CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
EVENT MERCHANDISING INC.,
a California corporation
The undersigned certify that:
a. They are the president and secretary, respectively, of Event Merchandising
Inc., a California corporation.
b. Article IV of the Articles of Incorporation of this corporation is hereby
amended to read as follows:
i. Classes of Stock. The authorized capital of this
corporation is divided into two classes, as follows:
(a) 5,000 shares of common stock, without par value (the
"Common Stock"); and
(b) 42,500 shares of preferred stock, without par value, which
shall be designated as Series A Preferred Stock (the "Preferred
Stock"). The rights, privileges, conditions and restrictions granted to
and imposed upon the Preferred Stock are set forth below.
ii. Preferred Stock Dividends.
(1) General Dividend Obligation. When, as and if declared by
the Board of Directors of the Corporation, the Corporation shall pay to
the holders of record of the Preferred Stock, out of the assets of the
Corporation available for the payment of dividends under the General
Corporation Law of the State of California, preferential dividends at
the times and in the amounts provided for in this Section 2.
(2) Payments of Dividends. When declared by the Board of
Directors of the Corporation, and out of monies legally available
therefore, dividends on the Preferred Stock shall be payable on each
Dividend Payment Date (capitalized terms not otherwise defined that are
being used herein shall have the definitions set forth in Section 10)
to the holders of Preferred Stock on the record date determined by the
Board of Directors of the Corporation in accordance with the by-laws of
the Corporation. Dividends shall be paid by the Corporation by wire
transfer, pursuant to the holders' instructions from time to time, of
immediately available funds so as to be received by such holder on the
due date of such dividend,
(3) Calculation of Dividends. Dividends on each share of
Preferred Stock shall be calculated cumulatively at the rate and in the
manner prescribed herein from and including the date of issuance of
such share of Preferred Stock, whether or not such dividends shall have
been declared and whether or not there shall be (at the time such
dividends are calculated or become payable or at any other time) funds
or assets of the Corporation legally available for the payment of
dividends. For purposes of this Section 2.3, the date on which the
Corporation shall initially issue any share of Preferred Stock shall be
deemed to be its "date of issuance" regardless of the number of times
transfer of such share of Preferred Stock shall be made on the stock
register maintained by or for the Corporation and regardless of the
number of certificates which may be issued to evidence such share of
Preferred Stock (whether by reason of transfer of such share or for any
other reason).
(4) Dividend Rates. (a) On each Dividend Payment Date,
dividends in an aggregate amount equal to eighty percent (80%) of the
Corporation's Adjusted EBDA, for the full fiscal quarter preceding such
Dividend Payment Date (prorated for any partial fiscal quarter
preceding the first Dividend Payment Date), shall accrue on the
Outstanding shares of Preferred Stock as a class. To the extent any
accrued dividend is not paid on a Dividend Payment Date, all such
unpaid dividends accrued on shares of Preferred Stock Outstanding
during the period from and including the preceding Dividend Payment
Date (or from and including the original date of issuance of such share
in the case of the initial Dividend Payment Date after the date of
issuance) shall be included in the Liquidation Value of such shares and
shall remain a part thereof until such dividends are paid.
(b) As used herein, "Adjusted EBDA" means the sum of (i) the
net income of the Corporation before depreciation and amortization,
deterrnined in accordance with GAAP consistently applied. In
calculating Adjusted EBDA: (i) expenses shall only be allowable if
reasonable and charged on an arms-length basis; (ii) there shall be no
deduction, for purposes of this calculation, for "Consultation Fees" of
the type reflected in previous financial statements of the Company;
(iii) there shall be no deduction for corporate overhead or interest
charges or fees or other expenses of Affiliates that are not direct
expenses of the Company; and (iv) all fees and other compensation paid
under the Management Services Agreement, to the extent taken into
account as expenses in determining net income of the Corporation shall
be added back. For purposes of this Agreement, the term "Affiliate"
with respect to any Person means (i) any Person directly, or indirectly
through one or more intermediaries, controlling, controlled by or under
common control with such Person; or (ii) any officer, director, partner
or direct or indirect beneficial or legal owner of any 10% or greater
equity or voting interest of such Person. "Person" shall mean a natural
person or any legal, commercial or governmental entity, such as, but
not limited to, a business association, corporation, general
partnership, joint venture, limited partnership, limited liability
company, trust, or any person acting in a representative capacity.
