CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PLAY CO. TOYS & ENTERTAINMENT CORP.
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF
PLAY CO. TOYS & ENTERTAINMENT CORP.
Under Section 242 of the Delaware Corporation Law:
The undersigned, for the purpose of amending the Certificate of
Incorporation of Play Co. Toys & Entertainment Corp., does hereby certify and
set forth:
FIRST:
The name of the Corporation is
PLAY CO. TOYS & ENTERTAINMENT CORP.
SECOND:
The Certificate of Incorporation was filed by the Department of State on
June 15, 1994.
THIRD:
The amendment of the Certificate of Incorporation of the Corporation
effected by this Certificate of Amendment is to (i) amend the conversion
provision of the Series D Preferred Stock to make said Series D Preferred Stock
convertible into shares of the Corporation's Common Stock at the average closing
bid price for the thirty (30) days prior to the written notice of conversion and
(ii) amend the conversion provisions of the Series E Preferred Stock to separate
said Series E Preferred Stock into two (2) class, whereby 6,000,000 shares of
Series E Preferred Stock shall be convertible at any time (Class I), and whereby
14,000,000 shares of Series E Preferred Stock shall be convertible two (2) years
from issuance (Class II), as follows:
The Certificate of Incorporation of this Corporation are amended by
changing "Article IV, so that, as amended, said Article shall read as follows:
"FOURTH
FOURTH:
A. Authorized Capital Stock. The total number of shares of all classes
of capital stock which this Corporation shall have authority to issue is
THIRTY-ONE MILLION FOUR HUNDRED SIXTY-NINE THOUSAND FOUR HUNDRED FORTY-FIVE
(31,469,445) shares consisting of THIRTY MILLION (30,000,000) shares of
Common Stock, par value $.01 per share (hereinafter, the "Common Stock"),
and ONE MILLION FOUR HUNDRED SIXTY- NINE THOUSAND FOUR HUNDRED FORTY-FIVE
(1,469,445) shares of preferred stock, par value $.01 per share
(hereinafter, the "Preferred Stock"), of which 469,444 shares have been
designed, "Series B Preferred Stock", the relative rights, preferences and
limitations of which are as set forth in sub-paragraph (B) of this Article
IV, one share has been designated, "Series D Preferred Stock", the relative
rights, preferences and limitations of which are as set forth in
sub-paragraph (C) of this Article and 1,000,000 shares have been
designated, "Series E Preferred Stock", the relative rights, preferences
and limitations of which are as set forth in sub- paragraph (D) of this
Article IV.
B. Series B. Preferred Stock.
(i) Designation. The designation of this series of Preferred
Stock, par value $.01 per share, shall be the "Series B Preferred
Stock."
(ii) Rank. The Series B Preferred Stock shall, with respect to
rights on liquidation, winding up and dissolution, rank (a) junior to
any other series of the Preferred stock established by the Board of
Directors and, if approved by the affirmative vote of the holders of
the outstanding shares of the Series B Preferred Stock, the terms of
which shall specifically provide that such series shall rank prior to
the Series B Preferred Stock (any such other securities are referred
to herein collectively as the "Senior Securities"), (b) on a parity
with any other series of the Preferred Stock established by the Board
of Directors, the terms of which shall specifically provide that such
series shall rank on a parity with the Series B Preferred Stock (the
Series B Preferred Stock and any such other securities are referred to
herein collectively as the "Parity Securities") and (c) prior to any
other equity securities of the Corporation, including the Series D
Preferred Stock and Series E Preferred Stock and the Common Stock, all
of such equity securities of the Corporation to which the Series B
Preferred Stock ranks prior, including the Common Stock, are referred
to herein collectively as the "Junior Securities").
(iii) Dividends.
