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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 28, 1998
Date of Report (date of earliest event reported)
VIDEO CITY, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
0-14023 95-3897052
(Commission File Number) (I.R.S. Employer
Identification No.)
370 Amapola Avenue, Suite 208, Torrance, California 90501
(Address of principal executive offices) (Zip Code)
(310) 533-3900
(Registrant's telephone number, including area code)
6840 District Boulevard, Bakersfield, California 93313
(Former address, if changed since last report) (Zip Code)
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Item 2. Acquisition or Disposition of Assets
On December 28, 1998, Video City, Inc. ("Video City") acquired Cianci's
Videoland, Inc. ("Videoland") from Victor J. Cianci and Evvy R. Cianci, in a
transaction structured as a reverse triangular merger, with a newly formed
subsidiary of Video City merging into Videoland. Videoland owns and operates 76
retail video stores in Oregon, Washington, Idaho, Iowa, South Dakota and
California and had aggregate revenues of approximately $28,400,000 during the
year ended December 31, 1997. The acquisition increased the number of retail
video stores owned and operated by Video City to 128. Since October 1998, Video
City had managed Videoland's retail video stores pursuant to a management
agreement.
The purchase price consisted of (i) cash in the amount of $1,900,000, (ii)
shares of Video City Series B Voting Convertible Redeemable Preferred Stock in
an aggregate stated value of $7,600,000 and (iii) assumption and payment of
indebtedness of Videoland by Video City in the amount of $11,500,000 (of which
approximately $3,100,000 was paid off by Video City at closing). The cash
component of the purchase price for the acquisition was obtained under the
revolving credit facility established with BankBoston Retail Finance Inc.
("BankBoston"), described in Item 5 below.
Item 5. Other Events
On December 29, 1998, Video City and its subsidiaries entered into a Loan
and Security Agreement with BankBoston providing for a $30 million revolving
credit facility secured by all of the assets of Video City and its subsidiaries.
This agreement replaces Video City's previous $7.5 million loan facility with
FINOVA Capital Corporation. The new loan agreement provides for a maturity date
of December 29, 2001 and a per annum interest rate equal to either (i) the base
rate announced from time to time by BankBoston, N.A. plus 0.5 percent or (ii)
LIBOR plus 3.0 percent, at Video City's election. In addition, Video City is
obligated to pay various fees in connection with the credit facility. As of
December 30, 1998, Video City borrowed $13,400,000 of which (i) $6,400,000 was
used to pay off all amounts due to FINOVA Capital Corporation, (ii) $1,900,000
was used as the cash component of the purchase price of Videoland, (iii)
$3,100,000 was used to pay off certain indebtedness and trade payables of
Videoland, and (iv) $2,000,000 was used to pay off certain amounts owed by Video
City.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired. It is impractical at the
present time to provide this information. This information will be filed as
soon as practicable, but in any event not later than March 15, 1999.
(b) Pro forma Financial Information. It is impractical at the present time
to provide this information. This information will be filed as soon as
practicable, but in any event not later than March 15, 1999.
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(c) Exhibits.
Numbers Description
- ------- -----------
3.1 Certificate of Designations for the Series B Voting Convertible
Redeemable Preferred Stock of Video City, Inc.
10.1 Agreement of Merger and Plan of Reorganization, dated as of
October 9, 1998, by and among Video City, Inc., Cianci's
Videoland, Inc., Victor J. Cianci and Evvy R. Cianci (previously
filed).
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.
VIDEO CITY, INC.
Date: January 12, 1999 /s/ Robert Y. Lee
-----------------
Robert Y. Lee
Chief Executive Officer
(Principal Executive Officer)
Date: January 12, 1999 /s/ Timothy J. Denari
---------------------
Timothy J. Denari
Chief Financial Officer
(Principal Financial Officer)
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EXHIBIT 3.1
VIDEO CITY, INC.
