Exhibit 3(b)
AMENDMENT NO. 1
TO
CERTIFICATE OF DESIGNATIONS OF
SERIES C PREFERRED STOCK
OF
CHOICES ENTERTAINMENT CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
CHOICES ENTERTAINMENT CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that, pursuant to (i) the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, (ii) the
provisions of Section 151 of said General Corporation Law, and (iii) the
resolutions adopted by the Board of Directors of the Corporation by unanimous
written consent dated August 11, 1995, the Board of Directors duly adopted
resolutions providing for the amendment of the Certificate of Designations of
Series C Preferred Stock of the Corporation to increase from 300 to 500 the
number of shares designated for issuance as Series C Preferred Stock (none of
which have been issued to date), and increasing from 25,000 to 40,000 the number
of votes to which each share of Series C Preferred Stock is entitled and the
number of shares of Common Stock into which each share of Series C Preferred
Stock may become convertible (and making similar conforming changes), which
resolutions are as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board
of Directors does hereby approve the issuance up to 500 shares of Preferred
Stock, par value $.01 per share, of the Corporation, to be designated
"Series C Preferred Stock" of the presently authorized shares of Preferred
Stock. The voting powers, designations, preferences, and other rights of
the Series C Preferred Stock authorized hereunder and the qualifications,
limitations and restrictions of such preferences and rights are as follows:
1. Cash Dividends. Cash dividends shall be paid with respect to
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the shares of Series C Preferred Stock on the same basis as dividends are
paid to holders of common stock of the Corporation (the "Common Stock"),
and shall be distributed ratably to holders of the Series C Preferred Stock
and holders of Common Stock on the basis that each 1/40,000 share of Series
C Preferred Stock shall be pro rata with each whole share of Common Stock.
2. Voting. The holders of Series C Preferred Stock shall be
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entitled to vote on any matter required to be or otherwise submitted to a
vote of stockholders of the Corporation together with the Common Stock and
not as a separate class, unless otherwise required by law. Each share of
Series C Preferred Stock shall be entitled to 40,000 votes.
3. Conversion. The Series C Preferred Stock shall not be
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convertible when issued, but shall automatically become convertible into
shares of Common Stock (at the rate of 40,000 shares of Common Stock for
every one share of Series C Preferred Stock (the "Conversion Rate")) upon
the filing of an amendment to the Corporation's Certificate of
Incorporation (the "Amendment") which increases the number of authorized
shares of Common Stock by a number equal to or greater than the sum of (i)
40,000 multiplied by the number of then outstanding shares of Series C
Preferred Stock, plus (ii) that number of additional shares of Common
Stock, if any, needed to be reserved for issuance upon the conversion or
exercise of all other then outstanding convertible or exercisable
securities of the Corporation. Upon filing of the Amendment, the number of
shares approved for issuance as Series C Preferred Stock shall
automatically be decreased from 500 to a number equaling the number of then
outstanding shares of Series C Preferred Stock (thus preventing the
issuance of any additional shares of Series C Preferred Stock). The
following provisions shall apply after the Series C Preferred Stock becomes
convertible:
(a) Any holder of shares of Series C Preferred Stock electing to
convert such shares into Common Stock shall surrender the certificate or
certificates for such shares at the office of the Corporation (or at such
other place as the Corporation may designate by notice to the holders of
shares of Series C Preferred Stock) during regular business hours, duly
endorsed to the Corporation or in blank, or accompanied by instruments of
transfer to the Corporation in blank, in form satisfactory to the
Corporation and shall give written notice to the Corporation at such office
that such holder elects to convert such shares of Series C Preferred Stock.
The Corporation shall, as soon as practicable after such deposit of
certificates for shares of Series C Preferred Stock, accompanied by the
written notice above prescribed, issue and deliver at such office to the
holder for whose account such shares were surrendered, or to his nominee,
certificates representing the number of shares of Common Stock to which
such holder is entitled upon such conversion.
(b) Conversion shall be deemed to have been made as of the date
of surrender of certificates for the shares of Series C Preferred Stock to
be converted and the delivery of written notice as hereinabove provided;
and the person entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such
Common Stock on such date.