(5) Distribution of Dividend Payments. All dividends accrued
on the Preferred Stock shall be payable pro rata so that an equal
amount shall be paid with respect to each share of Preferred Stock then
Outstanding. If at any time the Corporation shall pay a dividend to the
holders of Preferred Stock in an amount which is less than the total
amount of dividends then accrued on such Preferred Stock, such payment
shall be distributed among the holders of Preferred Stock so that an
equal amount shall be paid with respect to each share of Preferred
Stock then Outstanding.
iii. Liquidation Preferences.
Upon any liquidation (complete or partial), dissolution or
winding up of the Corporation, or any similar distribution of its
assets to its shareholders which results in a return of capital,
whether voluntary or involuntary, the holders of the Preferred Stock
shall be entitled, before any distribution or payment is made upon any
Junior Securities of the Corporation, to be paid out of the assets of
the Corporation available for distribution to its shareholders (whether
from capital, surplus or earnings) an amount in cash equal to the
aggregate Liquidation Value of all shares of Preferred Stock then
Outstanding, and shall not be entitled to any further payment. Written
notice of such liquidation, dissolution, winding up or other
distribution of assets, stating a payment date, the amount of the
payment and the place where the amounts distributable shall be payable,
shall be mailed by certified or registered mail, return receipt
requested, not less than sixty (60) days prior to the payment date
stated therein, to each record holder of any share of Preferred Stock
entitled thereto at the address for such record holder shown on the
Corporation's records. Neither the consolidation nor merger of the
Corporation into or with any other corporation or corporations, nor the
sale or transfer by the Corporation of all or any part of its assets,
nor the reduction of the capital stock of the Corporation, shall be
deemed to be a liquidation, dissolution, winding up or similar
distribution of the Corporation within the meaning of any of the
provisions of this Section 3.
iv. Redemptions of Preferred Stock.
(1) Redemption Price. For each share of Preferred Stock which
is to be redeemed by the Corporation at any time and for any reason in
a redemption pursuant to this Section 4, the Corporation shall be
obligated on the Redemption Date, regardless of whether the Corporation
shall be able or legally permitted to make such payment on the
Redemption Date, to pay to the holder thereof (upon surrender by such
holder at the Corporation's principal office of the certificate
representing such share of Preferred Stock duly endorsed in blank or
accompanied by an appropriate form of assignment) the Redemption Price
for such share of Preferred Stock, in cash.
(2) Redeemed or Otherwise Acquired Shares Not to be Reissued.
Any shares of Preferred Stock redeemed pursuant to this Section 4 or
otherwise acquired by the Corporation shall not be reissued, sold or
transferred by the Corporation and shall be
retired.
(3) Determination of Number of Each Holder's Shares to be
Redeemed. The number of shares of Preferred Stock to be redeemed from
each holder thereof in each redemption under this Section 4 shall be
determined by multiplying the total number of shares of Preferred Stock
to be redeemed times a fraction, the numerator of which shall be the
total number of shares of Preferred Stock then held by such holder and
the denominator of which shall be the total number of shares of
Preferred Stock then Outstanding, rounded if the result is fractional
to the nearest whole number of shares.
(4) Scheduled Redemption of Preferred Stock. On any
termination of the Management Services Agreement, the Corporation shall
purchase and redeem all of the shares of Preferred Stock then
Outstanding.
(5) Other Mandatory Redemptions. (a) In the event any
Corporate Change is to occur, any holder of shares of Preferred Stock
may require the Corporation to redeem all or any portion of the
Preferred Stock owned by such holder immediately prior to the
consummation of such Corporate Change. Written notice of any impending
Corporate Change, and the substance and intended date of consummation
thereof, shall be mailed by certified or registered mail, return
receipt requested, not more than sixty (60) nor less than ten (10) days
prior to the date of consummation thereof, to each record holder of
shares of Preferred Stock at the address for such record holder shown
on the Corporation's records. Each such holder shall have twenty (20)
days from the date of receipt of such notice to request (by written
notice to the Corporation) redemption of all or any portion of the
Preferred Stock owned by such holder. Immediately prior to the
consummation of such Corporate Change, the Corporation shall redeem all
Preferred Stock as to which requests under this Section 4.5(a) have
been made.