(a) Accrual of Dividends. The holders of the then
outstanding shares of Series B Preferred Stock shall be entitled
to receive, out of any funds legally available therefor,
cumulative dividends at the annual rate of $0.60 per share
payable in cash as provided in Section (iii)(b) below. Such
dividends shall accrue on each share from its issue date, and
shall accrue, whether or not earned or declared. Such dividends
shall be cumulative so that if such dividends in respect of any
dividend period, at the rate specified above, shall not have been
paid or declared and a sum sufficient for the payment thereof set
apart, the deficiency shall first be fully paid before any
dividend or other distribution shall be paid on or declared and
set apart for the Common Stock. The data on which the Corporation
initially issues any shares of the Series B Preferred Stock shall
be deemed its "issue date" regardless of the number of times such
share is transferred on the stock records of the Corporation or
the number of certificates which may be issue to evidence such
share.
(b) (1) Dividends on the shares of Series B Preferred Stock
shall be payable in cash annually on each February 1 or such
other date determined by the Board of Directors of the
Corporation (each such date being hereafter referred to as a
"Series B Dividend Payment Data") commencing on February 1, 1995.
If the Board of Directors selects a date other than February 1,
the Corporation shall deliver by regular mail notice to each
record holder of the Series B Preferred Stock, and (2) Dividends
shall be payable to each holder of record of the Series B
Preferred Stock, the record data being either (A) the January 31
immediately preceding the Series B Dividend Payment Date, or (B)
the date determined by the Board of Directors of the Corporation.
If the Board of Directors determines the record data, the
Corporation shall deliver by regular mail notice to each record
holder to the Series B Preferred Stock.
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(c) Other Dividends. So long as any shares of the Series B
Preferred Stock are outstanding, no dividend or other
distribution shall be paid, or declared and set apart for
payment, on the shares of Common Stock or any other class or
series of capital stock of the Corporation, without the written
consent of the holders of a majority of the outstanding shares of
the Series B Preferred Stock.
(iv) Put.
(a) Notice. On each February 1, 1995 and 1996, each of the
holders of the Series B Preferred Stock may, at his option,
require the Corporation to redeem one-half of the shares of
Series B Preferred Stock originally issued to him, for a per
share price equal to the sum of $1.00 plus all accrued but unpaid
dividends on each share of the Series B Preferred Series B
Preferred Stock (the "Redemption Price"), upon the terms set
forth below. A holder who desires to consummate such redemption
shall give written notice (the "Put Notice") to the Corporation.
Within five (5) days after receipt of a Put Notice, the
Corporation shall deliver notice (the "Company Notice") to the
other holders of the Series B Preferred Stock, which shall state
that a holder of the Series B Preferred Stock has delivered a Put
Notice. If any holder of the Series B Preferred Stock delivers a
Put Notice within ten (10) days after delivery of the Company
Notice, the Put Notice shall be deemed timely delivered, however,
the Corporation shall not be required to deliver another Company
Notice. If a holder does not exercise his rights hereunder, the
number of shares which he was entitled to sell to the Corporation
shall carry over to the next date on which he has a put right
(for example, if he does not exercise his put right on February
1, 1995, he shall be entitled to sell all of the shares
originally issued to him on February 1, 1996).
(b) Payment. On the thirtieth day after delivery of the
Company Notice pursuant to Section 2(a) above, the Corporation
shall pay the Redemption Price to the holder of the Series B
Preferred Stock in cash or by bank cashier's check provided that
the holder of the Series B Preferred Stock surrenders to the
Corporation the certificate or certificates representing such
shares duly endorsed for transfer. For purposes of calculating
the Redemption Price, dividends shall be deemed to cease accruing
on the day before payment of the Redemption Price.
(c) Limitation on Redemption. If the funds of the
Corporation legally available for redemption of shares of the
Series B Preferred Stock are insufficient to redeem the total
number of such shares to be redeemed, those funds which are
legally available will be used to redeem the maximum possible
number of such shares, and if at the time of payment to one
holder the Corporation has received a Put Notice from another
holder, then the funds available for redemption shall be applied
ratably among such holders. The shares of the Series B Preferred
Stock not redeemed shall remain outstanding and entitled to all
rights and preferences provided herein. At any time thereafter
when additional funds of the Corporation are legally available
for the redemption of shares of the Series B Preferred Stock,
such funds will immediately be used to redeem the balance of the
shares set forth in the Redemption Notice which were not
redeemed.
