specified in the notice before the meeting. The presiding officer of the meeting may, in his or her sole discretion, refuse to acknowledge any business proposed by a stockholder not made in compliance with the foregoing procedure Section 2.6. Quorum of and Action by Stockholders. (a) General Rule. Unless otherwise provided in the Certificate of Incorporation of the Corporation (the "Certificate"), the presence, in person or by proxy, of stockholders entitled to cast at least a majority of the votes that all stockholders are entitled to cast on a particular matter to be acted upon at the meeting shall constitute a quorum. However, in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting. If a meeting cannot be organized because of the absence of a quorum, those present may, except as otherwise provided by law, adjourn the meeting to such time and place as they may determine. (b) Action by Stockholders. Whenever any corporate action is to be taken by vote of the stockholders of the Corporation at a duly organized meeting, unless otherwise provided in the Certificate -3- or the Delaware Code, such corporate action shall be authorized by a majority of the votes cast at the meeting by the holders of shares entitled to vote thereon. (c) Withdrawal. The stockholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. (d) Election of Directors at Adjourned Meeting. In the case of any meeting for the election of directors, those stockholders who attend a meeting called for the election of directors that has been previously adjourned for lack of a quorum, although less than a quorum as fixed in this Section, shall nevertheless constitute a quorum for the purpose of electing directors. Section 2.7. Voting List: Proxies: Voting. (a) Voting List. The officer who has charge of the stock ledger of the Corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Upon the willful neglect or refusal of the directors to produce such a list at any meeting for the election of directors, they shall be ineligible for election to any office at such meeting. (b) Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him or her by proxy. All proxies shall be executed in writing by the stockholder or such stockholder's duly authorized attorney-in-fact and filed with the Secretary of the Corporation not later than -4- the day on which it is intended to be exercised. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. No unrevoked proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. (c) Voting. Except as otherwise specifically provided by law, all matters coming before the meeting shall be determined by a vote by shares. All elections of directors shall be by written ballot unless otherwise provided in the Certificate. Except as otherwise specifically provided by law, all other votes may be taken by voice unless a stockholder demands that it be taken by ballot, in which latter event the vote shall be taken by written ballot. (d) Inspector of Elections. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors who shall have such duties as, provided in Section 231 of the Delaware Code to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before and during the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. Section 2.8. Action by Unanimous Consent of Stockholders. Unless otherwise provided in the Certificate, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by all of the stockholders who would be entitled to vote at a meeting for such purpose and shall be delivered to the Secretary of the Corporation for insertion in the Corporation's minute book. -5- ARTICLE III - BOARD OF DIRECTORS Section 3.1. Directors. (a) General Powers. The Board of Directors shall have all powers necessary or appropriate to the management of the business and affairs of the Corporation and, in addition to the power and authority conferred by these By-laws, may exercise all powers of the Corporation and do all such lawful acts and things as are not by statute, these By-laws or the Certificate directed or required to be exercised or done by the stockholders. (b) Number. The Board of Directors shall consist of not less than two and not more than twelve members, the precise number to be fixed from time to time by the Board of Directors by resolution. Section 3.2. Place of Meeting. Meetings of the Board of Directors may be held at such place either within or without the State of Delaware, as a majority of the directors may from time to time designate or as may be designated in the notice calling the meeting. Section 3.3. Regular Meetings. A regular meeting of the Board of Directors shall be held annually, immediately following the annual meeting of stockholders, at the place where such meeting of the stockholders is held or at such other place, date and hour as a majority of the directors in office after the annual meeting of stockholders may designate. At such meeting the Board of Directors shall elect officers of the Corporation. In addition to such regular meeting, the Board of Directors shall have the power to fix, by resolution, the place, date and hour of other regular meetings of the Board. Section 3.4. Special Meetings. Special meetings of the Board of Directors shall be held whenever ordered by the Chief Executive Officer, by a majority of the members of the executive committee, if any, or by a majority of the directors in office. Section 3.5. Notices of Meetings of Board of Directors. (a) Regular Meetings. No notice shall be required to be given of any regular meeting, unless the same be held at other than the time or place for holding such meetings as fixed in accordance with Section 3.3 of these By-laws, in which event two days notice shall be given of -6- the time and place of such meeting. (b) Special Meetings. At least two days notice shall be given of the time, place and purpose for which any special meeting of the Board of Directors is to be held. Section 3.6. Quorum. A majority of the total number of directors shall constitute a quorum for the transaction of business, and the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. If there be less than a quorum present, a majority of those present may adjourn the meeting from time to time and place to place and shall cause notice of each such adjourned meeting to be given to all absent directors. Section 3.7. Informal Action by the Board of Directors. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 3.8. Compensation of Directors. Compensation of directors and reimbursement of their expenses incurred in connection with the business of the Corporation, if any, shall be as determined from time to time by resolution of the Board of Directors. Section 3.9. Removal of Directors by Stockholders. The entire Board of Directors or any individual director may be removed from office, only for cause, by a vote of the stockholders entitled to elect directors. In case the entire Board of Directors be so removed, new directors may be elected at such time. In the event that less than the entire Board of Directors be so removed, new directors shall be elected by a majority of the directors then in office, although less than a quorum. Section 3.10. Resignations. Any director may resign at any time by submitting his written resignation to the Corporation. Such resignation shall take effect at the time of its receipt by the Corporation unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed. The acceptance of a resignation shall not be required to make it effective. Section 3.11. Vacancies. Except as otherwise set forth in the Certificate, any vacancies on -7- the Board of Directors, including vacancies resulting from the removal of directors under Section 3.9 and from newly created directorships resulting from any increase in the authorized number of directors, shall be filled by a majority vote of the remaining directors then in office, although less than a quorum, or by a sole remaining director, and each person so elected shall be a director until the next election of directors, and until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. Section 3.12. Participation by Conference Telephone. Directors may participate in regular or special meetings of the Board or committee meetings by means of conference telephone or similar communications equipment whereby all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting. Section 3.13. Nominations. Notwithstanding the provisions of Section 2.5 of these By-laws (dealing with business at meetings of stockholders), nominations for the election of directors may be made by the Board of Directors, a committee appointed by the Board of Directors or by any stockholder of record entitled to vote on the election of directors who is a stockholder at the record date of the meeting and also on the date of the meeting at which directors are to be elected, provided such stockholder provides timely written notice to the Secretary of the Corporation in accordance with the following requirements: (1) To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation (i) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than 60 days nor more than 90 days prior to such anniversary date, and (ii) in the case of an annual meeting that is called for a date that is not within 30 days before or after the anniversary date of the immediately preceding annual meeting, or in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever occurs first; and (2) Each such written notice must set forth: (i) the name and address of the stockholder -8- who intends to make the nomination; (ii) the name and address of the person or persons to be nominated; (iii) a representation that the stockholder is a holder of record of the stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iv) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (v) such other information regarding each nominee proposed by such stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (vi) the consent of each nominee to serve as a director of the Corporation if so elected. The presiding officer of the meeting may refuse, in his or her sole discretion, to acknowledge the nomination of any person not made in compliance with the foregoing procedure. ARTICLE IV - OFFICERS Section 4.1. Election and Office. The Corporation shall have a President, a Secretary and a Treasurer who shall be elected by the Board of Directors. The Board of Directors may elect such additional officers as it may deem proper, including a Chairman and a Vice Chairman of the Board of Directors, one or more Vice Presidents, and one or more assistant or honorary officers. Officers may, but need not, be directors. Any number of offices may be held by the same person. Section 4.2. Term. The President, Secretary and Treasurer shall each serve for a term of one year and until their respective successors are elected and qualified, unless removed from office by the Board of Directors during their respective tenures. The term of office of any other officer shall be as specified by the Board of Directors. Section 4.3. Powers and Duties of the President. Unless otherwise determined by the Board of Directors, the President shall have the