(b) "Corporate Change" means (i) a public offering of the
Corporation's securities registered under the Securities Act of 1933,
as amended, (ii) the sale, exchange or transfer of all or substantially
all of the Corporation's assets, or (iii) a sale, exchange or other
transfer of capital stock of the Corporation, including in connection
with a merger or consolidation, in one transaction or a series of
related transactions, as a result of which one or more persons (other
than a shareholder on the date of the original issuance of Preferred
Stock, or an affiliate of such a shareholder) acquire ownership of or
control over capital stock of the Corporation (or its successor by
merger or consolidation) having the power to elect fifty percent (50%)
or more of the Corporation's (or such successor's) Board of Directors.
(6) Notice of Redemption. Except as otherwise expressly
provided herein, notice of any redemption of Preferred Stock,
specifying the time and place of redemption, the Redemption Price and
the Section and paragraph pursuant to which such redemption is being
made, shall be mailed by certified or registered mail, return receipt
requested, to
each holder of record of shares of Preferred Stock to be redeemed, at
the address for such holder shown on the Corporation's records, not
more than ninety (90) nor less than sixty (60) days (ten (10) days, in
the case of a redemption pursuant to Section 4.5) prior to the date on
which such redemption is to be made. The notice shall also specify the
number of shares of Preferred Stock and the certificate numbers thereof
which are to be redeemed. In case less than all the shares of Preferred
Stock represented by any certificate are redeemed, a new certificate
representing the unredeemed shares of Preferred Stock shall be issued
to the holder thereof without cost to such holder.
(7) Rights After Redemption Date. Provided that the Redemption
Price is paid in full on the applicable Redemption Date, no share of
Preferred Stock shall be entitled to any dividends accrued after its
Redemption Date, and on such Redemption Date, except as otherwise
provided herein or by law, all rights of the holder of such share of
Preferred Stock as a shareholder of the Corporation, by reason of the
ownership of such share, shall cease, except the right to receive the
Redemption Price of such share upon presentation and surrender of the
certificate representing such share, and such share shall not after
such Redemption Date be deemed to be Outstanding.
(8) Other Redemptions. The Corporation shall neither redeem
nor otherwise acquire any shares of Preferred Stock except (i) as
expressly authorized in these Articles of Incorporation, or (ii)
pursuant to any offer of redemption made to the holders of Preferred
Stock pro rata according to the shares held by them.
v. Voting Rights of Preferred Stock.
Except as otherwise provided by law, by agreement among the
shareholders, or as otherwise provided in these Articles of
Incorporation, Preferred Stock shall entitle the holders thereof to no
voting rights.
vi. Registration of Transfer.
The Corporation shall keep at its principal office (or such
other place as the Corporation reasonably designates) a register for
the registration of shares of Preferred Stock. Upon the surrender of
any certificate representing Preferred Stock at such place, the
Corporation shall, at the request of the registered holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing the
aggregate number of shares represented by the surrendered certificate,
subject to the requirements of applicable securities laws. Each such
new certificate shall be registered in such name and shall represent
such number of shares as shall be requested by the holder of the
surrendered certificate, shall be substantially identical in form to
the surrendered certificate, and the holders of the shares represented
by such new certificate shall be entitled to receive all theretofore
payable but unpaid dividends on the shares represented by the
surrendered certificate.
vii. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of the
Preferred Stock and, in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the registered holder is an institutional
investor its own agreement of indemnity, without bond, shall be
satisfactory), or, in the case of any such mutilation, upon surrender
of such certificate, the Corporation shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind
representing the number of shares represented by such lost, stolen,
destroyed or mutilated certificate, and the shares represented by such
new certificate shall be entitled, among other things, to receive all
theretofore payable but unpaid dividends on the shares represented by
the lost, stolen, destroyed or mutilated certificate.
viii. Restrictions on Corporate Action.
In addition to any other approvals or consents required by
law, without the prior affirmative vote or written consent of the
holders of at least a majority of all shares of the Preferred Stock
Outstanding at the time:
(i) The Corporation shall not authorize, create or issue any
shares, or securities convertible into such shares, of any class of
stock having preference over, or being on a parity with, the Preferred
Stock with respect to either the payment of dividends or rights upon
dissolution, liquidation, winding up or similar distribution of the
Corporation or distribution of assets to its shareholders by way of
return of capital, whether voluntary or involuntary.
(ii) Subject to the provisions of applicable law, the
Corporation shall not liquidate, dissolve or wind up its affairs.
(iii) The Corporation shall not sell, lease, or convey all or
substantially all of the property or business of the Corporation, or
effect a merger or consolidation of or with any other corporation,
partnership, limited liability company or other entity or entities.