(v) Redemption.
(a) Notice. The Corporation may redeem all of the issued and
outstanding shares of the Series B Preferred Stock for a per
share price equal to the Redemption
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Price, upon the terms set forth below. If the Corporation desires to
redeem the Series B Preferred Stock, it shall deliver notice (the
"Redemption Notice") by regular mail to each holder of record of the
Series B Preferred Stock at the address of each holder as it appears
on the books of the Corporation. Dividends shall cease accruing on the
date of the Redemption Notice.
(b) Delivery of Certificates and Payment. On or before the tenth
day after the date of the Redemption Notice (the "Period"), each
holder of the Series B Preferred Stock shall deliver to the secretary
of the Corporation at its principal office his certificates for the
Series B Preferred Stock, duly endorsed in blank (or accompanied by
proper instruments of transfer). Upon such surrender, the holder
thereof shall be entitled to receive payment of the Redemption Price
for each share of the Series B Preferred Stock so surrendered. The
Corporation shall make such payment within five days after the later
of (i) the date on which the holder delivered such certificates or
(ii) the last day of the Period.
(vi) Preference on Liquidation.
(a) Payment on Preferred Stock. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation
the holder of each share of the Series B Preferred Stock then
outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution to its shareholders, whether
from capital, surplus or earnings, before any payment shall be made in
respect of the Common Stock, an amount equal to the Redemption Price.
If upon liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of the Preferred
Stock the full amounts to which they shall be entitled, the holders of
the Preferred Stock shall share ratably in any distribution of assets.
(b) Merger and Consolidation. The merger or consolidation of the
Corporation with another corporation in which the Corporation is not
the surviving corporation or the sale of all or substantially all of
the assets of the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation as those terms are used
in this Article IV.
(c) Payment on Common Stock. Upon completion of the distributions
required by Section 4(a) above, the holders of the Common Stock shall
be entitled to receive ratable any remaining assets and funds of the
Corporation available for distribution in connection with any such
liquidation, dissolution or winding up of the Corporation.
(d) Determination of Value. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation
which will involved the distribution of assets other than cash, the
Board of Directors shall determine in good faith the value of the
assets to be distributed to the holders of shares of the Series B
Preferred Stock and the holders of shares of Common Stock.
(vii) Voting Rights. The holders of Series B Preferred Stock shall not
have any voting rights.
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C. Series D. Preferred Stock.
(i) Designation. The designation of this series of Preferred Stock,
par value $.01 per share, shall be the "Series D Preferred Stock."
(ii) Rank. The Series D Preferred Stock shall rank junior to the
Series B Preferred Stock and Series E Preferred Stock.
(iii) Dividends.
(a) The Holder of the share of Series D Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors,
out of funds legally available for the payment of dividends,
cumulative dividends at the annual rate of 7%. The dividend is payable
within 90 days of each year anniversary thereof (the "Series D
Dividend Payment Date"), in preference to dividends on the Junior
Securities. Such dividend shall be paid to the holder of record at the
close of business on the date ten business days prior to the Series D
Dividend Payment Dates, which dividend may be paid in cash or kind, at
the discretion of the Corporation. Each of such dividends shall be
fully cumulative and shall accrue (whether or not declared), without
interest, from the date such dividends are payable as herein provided.
