-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UT+2KTvSwcNKwuZBVgrZ7smqKcK0unw0LmevzIA6ynxT0nCr+ApCauIGzFFzNs10 tyLTuDs8qJ1VU/dvCFZlHQ== 0000950148-97-002273.txt : 19970827 0000950148-97-002273.hdr.sgml : 19970827 ACCESSION NUMBER: 0000950148-97-002273 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19890731 FILED AS OF DATE: 19970826 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JILCO INDUSTRIES INC CENTRAL INDEX KEY: 0000053540 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 952075885 STATE OF INCORPORATION: CA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-06649 FILM NUMBER: 97669507 BUSINESS ADDRESS: STREET 1: PO BOX 10539 CITY: BEVERLY HILLS STATE: CA ZIP: 90213 BUSINESS PHONE: 2132788193 MAIL ADDRESS: STREET 1: P O BOX 10539 CITY: BEVERLY HILLS STATE: CA ZIP: 90213 FORMER COMPANY: FORMER CONFORMED NAME: SPORTSWAYS INC DATE OF NAME CHANGE: 19721106 10-K 1 FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED July 31, 1989 COMMISSION NO. 0-6649 JILCO INDUSTRIES, INC. (exact name of registrant as specified in its charter) California 95-207885 - ---------------------------- ------------------ (State or other jurisdiction I.R.S. Employer of organization) Identification No. P. O. Box 10539 Beverly Hills, California 90213 - ------------------------- ----- (Address or principal (Zip Code) executive offices) Registrant's telephone number, including area code is (310) 274-1986. Securities registered pursuant to Section 12(g) of the Act: Common Stock, No Par Value - -------------------------------------------------------------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X ------- ------- As of July 31, 1989, there were 449,991 shares of common stock outstanding. 2 ITEM 1. Business Registrant is not engaged in any business operations and has not been so engaged since 1968. ITEM 2. Properties Registrant does not have an interest in any properties. ITEM 3. Legal Proceedings None. PART II. ITEM 5. Market for the Registrant's Common Stock and Related Security Holder Matters Increase and Decrease in Outstanding Securities Indebtedness None. Changes in Securities and Changes in Securities for Registered Securities None. Defaults Upon Senior Securities None. Approximate Number of Equity Security Holders - 2 - 3 Number of Record Holders Title of Class As of July 31, 1989 -------------- --------------------- Common Stock 785 Submission of Matters to a Vote of Security Holders Not applicable. ITEM 6. Selected Financial Data Five Year Summary of Operations
Year ended July 31, --------------------------------------------------- 1989 1988 1987 1986 1985 ------- ------- ------- ------- ------- Expenses $ 6,577 $ 5,722 $ 3,300 $ 3,171 $ 2,962 Net loss $(6,577) $(5,722) $(3,300) $(3,171) $(2,962) Loss per share $ (0.01) $ (0.01) $ (0.01) $ (0.01) $ (0.01) (Note 2) Total Assets $ 2,280 $ 1,882 $ 965 $ 835 $ 436
The numerical note referred to above is included in the Notes to Financial Statements. Registrant has not conducted any business operations during its last five (5) fiscal years, except that during the above fiscal years it has incurred expenses necessary to keep its good standing in its state of residence. ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Refer to notes and financial statements. ITEM 8. Financial Statements and Supplementary Data The financial statements of Registrant are attached hereto as Exhibit 14(a). - 3 - 4 PART III. ITEM 10. Directors and Executive Officers of the Registrant
First Common Shares Principal Elected Owned Beneficially Name Occupation Age Director On July 31, 1989 ---- ---------- --- -------- ----------------- Martha J. Kretzmer President, 56 1987 -0- Secretary and Treasurer of Registrant
ITEM 11. Management Remuneration and Transaction No officer or director of Registrant receives any remuneration. ITEM 12. Security Ownership of Certain Beneficial Owners and Management Leonard M. Ross owns 400,955 shares of the issued and outstanding stock of Registrant which constitutes approximately 89% of such stock. Registrant does not have any subsidiaries. Indemnification of Directors and Officers The by-laws of the Corporation provide that the Corporation shall indemnify each of its officers and directors, whether or not then in office, to the extent permitted by the California General Corporation Law against all reasonable expenses actually and necessarily incurred by such individuals in connection with the defense of any litigation to which he or she may have been made a party because he or she is or was a director or officer of the Corporation. Directors and officers have no right to reimbursement in relation to any matter in which such officer or director has been adjudged liable to the Corporation for gross negligence or comparable misconduct in the performance of his or her duties. PART IV - 4 - 5 ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) The Registrant's financial statements are attached hereto. (b) No materially important events occurred during the fiscal year of Registrant that would require filing of Form 8-K. (c) The Exhibits listed in the accompanying Exhibit Index on Page 12 are filed as part of this Form 10-K. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duty authorized. (Registrant) JILCO INDUSTRIES, INC. By: /s/ MARTHA J. KRETZMER -------------------------- Martha J. Kretzmer President Date: August 7, 1997 - 5 - 6 JILCO INDUSTRIES, INC. List of Financial Statements The following financial statements of Jilco Industries, Inc. are included in Item 8: Balance sheets -- Years ended July 31, 1989 and 1988. Statements of operations -- Years ended July 31, 1989, 1988 and 1987. Statements of cash flows -- Years ended July 31, 1989, 1988 and 1987. Notes to financial statements -- July 31, 1989. - 6 - 7 JILCO INDUSTRIES, INC. BALANCE SHEETS AS OF JULY 31, (UNAUDITED) ASSETS
1989 1988 --------- --------- ASSETS Cash $ 2,280 $ 1,882 --------- --------- TOTAL ASSETS $ 2,280 $ 1,882 ========= ========= LIABILITIES AND SHAREHOLDERS' DEFICIENCY CURRENT LIABILITIES Accounts payable $ -0- $ -0- Notes payable to shareholder (Note 3) 45,000 36,925 Accrued expenses (Note 3) 13,045 9,145 --------- --------- Total current liabilities 58,045 51,070 --------- --------- SHAREHOLDERS' DEFICIENCY Common stock, no par value 1,500,000 shares authorized 449,991 shares issued and outstanding 749,950 749,950 Accumulated deficit (805,715) (793,416) --------- --------- Total shareholders' deficiency (55,765) (43,466) --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY $ 2,280 $ 965 ========= =========
The accompanying notes are an integral part of these financial statements. - 7 - 8 JILCO INDUSTRIES, INC. STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE YEARS ENDED JULY 31, (UNAUDITED)
1989 1988 1987 --------- --------- --------- EXPENSES Professional fees $ 1,795 $ 1,783 $ 1,500 Fees and licenses 255 1,155 1,035 Interest expense (Note 3) 4,085 2,519 500 State franchise tax 405 200 200 Sundry 37 65 65 --------- --------- --------- Total expenses 6,577 5,722 3,300 --------- --------- --------- NET LOSS (6,577) (5,722) (3,300) ACCUMULATED DEFICIT, BEGINNING OF YEAR (799,138) (793,416) (790,116) --------- --------- --------- ACCUMULATED DEFICIT, END OF YEAR $(805,715) $(799,138) (790,116) ========= ========= ========= NET LOSS PER SHARE (NOTE 2) $ (0.01) $ (0.01) $ (0.01) ========= ========= =========
The accompanying notes are an integral part of these financial statements. - 8 - 9 JILCO INDUSTRIES, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JULY 31,
1989 1988 1987 ------- ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(6,577) $(5,722) $ 3,300 Increase (decrease) in Accounts payable and accrued expenses 3,900 2,639 430 ------- ------- ------- Net cash used in operating activities (2,677) (3,083) 130 ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes payable to shareholder, net 3,075 4,000 -0- ------- ------- ------- Net cash provided by financing activities 3,075 4,000 -0- ------- ------- ------- NET INCREASE (DECREASE) IN CASH 398 917 130 ------- CASH. BEGINNING OF YEAR 1,882 965 835 ------- ------- ------- CASH, END OF YEAR $ 2,280 $ 1,882 965 ======= ======= =======