(iv) The Corporation shall not amend, alter or repeat Sections
2 through 11 of Article IV of the Articles of Incorporaiion, nor shall
it amend, alter or repeal any of the other provisions of the Articles
of Incorporation or the by-laws of the Corporation in any manner which
adversely affects the preferences and rights and the qualifications,
limitations or restrictions of the Preferred Stock or the holders
thereof nor shall the Corporation increase the number of shares of the
Preferred Stock which the Corporation is authorized to issue.
(v) The Corporation shall not enter into any agreement which
would by its terms prohibit or in any way restrict the Corporation from
declaring or paying dividends on the Preferred Stock or from performing
any other obligation to the holders of Preferred Stock imposed on the
Corporation by these Articles of Incorporation.
(vi) The Corporation shall not declare or pay any dividend or
make any other distribution on any Junior Securities, other than
dividends or distributions payable solely in Junior Securities, or
purchase, redeem, or otherwise acquire for any consideration, or set
aside as a sinking fund or other fund for the redemption or repurchase
of any Junior Securities or any warrants, rights or options to purchase
the same.
ix. Closing Books.
The Corporation will not close its books against the transfer
of any share of Preferred Stock.
x. Definitions.
As used in these Articles of Incorporation, the following
terms shall have the following meanings, which meanings shall be
equally applicable to the singular and plural forms of such terms:
"Business Day" means any day which is not a Saturday or a
Sunday or a day on which banks are permitted to close in New York, New
York.
"Common Stock" means the common stock, without par value, of
the Corporation, and any capital stock of any class of the Corporation
hereafter authorized which shall not be limited to a fixed sum or
percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of
assets upon any liquidation, dissolution, winding up or similar
distribution of the Corporation.
"Dividend Pavment Date" means, with respect to Preferred
Stock, the fifteenth (15th) day of January, April, July and October in
each year (or if any such day is not a Business Day the immediately
preceding Business Day).
"GAAP" means generally-accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board.
"Junior Security" means the Corporation's Common Stock and any
other equity security of any kind which the Corporation or any
Subsidiary shall at any time issue or be authorized to issue other than
Preferred Stock.
"Liquidation Value" of any share of Preferred Stock as of any
particular date means an amount equal to the accrued and unpaid
dividends on such share of Preferred Stock.
"Management Services Agreement" means the Management Services
Agreement dated as of June, 1998 between the Corporation and EMI
Management Services Corporation (the "Manager"), as from time to time
amended, modified or supplemented.
"Outstanding" when used with reference to shares of Preferred
Stock as of any particular time shall mean shares thereof issued and
outstanding at such time and shall not include any shares of Preferred
Stock represented by any certificate in lieu of which a new certificate
has been executed and delivered by the Corporation in accordance with
Section 6 or Section 7, but shall include only those shares represented
by such new certificate.
"Person" means and includes an individual, a partnership, a
corporation, a trust, a joint venture, an unincorporated organization
and a government or any department or agency thereof.
"Redemption Date" as to any share of Preferred Stock means the
date specified in the notice of redemption delivered pursuant to
Section 4.6; provided that for purposes of Section 4.7, the Redemption
Date shall be the date on which the applicable Redemption Price is
actually paid to the holder of such share of Preferred Stock.
"Redemption Price" as to any share of Preferred Stock means
the Liquidation Value of such share.
"Subsidiary" means any corporation at least 50% of the Voting
Stock of every class of which is, at the time as of which any
determination is being made, owned by the Corporation either directly
or through one or more Subsidiaries.
"Voting Stock" means any shares of stock having general voting
power in electing the board of directors (irrespective of whether or
not at the time stock of any other class or classes has or might have
voting power by reason of the happening of any contingency).
xi. Miscellaneous.
(i) The unenforceability or invalidity of any provision or
provisions of these Articles of Incorporation shall not render invalid
or unenforceable any other provision or provisions herein contained.
(ii) Section and paragraph headings herein are for convenience
only and shall not be construed as a part of these Articles of
Incorporation.
(iii) All notices to holders of Preferred Stock required or
permitted hereunder shall be sent by overnight courier service,
prepaid, addressed to each such holder at the address for such holder
shown on the books of the Corporation.
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c. The foregoing amendment of the Articles of Incorporation has been duly
approved by the board of directors.
d. The foregoing amendment of the Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902,
California Corporations Code. The total number of outstanding shares of the
corporation is 3333 1/3. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Dated: June 16, 1998
/s/ H. K.
Howard Kaufman, President
/s/ S. K.
Sherry Kaufman, Secretary
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