(b) If at any time the Corporation shall have failed to pay full
dividends which have accrued (whether or not declared) on any Senior
Securities, no dividend shall be declared by the Board of Directors or
paid or set apart for payment by the Corporation on the share of the
Series D Preferred Stock or any other Parity Securities unless, prior
to or concurrently with such declaration, payment or setting apart for
payment, all accrued and unpaid dividends on all outstanding shares of
Senior Securities shall have been or be declared and paid or set apart
for payment, without interest. No dividends shall be declared or paid
or set apart for payment on any Parity or Junior securities for any
period unless full cumulative dividends have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment
thereof set apart for such payment on the Series D Preferred Stock for
all dividend payment periods terminating on or prior to the date of
payment of such full cumulative dividends. If any dividends are not
paid in full, as aforesaid, upon the share of the Series D Preferred
Stock and any other Parity Securities, all dividends declared upon the
share of the Series D Preferred Stock and any other Parity Securities
shall be declared pro rate so that the amount of dividends declared on
the share of Series D Preferred Stock and such other Parity Securities
shall in all cases bear to each other the same ratio that accrued
dividends per share on the Series D Preferred Stock and such other
Parity securities bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment
or payments on the Series D Preferred Stock or any other Parity
Securities which may be in arrears.
(c) The Holder of the share of the Series D Preferred Stock shall
be entitled to receive the dividends provided for in paragraph
(iii)(a) hereof in preference to and in priority over any dividends
upon any of the Junior Securities.
(d) Subject to the foregoing provisions of this Section (iii) the
Board of Directors may declare, and the Corporation may pay or set
apart for payment, dividends and other distributions on any of the
Junior Securities, and may purchase or otherwise redeem any of the
Junior Securities, and may purchase or otherwise redeem any of the
Junior Securities or any warrants, rights or options exercisable for
or convertible into any of the Junior
5
Securities, and the Holder of the share of the Series D Preferred
Stock shall not be entitled to share therein.
(iv) Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the
Holder of the share of Series D Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Corporation available
for distribution to its stockholders an amount in cash equal to
$1,400,000 for the share outstanding, before any payment shall be made
or any assets of the Corporation available for distribution to its
stockholders an amount in cash equal to $1,400,000 for the share
outstanding, before any payment shall be made or any assets
distributed to the holders of any of the Junior Securities, provided,
however, that the Holder of the outstanding share of Series D
Preferred Stock shall not be entitled to receive such liquidation
payment until the liquidation payments on all outstanding shares of
Senior Securities, if any, shall have been paid in full. If the assets
of the Corporation are not sufficient to pay in full the liquidation
payments payable to the Holder of the outstanding share of the Series
D Preferred Stock or any other Parity Securities, then the holders of
all such shares shall share ratably in such distribution of assets in
accordance with the amount which would be payable on such distribution
if the amounts to which the Holder of the outstanding share of Series
D Preferred Stock and the holders of outstanding shares of such other
Parity Securities are entitled were paid in full.
(b) For the purpose of this Article IV, neither the voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or their consideration) of all or substantially all
the property or assets of the corporation or the consolidation or
merger of the Corporation with one or more other corporations shall be
deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, unless such voluntary sale, conveyance, lease, exchange
or transfer shall be in connection with a dissolution or winding up of
the business of the Corporation.
(v) Redemption. The share of Series D Preferred Stock is not
redeemable by the Corporation.
(vi) Conversion.
(a) Subject to and upon compliance with the provisions of this
Section (vi), the Holder of the share of Series D Preferred Stock
shall have the right, at such Holder's option, at any time, to convert
such share into $1,400,000 worth of shares of the Corporation's Common
Stock at the average closing bid price for the thirty (30) days prior
to the Holder's giving notice of conversion. The shares issued
pursuant to the conversion shall be fully paid and nonassessable
shares of Common Stock of the Corporation.
(b)(i) In order to exercise the conversion privilege, the Holder
of the share of Series D Preferred Stock shall surrender the
certificate representing such share at the office of the transfer
agent for the Series D Preferred Stock, appointed for such purpose by
the Corporation, with the Notice of Election to Convert on the back of
said certificate completed and signed. Unless the shares of Common
Stock issuable on conversion are to be issued in the same name in
which such share of Series D Preferred Stock is registered, the share
surrendered
6
for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the Holder or
such Holder's duly authorized attorney and an amount sufficient to pay
any transfer or similar tax.