The accompanying notes are an integral part of these financial statements. - 9 - 10 NOTE 1 - THE COMPANY The Company has been inactive since April 2, 1968 when it was discharged from bankruptcy under its previous name of Sportways, Inc. The expenses the Company has incurred represent those necessary to keep the Company in good standing in its state of residence. Fair Value of Financial Instruments The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of the Company's financial instruments, including cash, accounts payable, and accrued expenses, the carrying amounts approximate fair value due to their short maturities. The amounts shown as notes payable also approximate fair value because current interest rates offered to the Company for notes payable of similar maturities are substantially the same. Estimates In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - LOSS PER SHARE All per share computations are based on 449,991 shares outstanding. There are no common stock equivalents. - 10 - 11 NOTE 3 - NOTES PAYABLE TO SHAREHOLDER Notes payable to shareholder consist of the following:
1996 1995 1994 1993 1992 1991 1990 1989 ------- ------- ------- ------- ------- ------- ------- ------- Revolving note payable (A) $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 Revolving note payable (B) 8,250 8,250 8,250 5,250 4,250 2,000 1,000 -0- Term note payable (C) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 ------- ------- ------- ------- ------- ------- ------- ------- TOTAL $53,250 $53,250 $53,250 $50,250 $49,250 $47,000 $46,000 $45,000 ------- ------- ------- ------- ------- ------- ------- -------
(A) Accrued interest at 9% per annum. Principal and accrued interest due on demand. (B) Accrued interest at 11% per annum. Principal and accrued interest due on demand. (C) Accrued interest at 10% per annum. Principal and accrued interest due on demand. - 11 - 12 EXHIBIT INDEX Exhibit No. Description 3(1) Articles of Incorporation of the Company, as amended. 3(2) By-laws of the Company, as amended. 10(1) Revolving Demand Note, dated December 18, 1987, between the Company and Leonard M. Ross. 10(2) Note Extension and Modification Agreement, dated July 13, 1988, between the Company and Leonard M. Ross. 10(3) Promissory Note Extension Agreement, dated August 8, 1986, between the Company and Leonard M. Ross. - 12 - EX-3.(1) 2 EXHIBIT 3(1) 1 EXHIBIT 3(1) ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. KNOW ALL MEN BY THESE PRESENTS: We, the undersigned, have this day voluntarily associated ourselves together for the purpose of forming a corporation under the laws of the State of California. I The name of this corporation is: SPORTSWAYS, INC. II The purposes for which this corporation are formed as follows: A. The primary business is to engage in a general merchandise business at wholesale and retail, and the manufacture, fabrication, acquisition, production, distribution and sales of all forms of sporting goods, equipment and products, health products, exercising devices and to otherwise sell and deal in such personal property. B. To carry on any business whatsoever which this corporation may deem proper or convenient in connection with any of the foregoing purposes, or otherwise, or which may be calculated, directly or indirectly, to promote the interests of this corporation or to enhance the value of its property or business. C. To have and to exercise all of the powers and rights conferred by the laws of the State of California upon corporations formed under the laws pursuant to and under which this corporation is formed, as such laws are now in effect or may at any time hereafter be enacted or amended. D. To act as principal, agent, joint venturer, partner or in any other capacity which may be authorized or approved by the board of directors of this corporation. E. To transact business in the State of California or in any other jurisdiction of the United States of America or in the District of Columbia or in the territories of the United States and in foreign countries. The foregoing statement of purposes shall be construed as a statement of both purposes and powers, and the purposes and powers in each clause shall, except where otherwise expressed, by in no wise limited or restricted by reference to or inference from the terms or provisions of any other clause, but shall be regarded as independent purposes and powers. III The principal office of the corporation for the transaction of business of the corporation is to be located in the County of Los Angeles, State of California. IV The total number of shares authorized to be issued is one thousand (1000) shares, which shares are without nominal or par value. Such shares may be issued from time to 1 2 time for such consideration as the directors from time to time determine. V The number of directors of this corporation shall be three (3), and the names and addresses of the directors hereby appointed to act as first directors of this corporation are: RICHARD M. KLINE 9413 Sawyer Street Los Angeles, California JULES BISNO 9563 Olympic Boulevard Beverly Hills, California BARBARA JEAN KLINE 9413 Sawyer Street Los Angeles, California IN WITNESS WHEREOF, these Articles of Incorporation have been subscribed by each person named therein as a director on this ___ day of April, 1958. /s/ Richard M. Kline ------------------------------ RICHARD M. KLINE /s/ Jules Bisno ------------------------------ JULES BISNO /s/ Barbara Jean Kline ------------------------------ BARBARA JEAN KLINE [ACKNOWLEDGMENT] 2 3 [FILED STAMP] CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. The undersigned, RICHARD M. KLINE and PHILIP SHORE, certify that they now are and at all times herein mentioned have been the duly elected and acting President and Secretary of SPORTSWAYS, INC., a California corporation, and that: ** I At a special meeting of the Board of Directors of the corporation duly held at 6050 West Jefferson Boulevard, Los Angeles 16, California, on the 9th day of February 1959, at 2:00 P. M., the following resolutions were duly adopted: RESOLVED that the provisions of Article IV of the Articles of Incorporation be and the same are hereby stricken from the Articles of Incorporation of this corporation, and in lieu thereof, there be substituted the following provision as Article IV: "The total number of shares authorized to be issued is TWO THOUSAND (2,000) shares, which shares are without nominal or par value. Such shares may be issued from time to time for such consideration as the Directors from time to time determine. The total number of shares authorized to be issued hereunder, cannot be increased, changed or altered except by the vote or written consent of the holders of 100 per cent of the outstanding voting shares." RESOLVED FURTHER that the said amendment is hereby adopted and approved. RESOLVED FURTHER that the provisions of Article V of the Articles of Incorporation which now read, "The number of Directors of this corporation shall be three (3)" be amended to read: "The number of Directors of this corporation shall be five (5)." II At a special meeting of the shareholders of the corporation duly held at 6050 West Jefferson Boulevard, Los Angeles 16, California, at 3:00 P. M. on the 9th day of February, 1959, the foregoing amendments to the Articles of Incorporation were ratified and approved by resolutions identical in form to said Directors' resolutions set forth in Paragraph I of this certificate. III The foregoing amendments were adopted and approved at said shareholders meeting by the total vote of 1,000 shares. 