CERTIFICATE OF DESIGNATIONS
_________________
Pursuant to Section 151
of the General Corporation Law of the State of Delaware
__________________
Video City, Inc. (the "Corporation"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify
that pursuant to Section 151 of the General Corporation Law of the State of
Delaware, its Board of Directors adopted the following resolution on December
14, 1998, which resolution remains in full force and effect as of the date
hereof:
WHEREAS, the Board of Directors of the Corporation (the "Board of Directors")
is authorized, within the limitations and restrictions stated in the
Corporation's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), to fix by resolution or resolutions the designation, powers,
preferences, voting rights and other rights of each series of preferred stock,
and the qualifications, limitations or restrictions thereof, and such other
subjects or matters as may be fixed by resolution or resolutions of the Board of
Directors under the General Corporation Law of Delaware; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its authority
as aforesaid, to authorize and fix the terms of a series of preferred stock and
the number of shares constituting such series:
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such series of
preferred stock on the terms and with the provisions herein set forth:
1. DESIGNATION OF SERIES. The designation of such series of preferred stock
is Series B Voting Convertible Redeemable Preferred Stock ("Series B Preferred
Stock"). The number of shares constituting such series is 200,000, with a value
of $100 per share for the purpose of calculating dividends and amounts payable
upon liquidation, dissolution or winding up ("stated value"). Shares of Series
B Preferred Stock redeemed, converted or purchased by the Corporation shall be
canceled and shall revert to authorized but unissued shares of preferred stock
undesignated as to series. Shares of the Series B Preferred Stock shall rank
pari passu and share in dividends and other distributions on a pro rata basis
with the shares of Series A Convertible Redeemable Preferred Stock and with
shares of any other series of preferred stock hereafter issued by the
Corporation with substantially equivalent rights, preferences, privileges and
limitations as those of the Series B Preferred Stock.
2. DIVIDENDS. The holders of the outstanding shares of Series B Preferred
Stock shall be entitled to receive when, as and if declared by the Board of
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Directors, out of funds legally available therefor, cumulative dividends at the
annual rate of 8.0% of the stated value per share of Series B Preferred Stock.
Such dividends shall be payable monthly on the last day of each calendar month,
commencing on the first month after the month in which such shares of Series B
Preferred Stock are issued (each of such dates being a "Dividend Payment Date").
In the event the Corporation is unable to pay such dividends in cash, the
Corporation may pay such dividends in shares of Common Stock of the Corporation
("Common Stock"). If such dividends shall be paid in shares of Common Stock,
the Common Stock shall be valued at the average of the Trading Price (as
hereinafter defined in Paragraph 14) for the ten consecutive trading days
immediately preceding the Dividend Payment Date. Such dividends shall be
cumulative so that if such dividends shall not have been set apart for all
shares of Series B Preferred Stock at the time outstanding, the deficiency shall
be set apart for such shares before the Corporation makes any distribution to
the holders of Common Stock or preferred stock of any series junior to the
Series B Preferred Stock. Declared but unpaid dividends shall not bear
interest.
3. VOTING. The Series B Preferred Stock holders shall be entitled to vote
together with the Common Stock holders as a single class upon all matters
presented to the Corporation's stockholders, with each share of Series B
Preferred Stock being entitled to a number of votes equal to the number of
shares of Common Stock such Series B Preferred Stock holder would be holding on
the record date for the relevant shareholders meeting if such Series B Preferred
Stock holder had converted such share of Series B Preferred Stock into shares of
Common Stock on the date of the initial issuance of such share of Series B
Preferred Stock (the "Closing Date") and had continued to hold all shares of
Common Stock received upon such conversion, except that without the approval of
holders of a majority of the outstanding shares of Series B Preferred Stock, the
Corporation shall not (a) authorize, create or issue any shares of any class or
series ranking senior to the Series B Preferred Stock as to liquidation rights,
(b) amend, alter or repeal, by any means, the Certificate of Incorporation if
the powers, preferences, or special rights of the Series B Preferred Stock would
be adversely affected, or (c) become subject to any restriction on the Series B
Preferred Stock, other than restrictions arising under the General Corporation
Law of the State of Delaware or existing under the Certificate of Incorporation
as in effect on the Closing Date; provided, however, that the creation of
additional series of preferred stock with substantially equivalent rights,
preferences, privileges and limitations as those of the Series B Preferred Stock
shall not be a violation of this Paragraph 3.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of Series B Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets are capital or surplus of any
nature, an amount per share of Series B Preferred Stock equal to the stated
value of such share of Series B Preferred Stock and a further amount equal to
any dividends declared and unpaid thereon, if any, as provided in Paragraph 2
hereof, to the date that payment is made available to the holders of Series B
Preferred Stock, and no more, before any payment shall be made or any assets
distributed to the holders of shares of Common Stock or
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shares of any other stock of the Corporation that rank junior to the Series B
Preferred Stock.