(ii) As promptly as practicable after the surrender of the
certificate for the share of Series D Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver at such
office to such holder, or on his written order, a certificate or
certificates for the number of full shares of Common Stock
issuable upon the conversion of such share in accordance with the
provisions of this Section (iv).
(iii) The conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which
the certificate for the share of Series D Preferred Stock shall
have been surrendered and such notice received by the Corporation
as aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares represented thereby
at such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such
person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, and such notice
received by the Corporation. All shares of Common Stock delivered
upon conversion of the Series D Preferred Stock will upon
delivery be duly and validly issued and fully paid and
nonassessable, free of all liens and charges and not subject to
any preemptive rights.
(c) The Corporation covenants that it will at all times reserve
and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued shares of Common Stock or its issued
shares of Common stock held in its treasury, or both, for the purposes
of effecting the conversion of the Series D Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of
the outstanding share of Series D Preferred Stock not theretofore
converted. For purposes of this subsection (c), the number of shares
of Common Stock which shall be deliverable upon the conversion of the
outstanding share of Series D Preferred Stock shall be computed based
upon the average closing bid price for the thirty (30) consecutive
days prior to the Holder giving notice of his intention to convert the
Series D Preferred Stock.
(vii) Voting Rights.
(a) The Holder of the Series D Preferred Stock shall have the
right to vote at all meetings of the stockholders of the Corporation,
or consent in writing in lieu of voting, or otherwise, solely for the
election of the Corporation's Board of Directors.
(b) At such times as the shares of Series D Preferred Stock is
outstanding, the Board of Directors shall be comprised of such odd
number of Directors as shall be fixed by the Board of Directors or as
state in the Corporation's Certificate of Incorporation; provided
however, that such number of Directors shall not be less than three
(3).
(c) The Holder of the share of Series D Preferred Stock, voting
as a separate class shall have the sole right to vote for or consent
in writing in lieu of voting, and elect two-thirds (2/3) of the
Directors of the Corporation, who shall be known as the
7
Preferred Directors, and to remove any Preferred Directors with or
without cause at any time and to fill all vacancies of Preferred
Directors.
D. Series E Preferred Stock.
(i) Designation. The designation of this series of Preferred Stock,
par value $.01 per share, shall be the "Series E Preferred Stock." There
shall be two classes of Series E Preferred Stock. 6,000,000 shares of
Series E Preferred Stock will be designated as Class I Series E Preferred
Stock and 14,000,000 shares will be designated as Class II Series E
Preferred Stock (the Class I Series E Preferred Stock and Class II Series E
Preferred Stock are collectively referred to herein as the "Series E
Preferred Stock"). The classification of the shares of Series E Preferred
Stock will be determined by the Board of Directors of the Corporation at
the time of issuance.
(ii) Rank. The Series E Preferred Stock shall rank junior to the
Series B Preferred Stock and senior to the Series D Preferred Stock.
(iii) Dividends.
(a) The holders of the shares of the Series E Preferred Stock
shall be entitled to receive, when and as declared by the Board of
Directors, out of funds legally available for the payment of
dividends, cumulative dividends at $1.00 per share. The dividend is
payable within 90 days of each year anniversary thereof (the "Series E
Dividend Payment Date"), in preference to dividends on the Junior
Securities. Such dividend shall be paid to the holder of record at the
close of business on the date ten business days prior to the Series E
Dividend Payment Dates, which dividend may be paid in cash or kind, at
the discretion of the Corporation. Each of such dividends shall be
fully cumulative and shall accrue (whether or not declared), without
interest, from the date such dividends are payable as herein provided.