(c) The Conversion Rate shall be adjusted from time to time as
follows:
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i) In case the Corporation shall (A) subdivide its outstanding
shares of Common Stock, (B) combine its outstanding shares of Common Stock
into a smaller number of shares or, (C) issue by reclassification of its
shares of Common Stock any shares of capital stock of the Corporation, the
conversion right and each Conversion Rate in effect immediately prior to
such action shall be adjusted so that the holder of any shares of the
Series C Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of capital stock of the
Corporation which such holder would have owned immediately following such
action had such shares of the Series C Preferred Stock been converted
immediately prior thereto. An adjustment made pursuant to this
subparagraph shall become effective retroactively immediately after the
record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this subparagraph, the holder of any shares of
the Series C Preferred Stock thereafter surrendered for conversion shall
become entitled to receive shares of two or more classes of capital stock
of the Corporation, the Board of Directors (whose determination shall be
conclusive) shall determine the allocation of the adjusted Conversion Rate
between or among shares of such classes of capital stock.
ii) Notwithstanding the foregoing, the Corporation shall not be
required to make any adjustment of the Conversion Rate unless such
adjustment would require an increase or decrease of at least 5% in such
rate. Any lesser adjustment shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 5% in such rate.
iii) Whenever an adjustment in the Conversion Rate is required,
the Corporation shall forthwith place on file with its Secretary a
statement signed by its Chairman of the Board, President or a Vice
President and by its Secretary or Treasurer or one of its Assistant
Secretaries or Assistant Treasurers, stating the adjusted Conversion Rate
determined as provided herein. Such statement shall set forth in
reasonable detail such facts as shall be necessary to show the reason and
the manner of computing such adjustment. Promptly after the adjustment of
the Conversion Rate, the Corporation shall mail a notice thereof to each
holder of shares of Series C Preferred Stock.
iv) In case of either (A) any consolidation or merger to which
the Corporation is a party, other than a merger or consolidation in which
the Corporation is the surviving or continuing corporation and which does
not result in any reclassification of, or change (other than a change in
par value or from par value to no par value or from no par value to par
value, or as a result of a subdivision or combination) in, outstanding
shares of Common Stock, or (B) any sale or conveyance to another
corporation of all or substantially all of the assets of the Corporation,
then the Corporation, or such successor corporation, as the case may be,
shall make appropriate provision so that the holder of each share of Series
C Preferred Stock then outstanding
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shall have the right to convert such shares of Series C Preferred Stock
into the kind and amount of shares or other securities and property
receivable upon such consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock into which such shares of Series C
Preferred Stock might have been converted immediately prior to such
consolidation, merger, sale or conveyance, subject to adjustments which
shall be as nearly equivalent as may be practicable to the adjustments
provided for hereunder. The provisions of this subparagraph shall apply
similarly to successive consolidations, mergers, sales or conveyances.
v) The Corporation shall take all necessary action to cause any
shares of Series C Preferred Stock which shall at any time have been
converted to resume the status of authorized but unissued shares of
Preferred Stock, without designation as to series, until such shares are
once more designated as part of a particular series by the Board of
Directors. At the time when the Series C Preferred Stock first becomes
convertible, and at all times thereafter, the Corporation shall reserve and
keep available out of its authorized but unissued stock, for the purpose of
effecting the conversion of the shares of the Series C Preferred Stock,
such number of its duly authorized shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding
shares of the Series C Preferred Stock; provided, however, that nothing
contained herein shall preclude the Corporation from satisfying its
obligations in respect of the conversion of the shares by delivery of
purchased shares of Common Stock which are held in the treasury of the
Corporation.
vi) The Corporation shall pay any and all issue or transfer
taxes that may be payable in respect of any issuance or delivery of shares
of Common Stock on conversion of shares of Series C Preferred Stock
pursuant hereto. The Corporation shall not, however, be required to pay
any tax which is payable in respect of any transfer involved in the issue
or delivery of Common Stock in a name other than that in which the shares
of Series C Preferred Stock so converted were registered, and no such issue
or delivery shall be made unless and until the person requesting such issue
has paid to the Corporation the amount of such tax, or has established, to
the satisfaction of the Corporation, that such tax has been paid.
vii) Before taking any action that would result in the effective
price of the shares of Common Stock issuable upon conversion of Series C
Preferred Stock being less than the then par value of the Common Stock, the
Corporation shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common Stock.
4. Fractional Shares. The Series C Preferred Stock may be
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issued as fractional shares in increments of 1/40,000 of a share. Each
fractional share of Series C Preferred Stock shall be entitled to the same
rights and powers on a pro rata basis as a whole share of Series C
Preferred Stock.
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5. Liquidation, Dissolution, Winding Up. The Series C Preferred
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Stock shall have no liquidation or other preference over the Corporation's
Common Stock. Upon the voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, its net assets shall be distributed
ratably to holders of the Series C Preferred Stock and holders of Common
Stock on the basis that each 1/40,000 share of Series C Preferred Stock
shall be pro rata with each whole share of Common Stock.
IN WITNESS WHEREOF, CHOICES ENTERTAINMENT CORPORATION, has caused this
Certificate to be signed by ______________, its ____________, and attested by
______________, its Secretary, this ___ day of ____________, 1995.
CHOICES ENTERTAINMENT CORPORATION
By: /s/ Ronald W. Martignoni
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Ronald W. Martignoni, CFO
ATTEST:
By: ____________________________
_________________, Secretary
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