3 4 IV The total number of shares of the corporation entitled to vote on or consent to the adoption of such amendment is 1,000 shares. DATED: February 9, 1959 /s/ Richard M. Kline --------------------------------- RICHARD M. KLINE, President of SPORTSWAYS, INC., a California corporation /s/ Philip Shore --------------------------------- PHILIP SHORE, Secretary of SPORTSWAYS, INC., a California corporation The undersigned, RICHARD M. KLINE, President and a Director of SPORTSWAYS, INC., a California corporation, declares under penalty of perjury that the foregoing is true and correct and that this certificate was executed on the 9th day of February, 1959 at Los Angeles, California. /s/ Richard M. Kline --------------------------------- RICHARD M. KLINE The undersigned, PHILIP SHORE, Secretary-Treasurer and a Director of SPORTSWAYS, INC., a California corporation, declares under penalty of perjury that the foregoing is true and correct and that this certificate was executed on the 9th day of February, 1959 at Los Angeles, California. /s/ Philip Shore --------------------------------- PHILIP SHORE 4 5 [FILED STAMP] Number of shares without par value changed from 2,000 to 5,000 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. The undersigned, RICHARD M. KLINE and WILLIAM S. BARTMAN, certify that they now are and at all times herein mentioned have been the duly elected and acting President and Assistant Secretary of SPORTSWAYS, INC., a California corporation, and that: I At a special meeting of the Board of Directors of the corporation duly held at 6505 Wilshire Boulevard, Los Angeles, California, on the 5th day of May, 1959, at 4:00 P. M., the following resolutions were duly adopted: RESOLVED that the provisions of Article IV of the Articles of Incorporation as amended by Paragraph I of Certificate of Amendment of Articles of Incorporation of SPORTSWAYS, INC., dated February 9, 1959, be and the name are hereby stricken from the Articles of Incorporation of this corporation, and in lieu thereof, there be substituted the following provision as Article IV: "The total number of shares authorized to be issued is FIVE THOUSAND (5,000) shares, which shares are without nominal or par value. Such shares may be issued from time to time for such consideration as the Directors from time to time determine. The total number of shares authorized to be issued hereunder cannot be increased, changed or altered except by the vote or written consent of the holders of 100 per cent of the outstanding voting shares." RESOLVED FURTHER that the said amendment is hereby adopted and approved. RESOLVED FURTHER that the provisions of Article V of the Articles of Incorporation as amended by Paragraph I of the Certificate of Amendment of Articles of Incorporation of Sportsways, Inc., dated February 9, 1959, be further amended to add at the end of the Article the following clause: "The number of Directors of this corporation as provided for by this Article cannot be increased, changed or altered except by the vote or written consent of the holders NINETY PER CENT (90 per cent) of the outstanding voting shares. This number cannot be changed by amendment of the By-laws of the corporation." RESOLVED FURTHER that the said amendment is hereby adopted and approved. II At a special meeting of the shareholders of the corporation duly held at 6505 Wilshire Boulevard, Los Angeles, California, at 5:00 P. M. on the 5th day of May, 1959, the foregoing amendments to the Articles of Incorporation were ratified and approved by resolutions identical in form to said Directors' resolutions set forth in Paragraph I of this 5 6 certificate. III The foregoing amendments were adopted and approved at said shareholders' meeting by the total vote of 1,000 shares. IV The total number of shares of the corporation entitled to vote on or consent to the adoption of such amendment is 1,000 shares. DATED: May 22, 1959 /s/ Richard M. Kline ---------------------------------- RICHARD M. KLINE, President of SPORTSWAYS, INC., a California corporation /s/ William S. Bartman ---------------------------------- WILLIAM S. BARTMAN, Assistant Secretary of SPORTSWAYS, INC., a California corporation The undersigned, RICHARD M. KLINE, President and a Director of SPORTSWAYS, INC., a California corporation, declares under penalty of perjury that the foregoing is true and correct and that this certificate was executed on the 22nd day of May, 1959 at Los Angeles, California. /s/ Richard M. Kline ---------------------------------- RICHARD M. KLINE The undersigned, WILLIAM S. BARTMAN, Assistant Secretary and a Director of SPORTSWAYS, INC., a California corporation, declares under penalty of perjury that the foregoing is true and correct and that this certificate was executed on the 22nd day of May, 1959 at Los Angeles, California. /s/ William S. Bartman ---------------------------------- WILLIAM S. BARTMAN 6 7 [FILED STAMP] Number of shares without par value changed from 5,000 to 1,500,000. CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. The undersigned, SAMUEL LECOCQ and WILLIAM S. BARTMAN, certify that they now are and at all times herein mentioned, have been the duly elected and acting Vice-President and Secretary of SPORTSWAYS, INC., a California corporation, and that: 1. At a special meeting of the Board of Directors of the corporation, duly held at Suite 1206, 6505 Wilshire Boulevard, Los Angeles 48, California, on the 16th day of June, 1961, at 10:00 o'clock a.m., the following resolutions were duly adopted: RESOLVED that the provisions of Article IV of the Articles of Incorporation be and the same are hereby stricken from the Articles of Incorporation of this corporation, and in lieu thereof there be substituted the following provisions as Article IV: "The total number of shares authorized to be issued is 1,500,000 shares, which shares are to be without nominal or par value. Such shares may be issued from time to time for such consideration as the Directors from time to time determine." 2. At a special meeting of the shareholders of the corporation, duly held at Suite 1206, 6505 Wilshire Boulevard, Los Angeles 48, California, on the 16th day of June, 1961, at 11:00 o'clock a.m., the foregoing amendments to the Articles of Incorporation were ratified and approved by resolutions identical in form to the Directors' resolutions set forth in Paragraph "1" of this Certificate. 3. The foregoing amendments were adopted and approved at said shareholders' meeting by the total vote of 5,000 shares, representing all of the issued and outstanding shares of the corporation as of the date of the meeting. DATED this 23rd day of June, 1961. /s/ Samuel Lecocq ---------------------------------- Samuel Lecocq /s/ William S. Bartman ---------------------------------- William S. Bartman 7 8 STATE OF CALIFORNIA ) ) SS. COUNTY OF LOS ANGELES ) We are the Vice-President and Secretary, respectively, of SPORTSWAYS, INC.; we have read the foregoing CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF SPORTSWAYS, INC., and know the contents thereof; and we certify that the same is true of our own knowledge, except as to the matters which are therein stated upon our information or belief; and as to those matters we believe it to be true. /s/ Samuel Lecocq ------------------------------------- Samuel Lecocq /s/ William S. Bartman ------------------------------------- William S. Bartman [ACKNOWLEDGEMENT] 8 9 [FILED STAMP] CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. The undersigned, FRED PLOTKIN and WILLIAM S. BARTMAN, certify that they now are, and at all times herein mentioned have been, the duly elected and acting President and Secretary, respectively, of SPORTSWAYS, INC., a California corporation, and further state that: 1. At a special meeting of the Board of Directors of the corporation, duly held at Suite 1206, 6505 Wilshire Boulevard, Los Angeles 48, California, on the 31st day of July, 1961, at 1 o'clock p.m., the following resolutions were duly adopted: RESOLVED: That Article IV of the Articles of Incorporation of this corporation shall be and the same is hereby amended to add the following paragraph only to said Article IV: "The presently issued and outstanding shares of the corporation, to wit: 5,000 shares without nominal or par value, shall each be divided and split up into 180 shares without nominal or par value. The effect of this amendment on all of the presently issued and outstanding no par common stock of the corporation will be to split up, subdivide and reconstitute each such outstanding share into 180 no par value shares. The shares of stock resulting from the division and split up provided herein shall be included within the 1,500,000 shares authorized to be issued by the corporation." RESOLVED FURTHER: That the President and the Secretary of the corporation be, and they are, hereby authorized and directed to procure the adoption and approval of the foregoing amendment by the vote or written consent of the Shareholders of this corporation holding a majority of the voting power, and thereafter to sign, execute, acknowledge and verify by their oath and to file a Certificate of Amendment of Articles of Incorporation in the form and manner required by Section 3672 of the California Corporations Code and in general to do any thing necessary to effectuate said amendment. 2. At a special meeting of the Shareholders of the corporation, duly held at Suite 1206, 6505 Wilshire Boulevard, Los Angeles 48, California, on the 31st day of July, 1961, at 2 o'clock p.m., the following foregoing amendments to the Articles of Incorporation were ratified and approved by resolutions identical in form to the Directors' resolution set forth in Paragraph 1 of this Certificate. 