usual duties of an executive officer with general supervision over and direction of the affairs of the Corporation. In the exercise of these duties and subject to the limitations -9- set forth in the Delaware Code, these By-laws, and the actions of the Board of Directors, the President may appoint, suspend and discharge employees, agents and assistant officers, fix the compensation of all employees others than executive officers, shall preside at all meetings of the stockholders at which he or she shall be present and shall, unless there is a Chairman of the Board of Directors, preside at all meetings of the Board of Directors. The President shall also do and perform such other duties as from time to time may be assigned to him or her by the Board of Directors. Unless otherwise designated by the Board of Directors, the President shall be the Chief Executive Officer of the Corporation. Unless otherwise determined by the Board of Directors, the President shall have the full power and authority on behalf of the Corporation to attend and to act and to vote at any meeting of the stockholders of any corporation in which the Corporation may hold stock, and, at any such meeting, shall possess and may exercise any and all of the rights and powers incident to the ownership of such stock and which, as the owner thereof, the Corporation might have possessed and exercised. The President shall also have the right to delegate such power. Section 4.4. Powers and Duties of the Secretary. Unless otherwise determined by the Board of Directors, the Secretary shall record all proceedings of the meetings of the Corporation, the Board of Directors and all committees, in books to be kept for that purpose, and shall attend to the giving and serving of all notices for the Corporation. The Secretary shall have charge of the corporate seal, the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct. The Secretary shall perform all other duties ordinarily incident to the office of Secretary and shall have such other powers and perform such other duties as may be assigned to him or her by the Board of Directors. Section 4.5. Powers and Duties of the Treasurer. Unless otherwise determined by the Board of Directors, the Treasurer shall have charge of all the funds and securities of the Corporation which may come into his or her hands. When necessary or proper, unless otherwise ordered by the Board of Directors, the Treasurer shall endorse for collection on behalf of the Corporation checks, notes and other obligations, -10- and shall deposit the same to the credit of the Corporation in such banks or depositories as the Board of Directors may designate and shall sign all receipts and vouchers for payments made to the Corporation. The Treasurer shall enter regularly, in books of the Corporation to be kept by him or her for that purpose, a full and accurate account of all moneys received and paid by him or her on account of the Corporation. Whenever required by the Board of Directors, the Treasurer shall render a statement of the financial condition of the Corporation. The Treasurer shall at all reasonable times exhibit the Corporation's books and accounts to any director of the Corporation, upon application at the office of the Corporation during business hours. The Treasurer shall have such other powers and shall perform such other duties as may be assigned to him or her from time to time by the Board of Directors. Section 4.6. Powers and Duties of the Chairman of the Board of Directors. Unless otherwise determined by the Board of Directors, the Chairman of the Board, if any, shall preside at all meetings of directors. The Chairman of the Board shall have such other powers and perform such further duties as may be assigned to such officer by the Board of Directors, including, without limitation, acting as Chief Executive Officer of the Corporation. To be eligible to serve, the Chairman of the Board must be a director of the Corporation. Section 4.7. Powers and Duties of Vice Presidents and Assistant Officers. Unless otherwise determined by the Board of Directors, each Vice President and each assistant officer shall have the powers and perform the duties as shall be designated by the Board of Directors. Vice Presidents and assistant officers shall have such rank as shall be designated by the Board of Directors and each, in the order of rank, shall act for such superior officer in his or her absence or disability or when so directed by such superior officer or by the Board of Directors. Vice Presidents may be designated as having responsibility for a specific aspect of the Corporation's affairs, in which event each such Vice President shall be superior to the other Vice Presidents in relation to matters within his or her area. The President shall be the superior officer of the Vice Presidents. The Treasurer and the Secretary shall be the superior officers of the Assistant Treasurers and -11- Assistant Secretaries, respectively. Section 4.8. Delegation of Office. The Board of Directors may delegate the powers or duties of any officer of the Corporation to any other officer or to any director from time to time. Section 4.9. Vacancies. The Board of Directors shall have the power to fill any vacancies in any office occurring for any reason. Section 4.10. Resignations. Any officer may resign at any time by submitting his or her written resignation to the Corporation. Such resignation shall take effect at the time of its receipt by the Corporation, unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed. The acceptance of a