(b) If at any time the Corporation shall have failed to pay full
dividends which have accrued (whether or not declared) on any Senior
Securities, no dividend shall be declared by the Board of Directors or
paid or set apart for payment by the Corporation on the shares of the
Series E Preferred Stock or any other Parity Securities unless, prior
to or concurrently with such declaration, payment or setting apart for
payment, all accrued and unpaid dividends on all outstanding shares of
Senior Securities shall have been or are declared and paid or set
apart for payment, without interest. No dividends shall be declared or
paid or set apart for payment on any Parity or Junior securities for
any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the
Series E Preferred Stock for all dividend payment periods terminating
on or prior to the date of payment of such full cumulative dividends.
If any dividends are not paid in full, as aforesaid, upon the shares
of the Series E Preferred Stock and any other Parity Securities shall
be declared pro rata so that the amount of dividends declared per
share on the Series E Preferred Stock and such other Parity Securities
shall in all cases bear to each other the same ratio that accrued
dividends per share on the Series E Preferred Stock and such other
Parity securities bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment
or payments on the Series E Preferred Stock or any other Parity
Securities which may be in arrears.
8
(c) Holders of the shares of the Series E Preferred Stock shall
be entitled to receive the dividends provided for in paragraph
(iii)(a) hereof in preference to and in priority over any dividends
upon the Series D Preferred Stock and any other Junior Securities.
(d) Subject to the foregoing provisions of this Section (iii) the
Board of Directors may declare, and the Corporation may pay or set
apart for payment, dividends and other distributions on any of the
Junior Securities, and may purchase or otherwise redeem any of the
Junior Securities or any warrants, rights or options exercisable for
or convertible into any of the Junior Securities, and the holders of
shares of the Series E Preferred Stock shall not be entitled to share
therein.
(iv) Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the
holders of shares of Series E Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Corporation available
for distribution to its stockholders an amount in cash equal to $1.00
per share for each share outstanding, before any payment shall be made
or any assets distributed to the holders of any of the Junior
Securities, provided, however, that the holder of the outstanding
shares of the Series E Preferred Stock shall not be entitled to
receive such liquidation payment until the liquidation payments on all
outstanding shares of Senior Securities, if any, shall have been paid
in full. In the assets of the Corporation are not sufficient to pay in
full the liquidation payments payable to the holders of the
outstanding shares of the Series E Preferred Stock or any other Parity
Securities, then the holders of all such shares shall share ratably in
such distribution of assets in accordance with the amount which would
be payable on such distribution if the amounts to which the holders of
the outstanding shares of Series E Preferred Stock and the holders of
outstanding shares of such other Parity Securities are entitled were
paid in full.
(b) For the purposes of this Article IV, neither the voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or their consideration) of all or substantially all
the property or assets of the Corporation or the consolidation or
merger of the Corporation with one or more other corporations shall be
deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, unless such voluntary sale, conveyance, lease, exchange
or transfer shall be in connection with a dissolution or winding up of
the business of the Corporation.
(v) Redemption. The shares of Series E Preferred Stock is not
redeemable by the Corporation.
(vi) Conversion.
(a) Subject to and upon compliance with the provisions of this
Section (vi), the holder of a share of Series E Preferred Stock
designated as Class I Series E Preferred Stock shall have the right,
at such holder's option, at any time, terminating five years from
issuance, to convert such share into twenty fully paid and
nonassessable shares of Common Stock of the Corporation. A holder of a
share of Series E Preferred Stock designated as Class II Series E
Preferred Stock shall have the right, at such holder's option, two (2)
years from issuance, to convert such share into twenty fully paid and
nonassessable shares of Common Stock of the Corporation.