3. The foregoing amendments were adopted and approved at said Shareholders meeting by the total vote of 5,000 shares, representing all of the issued and outstanding 9 10 shares of the corporation as of the date of the meeting. DATED this 16th day of August, 1961. /s/ Fred Plotkin ------------------------------ FRED PLOTKIN /s/ William S. Bartman ------------------------------ WILLIAM S. BARTMAN [ACKNOWLEDGEMENT] 10 11 [FILED STAMP] CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. The undersigned, FRED PLOTKIN and WILLIAM S. BARTMAN, certify that they now are, and at all times herein mentioned have been, the duly elected and acting President and Secretary, respectively, of SPORTSWAYS, INC., a California corporation, and further state that: 1. At a special meeting of the Board of Directors of said corporation, duly held at Suite 1206, 6505 Wilshire Boulevard, Los Angeles 48, California, on the 18th day of August, 1961, at 1:00 p.m., the following resolution was duly adopted: WHEREAS, it is deemed by the Board of Directors of this corporation to be to its best interests and to the best interests of its shareholders that its Articles of Incorporation be amended as hereinafter provided: NOW, THEREFORE, BE IT RESOLVED: That the provisions of Article V of the Articles of Incorporation be and the same hereby are stricken from the Articles of Incorporation of this corporation, and in lieu thereof the following provisions be adopted as new Article V of the Articles of Incorporation of this corporation: "V "The number of directors of this corporation shall be three (3). The number of directors may be changed by a by-law, or an amendment thereof, duly adopted by the shareholders. The names and addresses of the directors appointed to act as first directors of this corporation are: RICHARD M. KLINE 9413 Sawyer Street Los Angeles, California JULES BISNO 9563 Olympic Boulevard Beverly Hills, California BARBARA JEAN KLINE 9413 Sawyer Street Los Angeles, California 2. At a special meeting of the Shareholders of the corporation, duly held at Suite 1206, 6505 Wilshire Boulevard, Los Angeles 48, California, on the 18th day of August, 1961, at 2:00 p.m., the foregoing amendment to the Articles of Incorporation was approved, adopted and ratified by resolution identical in form to the resolution of the Board of Directors, as set forth in Paragraph 1 of this Certificate. 3. The foregoing amendment was approved, ratified and adopted at said Shareholders' meeting by the total vote of 5,000 shares, representing all of the issued and 11 12 outstanding shares of the corporation as of the date of the meeting. DATED this 18th day of August, 1961. /s/ Fred Plotkin ------------------------------------- FRED PLOTKIN President /s/ William S. Bartman ------------------------------------- WILLIAM S. BARTMAN Secretary [ACKNOWLEDGEMENT] 12 13 [FILED STAMP] Certificate Of RESTATED ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. I The name of this corporation is: SPORTSWAYS, INC. II The purposes for which this corporation are formed as follows: A. The primary business is to engage in a general merchandise business at wholesale and retail, and the manufacture, fabrication, acquisition, production, distribution and sales of all forms of sporting goods, equipment and products, health products, exercising devices and to otherwise sell and deal in such personal property. B. To carry on any business whatsoever which this corporation may deem proper or convenient in connection with any of the foregoing purposes, or otherwise, or which may be calculated, directly or indirectly, to promote the interests of this corporation or to enhance the value of its property or business. C. To have and to exercise all of the powers and rights conferred by the laws of the State of California upon corporations formed under the laws pursuant to and under which this corporation is formed, as such laws are now in effect or may at any time hereafter be enacted or amended. D. To act as principal, agent, joint venturer, partner or in any other capacity which may be authorized or approved by the board of directors of this corporation. E. To transact business in the State of California or in any other jurisdiction of the United States of America or in the District of Columbia or in the territories of the United States and in foreign countries. The foregoing statement of purposes shall be construed as a statement of both purposes and powers, and the purposes and powers in each clause shall, except where otherwise expressed, by in no wise limited or restricted by reference to or inference from the terms or provisions of any other clause, but shall be regarded as independent purposes and powers. III The principal office of the corporation for the transaction of business of the corporation is to be located in the County of Los Angeles, State of California. IV The total number of shares authorized to be issued is 1,500,000 shares, which shares are without nominal or par value. Such shares may be issued from time to time for such consideration as the directors from time to time determine. 13 14 The presently issued and outstanding shares of the corporation, to wit: 5,000 shares without nominal or par value, shall each be divided and split up into 180 shares without nominal or par value. The effect of this amendment on all of the presently issued and outstanding no par common stock of the corporation will be to split up, subdivide and reconstitute each such outstanding share into 180 no par value shares. The shares of stock resulting from the division and split up provided herein shall be included within the 1,500,000 shares authorized to be issued by the corporation. V The number of directors of this corporation shall be three (3). The number of directors may be changed by a by-law, or an amendment thereof, duly adopted by the shareholders. The names and addresses of the directors appointed to act as first directors of this corporation are: RICHARD M. KLINE 9413 Sawyer Street Los Angeles, California JULES BISNO 9563 Olympic Boulevard Beverly Hills, California BARBARA JEAN KLINE 9413 Sawyer Street Los Angeles, California We, the undersigned, do hereby certify: 1. That the foregoing RESTATED ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. correctly set forth the text of the Articles of Incorporation of said corporation, as amended, to the date hereof. 2. That at a special meeting of the Board of Directors of said corporation, duly held on the 31st day of August, 1961, at 2:00 p.m., at which meeting there was at all times present a quorum, the following resolution was duly adopted: WHEREAS, the original Articles of Incorporation of this corporation, dated April 3, 1958, and filed with the Secretary of State of the State of California on April 17, 1958, have thereafter been amended from time to time; and WHEREAS, it is deemed desirable to consolidate such amendments with said original Articles of incorporation so as to restate the entire text of the Articles of Incorporation of this corporation and amendments thereto in a single certificate; NOW, THEREFORE, BE IT RESOLVED: That the document entitled RESTATED ARTICLES OF INCORPORATION OF SPORTSWAYS, INC., this day submitted to 14 15 the Board of Directors, correctly sets forth the text of the Articles of Incorporation of said corporation, as amended, to the date hereof, and that the same is hereby approved as the RESTATED ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. That the President or a Vice President and the Secretary or Assistant Secretary be and they hereby are authorized to execute, verify and cause to be filed on behalf of this corporation said RESTATED ARTICLES OF INCORPORATION OF SPORTSWAYS, INC., to certify the same, and in general to do any and all things necessary for the purpose of filing a restatement of the Articles of Incorporation of Sportsways, Inc. in a single certificate, in form or manner as permitted or required by the Corporations Code of the State of California. IN WITNESS WHEREOF, we have executed this certificate this 31st day of August, 1961. /s/ Fred Plotkin ----------------------------- FRED PLOTKIN PRESIDENT SPORTSWAYS, INC. /s/ Sidney J. Noveck ----------------------------- SIDNEY J. NOVECK SECRETARY SPORTSWAYS, INC. 15 16 [FILED STAMP] SPORTSWAYS, INC. CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION The undersigned, FRED PLOTKIN and SANFORD, do hereby certify that they are, and at