resignation shall not be required to make it effective. ARTICLE V - CAPITAL STOCK Section 5.1. Stock Certificates. (a) Execution. Shares of the Corporation shall be represented by certificates signed by or in the name of the Corporation by (i) the Chairman or Vice Chairman of the Board of Directors, the President or a Vice President, and (ii) the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, representing the number of shares registered in certificate form, and may be countersigned by a transfer agent or registrar other than the Corporation or its employee. Any or all of the signatures on the share certificates may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. (b) Fractional Shares. Except as otherwise determined by the Board of Directors, shares or certificates thereof may be issued as fractional shares. Section 5.2. Fixing Date for Determination of Stockholders of Record (a) General Rules. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of -12- Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; providing, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) Actions in Lieu of Meeting. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the Delaware Code, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Delaware Code, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts a resolution taking such prior action. -13- (c) Dividends and Other Related Matters. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 5.3. Transfer of Shares. Except as provided in Section 5.4, transfer of shares shall be made on the books of the Corporation only upon surrender of the share certificate, duly endorsed and otherwise in proper form for transfer, which certificate shall be canceled at the time of the transfer; no transfer of shares shall be made on the books of this Corporation if such transfer is in violation of a lawful restriction noted conspicuously on the certificate. Section 5.4. Lost, Stolen or Destroyed Share Certificates. The Corporation may issue a new certificate of stock or uncertified shares in place of any certificate therefore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen, or destroyed certificate, or his legal representative to give the Corporation a bond sufficient to indemnify it against claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertified shares. ARTICLE VI - NOTICES - COMPUTING TIME PERIODS Section 6.1. Contents of Notice. Whenever any notice of a meeting is required to be given pursuant to these By-laws, the Certificate or otherwise, the notice shall specify the place, day and hour of the meeting; in the case of a special meeting or where otherwise required by law, the general nature of the business to be transacted at such meeting; and any other information required by the Delaware Code. -14- Section 6.2. Method of Notice. All notices shall be given to each person entitled thereto, either personally or by sending a copy thereof by first class or express mail, postage prepaid, or by telegram (with messenger service specified), telex or TWX (with answer back received) or courier service, charges prepaid, or by telecopier, with confirmation of receipt, to such person's address (or their telex, TWX, telecopier or telephone number), as it appears on the records of the Corporation, or supplied by such person to the Corporation for the purpose of notice. If notice is sent by mail, telegraph or courier service, it shall be deemed to have been given to the person entitled thereto when deposited in the United States Mail, with the telegraph office or with the courier service, as the case may be, for delivery to that person or, in the case of telex, TWX or telecopier, when dispatched. If no address for a stockholder appears on the books of the Corporation and such stockholder has not supplied the Corporation with an address for the purpose of notice, notice deposited in the United States Mail addressed to such stockholder care of General Delivery in the city in which the principal office of the Corporation is located shall be sufficient Section 6.3. Waiver of Notice. Whenever notice is required to be given under any provision of the Delaware Code, the Certificate or these By-laws, a written waiver, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice unless so required by the Certificate. Section 6.4. Computing Time Periods. (a) Days to be Counted. In computing the number of days for purposes of these Bylaws, all days shall be counted, including Saturdays, Sundays or Holidays; provided, however, that if the final day of any time period fails on a Saturday, Sunday or Holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or Holiday. In computing the number of days for the -15- purpose of giving notice of any meeting, the date upon which the notice is given shall be counted but the day set for the meeting shall not be counted. (b) Two Day Notice. In any case where only two days notice is being given, notice must be given at least 48 hours in advance by delivery in person, telephone, telex, TWX, telecopler or similar means of communication. ARTICLE VII - INDEMNIFICATION OF DIRECTORS AND OFFICERS AND OTHER PERSONS Section 7.1. Indemnification. The Corporation shall have the power to indemnify any director, officer, employee or agent of the Corporation against expenses (including attorney's fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred by him or her, to the fullest extent now or hereafter permitted by law in connection with and including, but not limited to, those instances in which such indemnification, although greater in scope or