9
(b) The holders of shares of the Series E Preferred Stock at the
close of business on a Series E Dividend Payment Date shall be
entitled to receive the dividend payable on such shares on the
corresponding Series E Dividend Date withholding the conversion
thereof or the Corporation's default in payment of the dividend due on
such Series E Dividend Payment Date (except that holders of shares
called for redemption on a redemption date between such record date
and the Series E Dividend Payment Date shall not be entitled to
receive such dividend on such dividend payment date). However, shares
of Series E Preferred Stock surrendered for conversion during the
period between the close of business on any Series E Dividend Payment
Date and the opening of business on the corresponding Series E
Dividend Payment Date (except shares called for redemption on a
redemption date during such period) must be accompanied by payment of
an amount equal to the dividend payable on such shares on such Series
E Dividend Payment Date. A holder of shares of Series E Preferred
Stock on a Series E Dividend Payment Date. A holder of shares of
Series E Preferred Stock on a Series E Dividend Payment Date who (or
whose transferee) surrenders any of such shares for conversion into
shares of Common Stock on a Series E Dividend Payment Date will
receive the dividend payable by the Corporation on such shares of
Series E Preferred Stock on such date, and the converting holder need
not include payment in the amount of such dividend upon surrender of
shares of Series E Preferred Stock for conversion. Exchange as
provided above, the Corporation shall make no payment or allowance for
unpaid dividends, whether or not in arrears, on converted shares or
for dividends on the shares of Common Stock issued upon such
conversion.
(c)(i) In order to exercise the conversion privilege, the holders
of each share of Series E Preferred Stock to be converted shall
surrender the certificate representing such share at the office of the
transfer agent for the Series E Preferred Stock, appointed for such
purpose by the Corporation, with the Notice of Election to Convert on
the back of said certificate completed and signed. Unless the shares
of Common Stock issuable on conversion are to be issued in the same
name in which such share of Series E Preferred Stock is registered,
each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly
executed by the holder of such holder's duly authorized attorney and
an amount sufficient to pay any transfer or similar tax.
(ii) As promptly as practicable after the surrender of the
certificates for shares of Series E Preferred Stock as aforesaid,
the Corporation shall issue and shall deliver at such office to
such holder, or on his written order, a certificate or
certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with
the provisions of this Section (iv).
(iii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which
the certificates for shares of Series E Preferred Stock shall
have been surrendered and such notice received by the Corporation
as aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares represented thereby
at such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such
person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, and such notice
received by the Corporation. All shares of Common Stock delivered
upon conversion of the Series E Preferred Stock will upon
delivery be duly and validly issued
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and fully paid and nonassessable, free of all liens and charges
and not subject to any preemptive rights.
(d) The Corporation covenants that it will at all times reserve
and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued shares of Common Stock or its issued
shares of Common stock held in its treasury, or both, for the purposes
of effecting conversions of the Series E Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of
all outstanding shares of Series E Preferred Stock not theretofore
converted. For purposes of this subsection (d), the number of shares
of Common Stock which shall be deliverable upon the conversion of all
outstanding shares of Series E Preferred Stock shall be computed as if
at the time of computation of all such outstanding share were held by
a single holder.
(vii) Voting Rights.
(a) The holders of the Series E Preferred Stock shall have no
voting rights.
(b) Common Stock.
(i) Dividends. Subject to the dividend and liquidation
rights of the Series E Preferred stock, the holders of Common
Stock shall be entitled to share equally all dividends declared
and paid by the Corporation.
(ii) Voting. The holders of record of Common Stock shall
have one vote, on all matters upon which stockholders of the
Corporation may vote, for each share of the Common Stock held by
them.
(iii) Dissolution, Liquidation, Etc. In the event of the
dissolution, liquidation or winding up of the affairs of the
Corporation, after payment or provision for payment of the debts
and other liabilities of the Corporation and after the payment to
the holders of the Preferred Stock as provided for in this
Certificate of Incorporation, the remaining assets of the
Corporation shall be distributed to the holders of Common Stock."
FIFTH:
The amendment to the Articles of Incorporation of the Corporation set forth
above was adopted by written consent of the Corporation's majority shareholder
on the day of August.
IN WITNESS WHEREOF, the undersigned President of this Corporation has
executed this Certificate of Amendment on this ____ day of August, 1996.
PLAY CO. TOYS & ENTERTAINMENT CORP.
--------------------------------------
Ilan Arbel, President
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