all times herein mentioned have been, the duly elected and acting President and Assistant Secretary of SPORTSWAYS, INC., a California corporation, and that: 1. At a special meeting of the Board of Directors of the corporation duly held at Suite 1206, 6506 Wilshire Boulevard, Los Angeles, California, on the tenth day of January 1962, at 11:00 o'clock A.M., at which time there was at all times present and acting quorum of the members of said Board, the following resolution was adopted: "WHEREAS, It is deemed by the Board of Directors of this corporation to be in the best interests of the corporation and of its shareholders that its Articles of Incorporation be amended as hereinafter provide: "NOW, THEREFORE, BE IT RESOLVED, That Article IV of the Articles of Incorporation of this corporation be amended to read in its entirety as follows: "IV The total number of shares authorized to be issued is one million five hundred thousand shares of common stock without par value. Such shares may be issued from time to time for such consideration as the directors from time to time determine. "The presently issued and outstanding shares of the corporation, to wit, nine hundred thousand shares without nominal or par value, shall be combined pro rata in a reverse stock split into four hundred fifty thousand shares of common stock without par value, less the number of shares represented by the aggregate of fractional share interests for which payment is provided hereafter. The effect of this amendment on all of the presently issued and outstanding shares of stock of the corporation will be to combine each such outstanding two shares of stock into one share of common stock without par value, provided that the corporation shall not be obligated to issue, and does not hereby issue or create, any fraction of a share of such stock, and the corporation shall in lieu thereof pay to the person who would otherwise be entitled to such fraction the fair value thereof as determined by the Board of Directors. 16 17 "RESOLVED FURTHER, That the President of a Vice-President and the Secretary or an Assistant Secretary of the corporation be, and they hereby are authorized and directed to procure the adoption and approval of the foregoing amendment by the vote or written consent of the Shareholders of this corporation holding a majority of the voting power, and after obtaining an appropriate permit of the California Commissioner of Corporations, thereafter to sign, execute, acknowledge and verify and to file a certificate in the form and manner required by Section 3672 of the California Corporations Code, and in general to do any and all things necessary to effectuate said amendment. 2. The number of shares of said corporation consenting to such amendment of its Articles of Incorporation is 820,022 shares and the shareholder holding said number of shares duly executed a written consent to such amendment, a copy of which written consent executed by said shareholder is as follows: "WHEREAS, At a special meeting of the Board of Directors of SPORTSWAYS, INC., a California corporation, duly held on the 10th day of January, 1962, at which meeting a quorum of members of said Board of Directors was at all times present and acting, an amendment of the Articles of Incorporation of said corporation was adopted and approved by resolution of said Board of Directors amending Article IV of the Articles of Incorporation to read in its entirety, as follows: "IV The total number of shares authorized to be issued is one million five hundred thousand shares of common stock, without par value. Such shares may be issued from time to time for such consideration as the directors from time to time determine. "The presently issued and outstanding shares of the corporation, to wit, nine hundred thousand shares without nominal or par value, shall be combined pro rata in a reverse stock split into four hundred fifty thousand shares of common stock without par value, less the number of shares represented by the aggregate of fractional share interests for which payment is provided hereafter. The effect of this amendment on all of the presently issued and outstanding shares of stock of the corporation will be to combine each such outstanding two shares of stock into one share of common stock without par value, provided that the corporation shall not be obligated to issue, and does not hereby issue or create, any fraction of a share of such stock, and the corporation shall in lieu thereof pay to the person who would 17 18 otherwise be entitled to such fraction the fair value thereof as determined by the board of directors." "NOW, THEREFORE, The undersigned, Shore-Calnevar, Inc., a California corporation, as the shareholder of said SPORTSWAYS, INC., a California corporation, does hereby adopt, approve and consent to the foregoing amendment______ Articles of Incorporation, and does hereby consent that Article IV of said Articles of Incorporation be amended to read as hereinabove set forth. "IN WITNESS WHEREOF, The undersigned, Shore-Calnevar, Inc., has signed and executed this written consent by its President and its Secretary, thereunto duly authorized, following its name, has stated the date of signing and the number of shares of said SPORTSWAYS, INC, held by it of record on said date, entitled to vote upon amendments of said Articles of Incorporation of the character of the foregoing amendment. Shore-Calnevar, Inc., January 10, 1962 No. of Shares a California corporation 820,022 SHORE-CALNEVAR, INC. By/s/ Fred Plotkin ------------------------------- Fred Plotkin-President By/s/ William S. Bartman ------------------------------- William S. Barman-Secretary 3. The total number of shares of said corporation entitled to vote or consent to the adoption of said amendment is 900,000 shares. IN WITNESS WHEREOF, The undersigned have executed this Certificate of Amendment this 10th day of January 1962. /s/ Fred Plotkin ------------------------------------ FRED PLOTKIN, President, Sportsways, Inc. /s/ Sanford Kaplan ------------------------------------ SANFORD KAPLAN, Assistant Secretary, Sportsways, Inc. 18 19 [FILED STAMP] Name chg to: Milton J. Wershow Enterprises Certificate of Amendment: Change of Name CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF SPORTSWAYS, INC. ______________________________________________ The Undersigned, Milton J. Wershow and E.T. Hagerman, certify that they now are and at all times herein mentioned have been the duly-elected and acting President and Secretary of Sportsways, Inc., a California corporation and that: I At a special meeting of the shareholders of said corporation duly held at 629 North La Brea, City and County of Los Angeles, State of California, for the transaction of business, at 11:00 A.M., on the 20th day January, 1969, at which meeting there was at all times present and acting a quorum of the shareholders of the corporation, the following resolution was duly adopted: "WHEREAS, it is deemed to be to the best interests of the corporation and to the best interests of its shareholders that its Articles of Incorporation be amended as hereinafter provided: NOW, THEREFORE, be it resolved, that Article I of the Articles of Incorporation of this corporation be amended to read as follows: I: The name of this corporation is: Milton J. Wershow Enterprises' and RESOLVED further, that said amendment of its Articles of Incorporation is hereby adopted and approved." II At a special meeting of the Board of Directors of said corporation duly held at 629 North La Brea, City and County of Los Angeles, State of California, for the transaction of business at 12:00 P.M., on the 20th day of January, 1969, at which meeting there was at all times present and acting a quorum of the members of said Board, the resolution set forth in paragraph I hereinabove, was duly adopted and approved. III The foregoing amendment was adopted and approved at said shareholders' meeting by the total vote of 413,952 shares. 