If upon such liquidation, dissolution or winding up, the assets thus
distributed among the holders of the Series B Preferred Stock and other series
of preferred stock that upon liquidation, dissolution, or winding up share pari
passu with the Series B Preferred Stock shall be insufficient to permit the
payment to such stockholders of the full preferential amounts aforesaid, then
the entire assets of the Corporation to be distributed shall be distributed
ratably among the holders of Series B Preferred Stock and such other series of
preferred stock.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, subject to the provisions of the Certificate of
Incorporation, and to all of the preferential rights of the holders of Series B
Preferred Stock and other series of preferred stock that rank pari passu with
the Series B Preferred Stock, on distribution or otherwise, the holders of
Common Stock shall be entitled to receive, ratably, all remaining assets of the
Corporation.
A consolidation or merger of the Corporation with or into any other
corporation or corporations, or a sale of all or substantially all of the assets
of the Corporation, shall not be deemed to be a liquidation, dissolution or
winding up within the meaning of this Paragraph 4.
5. CONVERSION RIGHTS. The holder of any shares of Series B Preferred Stock
shall have the right at any time commencing from the date of issuance to convert
all or any shares of Series B Preferred Stock into duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock of the Corporation
at the Conversion Price, as defined herein, and upon the terms set forth herein.
The Corporation shall have the right to redeem the outstanding shares of
Series B Preferred Stock, in whole or in part, as provided in Paragraph 14.
6. AUTOMATIC CONVERSION. In the event the Trading Price (as hereinafter
defined in Paragraph 14) of the Corporation's Common Stock for any period of 20
consecutive trading days commencing 270 days following the Closing Date is equal
to or exceeds $4.00 per share (the "Automatic Conversion Price"), then all of
the issued and outstanding shares of Series B Preferred Stock shall be
automatically converted into duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock of the Corporation at the Conversion Price,
as defined herein, and upon the terms set forth herein, without any further
action, notice or other requirement of the Corporation or any holder of the
shares of Series B Preferred Stock. The Automatic Conversion Price shall be
subject to adjustment as set forth in Paragraph 9 hereof.
7. CONVERSION PRICE. Each share of Series B Preferred Stock shall be
converted into a number of shares of Common Stock determined by dividing (i)
$100 by (ii) the Conversion Price in effect on the conversion date. The
"Conversion
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Price" at which shares of Common Stock shall initially be issuable upon
conversion of the shares of Series B Preferred Stock shall be $3.1667. The
Conversion Price shall be subject to adjustment as set forth in Paragraph 9
hereof. No payment or adjustment shall be made for any dividend or other
distribution that is payable on the Common Stock issued upon such conversion.
8. CONVERSION PROCEDURE. The holder of any shares of the Series B Preferred
Stock may exercise his or her right to convert such shares into shares of Common
Stock by surrendering for such purpose to the Corporation, at its principal
office or at such other office or agency maintained by the Corporation for that
purpose, a certificate or certificates representing the shares of Series B
Preferred Stock to be converted, accompanied by a written notice stating that
such holder elects to convert all or a specified whole number of such shares in
accordance with the provisions of this Paragraph 8 and specifying the name or
names in which such holder wishes the certificate or certificates for shares of
Common Stock to be issued. In case such notice shall specify a name or names
other than that of such holder, such notice shall be accompanied by payment of
all transfer taxes payable upon the issuance of shares of Common Stock in such
name or names. As promptly as practicable, and in any event within ten business
days after the surrender of such certificates and the receipt of such notice
relating thereto and, if applicable, payment of all transfer taxes, or upon the
automatic conversion of the shares of Series B Preferred Stock pursuant to
Paragraph 6 hereof, the Corporation shall deliver or cause to be delivered (i)
certificates representing the number of validly issued, fully paid and
nonassessable shares of Common Stock to which the holder of the Series B
Preferred Stock so converted shall be entitled and (ii) if less than the full
number of shares of the Series B Preferred Stock evidenced by the surrendered
certificate or certificates are being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares converted.