degree than that expressly provided by Section 145 of the Delaware Code, as deemed by a majority of a quorum of directors who were not parties to such action, suit or proceeding (which may consist of only one director if there is only one such disinterested director) or by independent legal counsel, after due investigation, to be in the best interests of the Corporation, with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, brought or threatened to be brought against him or her by reason of his or her performance as a director, officer, employee or agent of the Corporation, its parent or any of its subsidiaries, or in any other capacity on behalf of the Corporation, its parent or any of its subsidiaries. The Board of Directors by resolution adopted in each specific instance may similarly indemnify any person other than a director, officer, employee or agent of the Corporation for liabilities incurred by him or her in connection with services rendered by him or her for or at the request of the Corporation, its parent or any of its subsidiaries. The provisions of this Section shall be applicable to all actions, suits or proceedings commenced after its adoption, whether such arise out of acts or omissions which occurred prior or -16- subsequent to such adoption and shall continue as to a person who has ceased to be a director, officer, employee or agent or to render services for or at the request of the Corporation or as the case may be, its parent, or subsidiaries and shall inure to the benefit of the heirs, executors and administrators of such a person. The rights of indemnification provided for herein shall not be deemed exclusive of any other rights to which any director, officer, employee or agent of the Corporation may be entitled under these By-laws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 7.2. Advances. Expenses (including attorney's fees) incurred by any officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding, whether threatened, pending or completed, may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking, by or on behalf of such director or officer, to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized by law. Such expenses (including attorney's fees) incurred by other employees and agents may be paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. Section 7.3. Amendment. The provisions of this Article VII relating to indemnification and to the advancement of expenses shall constitute a contract between the Corporation and each of its directors and officers which may be modified as to any director or officer only with that person's consent or as specifically provided in this Section. Notwithstanding any other provision of these By-laws relating to their amendment generally, any repeal or amendment of this Article VII which is adverse to any director or officer shall apply to such director or officer only on a prospective basis, and shall not limit the rights of persons covered by this Article VII to indemnification or to the advancement of expenses with respect to any action or failure to act occurring prior to the time of such repeal or amendment. Notwithstanding any other -17- provision of these By-laws, no repeal or amendment of these By-laws shall affect any or all of this Article VII so as to limit indemnification or the advancement of expenses in any manner unless adopted by (a) the unanimous vote of the directors of the Corporation then serving, or (b) the affirmative vote of shareholders entitled to cast not less than a majority of the votes that all shareholders are entitled to cast in the election of directors; provided that no such amendment shall have retroactive effect inconsistent with the preceding sentence. Section 7.4. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under law. ARTICLE VIII - SEAL The form of the seal of the Corporation, [Form of Seal] called the corporate seal of the Corporation, shall be as impressed adjacent hereto. ARTICLE IX - FISCAL YEAR The Board of Directors shall have the power by resolution to fix the fiscal year of the Corporation. If the Board of Directors shall fail to do so, the President shall fix the fiscal year. ARTICLE X - AMENDMENTS (a) Stockholders. The affirmative vote of the holders of a majority of the combined voting power of the outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal these By-laws or to adopt any provision inconsistent therewith. (b) Board of Directors. If the Certificate so provides, the Board shall have the power -18- to alter, amend or repeal these By-laws, however, the Board may not alter, amend or repeal any provision or subject of these By-laws which is expressly committed to the stockholders by the Delaware Code or otherwise. Notwithstanding that such power may be granted to the Board, it shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal these By-laws. ARTICLE XI - INTERPRETATION OF BY-LAWS - - SEPARABILITY Section 11.1. Interpretation. All words, terms and provisions of these By-laws shall be interpreted and defined by and in accordance with the Delaware Code, as amended, and as amended from time to time hereafter. Section 11.2. Separability. The provisions of these By-laws are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. ARTICLE XII - DETERMINATION BY THE BOARD Section 12.1. Effect of Board Determinations. Any determination involving interpretation or application of these By-laws made in good faith by the Board of Directors shall be final, binding and conclusive on all parties in interest. -19- -----END PRIVACY-ENHANCED MESSAGE-----