19 20 IV The total number of shares of said corporation entitled to vote on or consent to the adoption of such amendment is 451,781 shares. IN WITNESS WHEREOF, The undersigned have executed this Certificate of Amendment this 21st day of January 1969. /s/ Milton J. Wershow --------------------------- MILTON J. WERSHOW, President, Sportsways, Inc. /s/ E.T. Hagerman --------------------------- E.T. HAGERMAN, Secretary, Sportsways, Inc. 20 21 [FILED STAMP] CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF MILTON J. WERSHOW ENTERPRISES George Ross and Marlene White certify: I That they are the Vice President and Secretary, respectively of Milton J. Wershow Enterprises, a California Corporation. II The By-Laws of the Corporation authorize the Directors to adopt resolutions amending the Articles of Incorporation by unanimous written consent without a meeting: Theretofore, by unanimous written consent without a meeting, the Directors adopted a resolution amending the Articles as follows: "RESOLVED, that Articles I of the Articles of Incorporation of this Corporation be amended to read as follows: 'The name of this Corporation shall be Jilco Industries, Inc.'" III That the shareholders have adopted said amendment by resolution at a meeting held at Los Angeles, California on June 30, 1972. That the wording of the Amended Article, as set forth in the shareholders' resolution, is the same as that set forth in the directors' resolution referred to in Paragraph II above. IV That the number of shares which were voted affirmatively for the adoption of said resolution is four hundred three thousand four hundred and fifty-two (403,452) and the total number of shares entitled to vote on or consent to said Amendment is four hundred fifty-one thousand seven hundred and ninety-one (451,791). /s/ George Ross ---------------------------------- GEORGE ROSS, VICE PRESIDENT /s/ Marlene White ---------------------------------- MARLENE WHITE, SECRETARY 21 22 Each of the undersigned under penalty of perjury that the matter set forth in the foregoing Certificate are true and correct. Executed at Los Angeles, California, on June 30, 1972. /s/ George Ross ------------------------------- GEORGE ROSS, VICE PRESIDENT /s/ Marlene White ------------------------------- MARLENE WHITE, SECRETARY 22 EX-3.(2) 3 EXHIBIT 3(2) 1 EXHIBIT 3(2) AMENDED BY-LAWS OF JILCO INDUSTRIES, INC. A California corporation ARTICLE I PLACE OF BUSINESS Section 1. The principal office of the corporation shall be in the County of Los Angeles, State of California. Section 2. The Corporation may also have offices at such other places both within and without the State of California as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II Section 1. PLACE. All meetings of shareholders shall be held at the principal offices of the Corporation in the City of Los Angeles, State of California, or at any other place within or without the State of California which may be designated by the Board of Directors; provided, however, that the place of meeting shall be specified in the notice calling the meeting, and that no change in the place of meeting shall be made within ten (10) days next before the day on which an election of Directors is to be held. Section 2. ANNUAL. The annual meeting of the shareholders shall be held on a date and at a time selected by the Board of Directors at which time the shareholders shall elect by majority vote a Board of Directors, consider reports of the affairs of the Corporation, and transact such other business as may properly be brought before the meeting. Section 3. SPECIAL. Special meetings of the shareholders, for any purpose or purposes whatsoever may be called at any time by the Board of Directors, the President or by one or more shareholders holding not less than one-fifth (15) of the voting power of the corporation. Section 4. NOTICE OF MEETINGS: WAIVER. Each shareholder of record entitled to vote at the meeting shall be given in 23 2 person, or by mail, or by prepaid telegram, written or printed notice of the purpose or purposes and the time and place within or without the State of California of every meeting of shareholders. Such notice shall be delivered not less than ten (10) days nor more than fifty (50) days before the meeting. It mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the shareholder at his address as it appears on the records of the corporation unless the shareholder shall have requested of the Secretary, in writing, that notice intended for him be mailed to some other address, in which case the notice shall be transmitted to the address so designated. No publication of the notice of meeting shall be required. A shareholder may waive the notice of meeting by attendance, either in person or by proxy, at the meeting, or by so stating in writing, either before or after such meeting. Attendance at a meeting for the express purpose of objecting that the meeting was not lawfully called or convened shall not, however, constitute a waiver of notice. Except where otherwise required by law, notice need not be given of any adjourned meeting of the shareholders. Section 5. AFFIDAVIT OF NOTICE. Whenever any shareholder entitled to vote has been absent from any meeting of shareholders whether annual or special, an affidavit of the secretary or an assistant secretary or the transfer agent of the corporation to the effect that notice has been duly given shall in the absence of fraud be prima facie evidence that due notice of such meeting was given to such shareholder, as required by law and the By-Laws of the corporation. Section 6. CONSENT TO SHAREHOLDER'S MEETINGS. The transactions of any meeting of shareholders, however called and noticed, shall be valid as though had at a meeting held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the shareholders entitled to vote, not present in person or by proxy, signs a written waiver of notice, or a consent to the holding of such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Any action which may be taken at a meeting of the shareholders may be taken without a meeting, if authorized by a writing signed by all of the holders of shares who would be entitled to vote at a meeting for such purposes, and filed with the Secretary of the Corporation. Section 7. QUORUM. The holders of a majority of the shares entitled to vote at a meeting of shareholders who are present in person, or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by law. If, however, such percentage shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person, or by proxy, shall have the power to adjourn the meeting from time to time, until the requisite amount of voting shares shall be present. at such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been 24 3 transacted at the meeting as originally notified. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter and entitled to vote shall be the act of the shareholders, unless the vote of a greater number is specified herein or is required by law. Section 8. CLOSING OF TRANSFER BOOKS: RECORD DATE. (a) In order to determine the holders of record of the corporation's stock who are entitled to notice of meetings, to vote at a meeting or adjournment thereof, or to make a determination of the shareholders of record for any other proper purpose, the Board of Directors of the corporation may order that the Stock Transfer Books be closed for a period not to exceed fifty (50) days prior to the meeting. (b) In lieu of closing the Stock Transfer Books, the Board of Directors may fix a date as the record date for such determination of shareholders. Such date shall not be more than fifty (50) nor less than ten (10) days prior to the date of the action which requires such determination. (c) If the Stock Transfer Books are not closed and no record date is fixed for a determination of the shareholders of record entitled to notice or to vote at a meeting of shareholders the day next preceding the day on which notice of the meeting is mailed, or for any other purpose the day on which resolution of the Board of Directors relating thereto is adopted, as the case may be, shall be the record date for such determination of shareholders. (d) When a determination of shareholders entitled to vote at any meeting has been made as provided in this Section, such determination shall apply to any adjournment of such meeting; provided however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 9. VOTING LIST. (a) A complete list of the shareholders of the corporation entitled to vote at the ensuing meeting, arranged in alphabetical order, and showing the address of, and number of shares owned by each shareholder, shall be prepared by the Secretary or other officer or the Transfer Agent of the corporation having charge of the Stock Transfer Books. This list shall be kept on file for a period of at least ten (10) days prior to the meeting at the principal office of the corporation, and shall he subject to inspection during the ordinary business hours for any purpose germane to the meeting by any shareholder. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. (b) The original Stock Transfer Books shall be prima facie evidence as to who are the shareholders entitled to examine such list or to vote at any meeting of the shareholders. 25 4 (c) Failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting of the shareholders. Section 10. PROXIES. Every person entitled to vote or execute consents may do so either in person or by one or more agents authorized by a written proxy executed by the person or his duly authorized agent and filed with the Secretary of the corporation, but no proxy shall be valid or acted upon after eleven (11) months from its date, unless the proxy provides for a longer period which in no case shall exceed seven (7) years from the date of its execution. Section 11. PRESIDING OFFICER: ORDER OF BUSINESS: CONDUCT OF MEETING. (a) Meetings of the shareholders shall be presided over by such person as shall be designated by the Board of Directors or if no designation is made, then by the President. The Secretary of the corporation, or in his absence an Assistant Secretary, shall act as secretary of the meeting. The President of the corporation shall serve as Chairman of the Board unless another person is specifically elected to that position by the directors. (b) Subject to the following, meetings of shareholders shall generally follow accepted rules of parliamentary procedure. 1. The chairman of the meeting shall have absolute authority over matters of procedure and there shall be no appeal from the ruling of the Chairman. If the Chairman, in his absolute discretion, deems it advisable to dispense with the rules of parliamentary procedure as to any one meeting of shareholders or a part thereof, the chairman shall so state and shall clearly state the rules under which the meeting or appropriate part thereof shall be conducted. 2. If disorder shall arise which prevents continuation of the legitimate business of the meeting, the chairman may quit the chair and announce the adjournment of the meeting; and upon his so doing the meeting is immediately adjourned. 3. The chairman may ask or require that anyone not a bona fide shareholder or proxy holder leave the meeting. 4. A resolution or motion shall be only considered for a vote if proposed by a shareholder or duly authorized proxy holder, and seconded by an individual who is a shareholder or a duly authorized proxy holder, other 26 5 than the individual who proposed the resolution or motion. ARTICLE III DIRECTORS -- MANAGEMENT Section 1. POWERS. Subject to the limitations in the Articles of Incorporation, of the By-Laws and of the laws of the State of California as to actions to be authorized or approved by the shareholders, all corporate powers shall be exercised by or under authority of, and the business and affairs of this corporation shall be controlled by a Board of Directors. Section 2. NUMBER OF DIRECTORS AND QUALIFICATIONS. The authorized number of directors of the corporation shall be three (3). Section 3. ELECTION AND TENURE OF OFFICE. Each director shall be elected by ballot at the annual meeting of shareholders or at any special meeting called for that purpose to serve until the next annual meeting of shareholders and until his successor is elected and has qualified, or until his earlier resignation or removal. His term of office shall begin immediately after election. Section 4. REMOVAL OF DIRECTORS. A director may only be removed from office before the expiration of his term by a majority vote of the shareholders entitled to vote at an election of directors as provided in Section 810 of the California Corporations Code. Section 5. VACANCIES. Any vacancy occurring in the Board of Directors may directors though less than a quorum of the Board of Directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Any directorship to be filled by reason of an increase in the number of directors shall be filled by the affirmative vote a majority of the directors then in office or by an election at an annual meeting or at a special meeting of shareholders called for that purpose. A director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified. Section 6. PLACE OF MEETINGS. Meetings of the Board of Directors shall be held at any place within or without the State of California, as designated for this purpose, from time to time, by resolution of the Board of Directors or written consent of all the members of the Board. Section 7. REGULAR MEETINGS. Regular meetings of the Board of Directors shall not be held. In lieu of 27 6 regular meetings, special meetings of the Board may be held as provided in Section 8 of this ARTICLE III. Section 8. SPECIAL MEETINGS AND NOTICE THEREOF. Special meetings of the Board of Directors for any purpose or purposes may be called at any time by the Chairman of the Board, the President, or if they are absent or unable or refuses to act, by any Vice President or by any two (2) directors. Written notice of the time and place of special meetings shall be delivered personally to the directors or sent to each director by letter or by telegram, charges prepaid, addressed to him at his address as it is shown upon the records of the corporation, or if it is not so shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the mail or delivered to the telegraph company at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is personally delivered as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of such meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director. Section 9. WAIVER OF NOTICE. When all the directors are present at any director's meeting, however called or noticed, and sign a written consent thereto, or if a majority of the directors are present, and if those not present sign in writing a waiver of notice of such meeting, whether prior to or after the holding of such meeting, which said waiver shall be filed with the Secretary of the corporation, the transactions thereat are as valid as if had at a meeting regularly called and noticed. Section 10. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not he given to absent directors if the time and place be fixed at the meeting adjourned. Section 11. QUORUM. A majority of the number of directors as fixed by the By-Laws shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the directors present at any meeting at which there is a quorum when duly assembled, is valid as a corporate act; provided that a minority of the directors, in the absence of a quorum, may adjourn the meeting from time to time, but may not transact any business. Section 12. DIRECTORS ACTING WITHOUT A MEETING. Any action required or permitted to be taken by the Board of Directors under any provision of these By-Laws or by any statute or regulation may be taken without a meeting, if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and 28 7 effect as a unanimous vote of such directors. Any certificate or other document filed under any provision of this Article which relates to action so taken shall state that the action was taken by unanimous written consent of the Board of Directors without a meeting, and that the By-Laws authorize the directors to so act, and such statement shall be prima facie evidence of such authority. Section 13. INDEMNIFICATION. The corporation shall indemnify each of its directors and officers, whether or not then in office (and his executor, administrator and heirs), to the extent permitted by Section 830 of the California Corporations Code or any amendment thereto, against all reasonable expenses actually and necessarily incurred by him in connection with the defense of any litigation to which he may have been made a party because he is or was a director or officer of the corporation. He shall have no right to reimbursement, however in relation to matters to which he has been adjudged liable to the corporation for gross negligence or culpable misconduct in the performance of his duties. The right to be indemnified for expenses shall also apply to the expenses of suits which are compromised if the court having jurisdiction of the matter shall approve such settlement. Section 14. COMPENSATION. Directors and members of any committee of the Board of Directors shall be entitled to such reasonable compensation for their services as directors and members of any such committee as shall be fixed from time to time by resolution of the Board of Directors and shall