Such conversions shall be deemed to have been made at the close of business on
the date of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series B Preferred Stock to be
converted, or upon the automatic conversion of the shares of Series B Preferred
Stock pursuant to Paragraph 6 hereof, so that the rights of the holder thereof
shall cease except for the right to receive Common Stock in accordance herewith,
and the converting holder shall be treated for all purposes as having become the
record holder of such Common Stock at such time.
Shares of the Series B Preferred Stock may not be converted after the close of
business of the fifth business day preceding the date fixed for redemption of
such shares pursuant to Paragraph 14 hereof.
Upon conversion of any shares of the Series B Preferred Stock, the holder
thereof shall not be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, provided that such holder shall
be entitled to receive any dividends on such shares of the Series B Preferred
Stock declared prior to such conversion if such holder held such shares on the
record date fixed for the determination of holders of the Series B Preferred
Stock entitled to receive payment of such dividend.
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9. CONVERSION PRICE ADJUSTMENTS. The Conversion Price and the Automatic
Conversion Price shall be subject to adjustment from time to time upon the
occurrence of certain events as follows:
a. Stock Dividends, Subdivisions, Reclassifications or Combinations. If the
Corporation shall (i) declare a dividend or make a distribution in shares of
Common Stock, (ii) subdivide or reclassify the outstanding shares of Common
Stock into a greater number of shares, or (iii) combine or reclassify the
outstanding Common Stock into a smaller number of shares, the Conversion Price
in effect at the time of the record date of such dividend or distribution or on
the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any shares of Series B Preferred
Stock surrendered for conversion after such date shall be entitled to receive
the number of shares of Common Stock which he or she would have owned or been
entitled to receive had such Series B Preferred Stock been converted immediately
prior to such date, and the Automatic Conversion Price shall be proportionately
adjusted on the effective date of such event. Successive adjustments in the
Conversion Price and the Automatic Conversion Price shall be made whenever any
event specified above shall occur.
b. Other Distributions. In case the Corporation shall fix a record date for
the making of a distribution to all holders of shares of Common Stock, (i) of
shares of any class of capital stock of the Corporation other than shares of
Common Stock, or (ii) of evidences of indebtedness of the Corporation, or (iii)
of assets (excluding cash dividends or distributions, and dividends or
distributions referred to in subparagraph 9(a) hereof), or (iv) of rights or
warrants entitling the holders of Common Stock to subscribe for or purchase
shares of Common Stock at less than the Trading Price, as defined in Paragraph
14 hereof, on the record date fixed to determine stockholders entitled to
subscribe or purchase; in each such case, the Conversion Price in effect
immediately prior thereto shall be reduced immediately thereafter to the price
determined by dividing (1) an amount equal to the difference resulting from (A)
the number of shares of Common Stock outstanding on such record date multiplied
by the Conversion Price per share on such record date, less (B) the fair market
----
value (as determined by the Board of Directors in their reasonable discretion)
of said shares or evidences of indebtedness or assets or rights or warrants to
be so distributed by (2) the number of shares of Common Stock outstanding on
such record date. Such adjustment shall be made successively whenever such a
record date is fixed. In the event that such distribution is not so made, the
Conversion Price then in effect shall be readjusted, effective as of the date
when the Board of Directors determines not to distribute such shares, evidences
of indebtedness, assets, rights or warrants, as the case may be, to the
Conversion Price which was in effect prior to the fixing of the record date
(subject to any adjustments made pursuant to this Paragraph 9 since such record
date).
c. Rounding of Calculations; Minimum Adjustment. All calculations under this
Paragraph 9 shall be made to the nearest cent or to the nearest one-hundredth of
a
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share, as the case may be. No adjustment in the Conversion Price or the
Automatic Conversion Price shall be made if the amount of such adjustment would
be less than $0.01, but any such amount shall be carried forward and an
adjustment with respect thereto shall be made at the time of and together with
any subsequent adjustment which, together with such amount and any other amount
or amounts so carried forward, shall aggregate $0.01 or more.
d. Adjustments for Consolidation, Merger, etc. In case the Corporation, (i)
shall consolidate with or merge into any other person and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) shall
permit any other person to consolidate with or merge into the Corporation and
the Corporation shall be the continuing or surviving person, but, in connection
with such consolidation or merger, the Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property, (iii) shall transfer all or substantially all of its properties or its
assets to any other person, or (iv) shall effect a capital reorganization or
reclassification of the Common Stock (other than a capital reorganization or
reclassification resulting in the issue of additional shares of Common stock for
which adjustment is provided in this Paragraph 9); then, and in each such case,
proper provision shall be made so that each share of Series B Preferred Stock
then outstanding shall be converted into, or exchanged for, one share of
preferred stock of the acquiring corporation entitling the holder thereof to all
of the rights (including voting rights), powers, privileges and preferences with
respect to the acquiring corporation to which the holder of a share of Series B
Preferred Stock is entitled with respect to the Corporation, and being subject
with respect to the acquiring corporation to the qualifications, limitations and
restrictions to which a share of Series B Preferred Stock is subject with
respect to the Corporation.
10. VOLUNTARY ADJUSTMENT. The Corporation may make, but shall not be
obligated to make, such decreases in the Conversion Price so as to increase the
number of shares of Common Stock into which the Series B Preferred Stock may be
converted, in addition to those required by Paragraph 9 hereof, as it considers
to be advisable in order to avoid federal income tax treatment as a dividend of
stock or stock rights.
11. RESERVATION OF SHARES OF COMMON STOCK FOR CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized and unissued
shares of Common Stock such number of shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all shares of Series B
Preferred Stock that are then outstanding.
12. NOTICE OF ADJUSTMENT OF CONVERSION PRICE. Whenever the Conversion Price
or the Automatic Conversion Price is adjusted as herein provided, the
Corporation shall forthwith file with any transfer agent or agents for the
Series B Preferred Stock, if any, and at the principal office of the
Corporation, a statement signed by the President or a Vice President and by the
Chief Financial Officer or the Secretary of the Corporation setting forth the
adjusted Conversion Price and the
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adjusted Automatic Conversion Price. The statement so filed shall be open to
inspection by any holder of record of shares of Series B Preferred Stock. The
Corporation shall also, at the time of filing any such statement, mail notice to
the same effect to the holders of shares of Series B Preferred Stock at their
addresses appearing on the books of the Corporation or supplied by such holder
to the Corporation for the purpose of notice.
13. FRACTIONAL SHARES IN CONVERSION. The Corporation shall not be required
to issue fractions of shares of Common Stock on the conversion of Series B
Preferred Stock. If any fraction of a share of Common Stock would be issuable
upon the conversion of a share, except for the provisions hereof, the
Corporation shall purchase such fraction for an amount in cash equal to the
Conversion Price multiplied by such fraction. If more than one certificate for
shares of Series B Preferred Stock shall be presented for conversion at any one
time by the same registered holder, the number of shares of Common Stock which
shall be issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Common Stock issuable upon conversion of the
shares so presented. All calculations under this Paragraph 13 shall be made to
the nearest one-hundredth of a share.
14. REDEMPTION. The outstanding shares of Series B Preferred Stock may be
redeemed, in whole or in part, at any time at the option of the Corporation by
resolution of its Board of Directors, for cash at $100 per share; plus, in each
----
case, all declared and unpaid dividends thereon, if any, to the redemption date.
In case of the redemption of a part only of the outstanding shares of Series B
Preferred Stock, the shares so to be redeemed shall be selected pro rata.
At least 30 days' previous notice by mail, postage prepaid, shall be given to
the holders of record of the shares of Series B Preferred Stock to be redeemed,
such notice to be addressed to each such stockholder at the address of such
holder appearing on the books of the Corporation or given by such holder to the
Corporation for the purpose of notice, or if no such address appears or is so
given, at the place where the principal office of the Corporation is located.
Such notice shall state the date fixed for redemption and the redemption price
and shall call upon such holder to surrender to the Corporation on said date at
the place designated in the notice such holder's certificate or certificates
representing the shares to be redeemed. On or after the date fixed for
redemption and stated in such notice, each holder of shares of Series B
Preferred Stock called for redemption shall surrender the certificate evidencing
such shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the redemption price, together with
declared and unpaid dividends, if any, to the date fixed for redemption. If
less than all the shares represented by any such surrendered certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares.
If such notice of redemption shall have been duly given, and if on the date
fixed for redemption funds necessary for the redemption shall be available
therefor, then, notwithstanding that the certificate evidencing any shares of
Series B Preferred Stock so called for redemption shall not have been
surrendered, all rights pertaining to such shares shall terminate, except only
the right of the holders to receive
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the redemption price, together with declared and unpaid dividends thereon, if
any, to the date fixed for redemption, without interest, upon surrender of their
certificates therefor.
The term "Trading Price" shall be determined as follows: (i) If the Common
Stock is listed or admitted to trade on a national securities exchange, on the
Nasdaq National Market System ("NMS"), or on the Nasdaq SmallCap Market
("SmallCap"), the closing price of the Common Stock on the composite tape of the
principal national securities exchange on which the Common Stock is so listed or
admitted to trade or on the NMS or SmallCap systems, as the case may be; (ii) If
the Common Stock is not listed or admitted to trade on an exchange or a system
that publishes daily closing prices, the average of the last bid and asked
prices of the Common Stock quoted on such other trading system.
15. MUTILATED OR MISSING PREFERRED STOCK CERTIFICATES. If any of the Series
B Preferred Stock certificates shall be mutilated, lost, stolen or destroyed,
the Corporation shall issue, in exchange and substitution for and upon
cancellation of the mutilated Series B Preferred Stock certificate, or in lieu
of and in substitution for the Series B Preferred Stock certificate lost, stolen
or destroyed, a new Series B Preferred Stock certificate of like tenor and
representing an equivalent number of shares of Series B Preferred Stock, but
only upon receipt of evidence of such loss, theft or destruction of such Series
B Preferred Stock certificate and indemnity, if requested.
16. REISSUANCE OF PREFERRED STOCK. Shares of Series B Preferred Stock that
have been issued and reacquired in any manner, including shares purchased or
redeemed or exchanged, shall (upon compliance with any applicable provisions of
the laws of the State of Delaware) have the status of authorized and unissued
shares of preferred stock undesignated as to Series and may be redesignated and
reissued as part of any series of preferred stock other than the Series B
Preferred Stock.
17. BUSINESS DAY. If any payment, redemption or exchange shall be required
by the terms hereof to be made on a day that banks are not open in the State of
California, such payment, redemption or exchange shall be made on the
immediately succeeding day on which such banks are open.
18. HEADINGS OF SUBDIVISIONS. The headings of various subdivisions hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.
19. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of
the Series B Preferred Stock set forth in these resolutions and the Certificate
of Designations filed pursuant hereto (as such resolution may be amended from
time to time) is invalid, unlawful or incapable of being enforced by reason of
any rule of law or public policy, all other rights, preferences and limitations
set forth in this
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resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
20. NOTICE TO THE CORPORATION. All notices and other communications required
or permitted to be given to the Corporation hereunder shall be made to the
Corporation at its offices located at 370 Amapola Avenue, Suite 208, Torrance,
California 90501, Attention: Chief Financial Officer. Minor imperfections in
any such notice shall not affect the validity thereof.
21. LIMITATIONS. Except as may otherwise be required by law, the shares of
Series B Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in this resolution (as such resolution may be amended from time to
time) or otherwise in the Certificate of Incorporation of the Corporation.
IN WITNESS WHEREOF, Video City, Inc. has caused this certificate to be
executed by the undersigned on this 16th day of December 1998.
VIDEO CITY, INC.
By /s/ Robert Y. Lee
-------------------------
Robert Y. Lee,
Chief Executive Officer
Attest:
/s/ Timothy J. Denari
- -----------------------
Timothy J. Denari,
Chief Financial Officer
9