also be entitled to reimbursement for any reasonable expenses incurred in attending such meetings. The compensation of directors may be on such basis as is determined by the resolution of the Board of Directors. Any director receiving compensation under these provisions shall not be barred from serving the corporation in any other ,capacity and receiving reasonable compensation for such other services. Section 15. COMMITTEES. The Board of Directors, by a resolution or resolutions adopted by a majority of the members of the whole Board, may appoint an Executive Committee and such other committees as it may deem appropriate. Each such committee shall consist of two or more members of the Board of Directors. Any such committee shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it, but no such committee shall have the power or authority in reference to amending the Articles of Incorporation or By-Laws, declaring dividends, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets or recommending to the stockholders a dissolution of the corporation. A majority of any such committee may determine its action and may fix the time and place of its meetings unless provided otherwise by the Board Os Directors. The Board of Directors shall have the power at any time to fill vacancies in, to change the size or membership of and to discharge any such committee. No member of any committee shall continue to be a member of it after he ceases to be a director of the corporation. 29 8 Each such committee shall keep a written record of its acts and proceedings and shall submit such record to the Board of Directors at each regular meeting thereof, and at such other times as requested by the Board of Directors. Failure to submit such record, or failure of the Board to approve any action indicated herein, will not, however, invalidate such action to the extent it has been carried out by the corporation prior to the time the record of such action was, or should have been submitted to the Board of Directors as herein provided. ARTICLE IV OFFICERS Section 1. NUMBER. The officers of the corPoration shall be a Chairman of the Board, a President, one or more Executive, Senior, Group or general Vice Presidents, a Treasurer or Controller, and a Secretary. Any person may hold two or more offices except that no person shall hold the offices of President and Secretary simultaneously. Section 2. ELECTION: TERM OF OFFICE. The principal officers of the corporation shall he chosen annually by at least a majority vote of the directors of the corporation at the first meeting of the Board held after the annual meeting of shareholders, or as soon thereafter as is conveniently possible. No one of said officers, except the Chairman of the Board, and President, need be directors. Each officer shall serve until his successor shall have been chosen and qualified, or until his death, resignation or removal. Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the By-Laws or as the Board of Directors may from time to time determine. Section 4. RESIGNATION AND REMOVAL. Any officer may be removed, either with or without cause, at any time, by at least a majority vote of the directors then in office whenever in such directors' judgment the hoised interests of the corporation will be served by so doing. Any officer may resign at any time by giving written notice to the Board of Directors or to the President, or to the Secretary of the corPoration. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Section 5. VACANCIES. The Board of Directors shall have the power to fill any vacancies in any office 30 9 occurring for any reason. Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him or her by the Board of Directors or prescribed by the By-Laws. Section 7. PRESIDENT. Subject to the control of the Board of Directors, the President shall be responsible for the general supervision and direction of the business and affairs of the corporation. He shall: (a) Preside at all meetings of the shareholders, and in the absence of the Chairman of the Board, at all meetings of the Board of Directors; (b) Have the general powers and duties of management usually vested in the office of President of a corporation; (c) Shall sign or countersign all certificates of shares; and (d) Have such other powers and duties as may be prescribed by the Board of Directors or the By-Laws. Section 8. VICE PRESIDENTS. In the absence or disability of the President the Vice Presidents, in order of their rank as fixed by the Board of Directors, or if not ranked the Vice President designated by the Board of Directors shall perform all the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them by the Board of Directors or the By-Laws. Section 9. SECRETARY. The Secretary shall: (a) Keep, or cause to be kept, a book of minutes at the principal office or such other place as the Board of Directors may order, of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those directors and shareholders present, the names of those present at the directors' meeting, the number of shares present or-represented at shareholders' meetings and the proceedings thereof; (b) Keep, or cause to be kept, at the principal office or at the office of the corporation's Transfer Agent (s) or Registrar (s), a share register or a duplicate share register showing the names of the shareholders and their addresses; the number and classes of shares 31 10 held by each; the number and date of certificates issued for the same; the number and date of cancellation of every certificate surrendered for cancellation; (c) Give, or cause to be given, notice of all meetings of shareholders and the Board of Directors, as required by the By-Laws to be given; and (d) Keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-Laws. Section 10. ASSISTANT SECRETARIES. Each Assistant Secretary (if one or more Assistant Secretaries be elected or appointed) shall assist the Secretary in his duties, and shall perform such other duties as the Board of Directors, Executive Committee (if any), President or Secretary may from time to time assign to him. At the request of the Secretary any Assistant Secretary may, in the case of the absence or inability to act of the Secretary, temporarily act in his place. In the case of the death of the Secretary or in the case of his absence or inability to act temporarily, the Assistant Secretary shall perform such duties of the Secretary as shall be designated by the President or any Vice President. Section 11. TREASURER. The Treasurer shall: (a) Keep and maintain, or cause to kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and surplus shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital shall be classified according to source and shown in a separate account. The books of account shall at all times be open for inspection by any director; (b) Deposit all monies and other valuables in the names and to the credit of the corporation with such depositories as may be designated by the Board of Directors; (c) Disburse the funds of the corporation as ordered by the Board of Directors; (d) Render to the President and directors, when they request it, an account of all of his or her transactions as treasurer and of the financial condition of the corporation; and (e) Have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-Laws. 32 11 Section 12. SALARIES. The salaries for the principal officers of the corporation shall be fixed, from time to time, by the Board of Directors. No officer shall be disqualified from receiving a salary by reason of his also being a director of the corporation. ARTICLE V RECORDS--REPORTS--INSPECTION Section 1. RECORDS. The corporation shall maintain adequate and correct accounts, books, and records of its business and properties. All of such books, records and accounts shall be kept at its principal place of business as fixed by the Board of Directors from time to time. Section 2. INSPECTION. The share register or duplicate share register, the books of account and minutes of proceedings of the shareholders and directors shall be open to inspection upon the written demand of any shareholder, stockholder or the holder of a voting trust certificate, at any reasonable time, and for a purpose reasonably related to his or her interests as a shareholder. Such inspection may include the right to make extracts. Demand for inspection other than at a shareholders' meeting shall be made in writing upon the President or Secretary of the corporation. Section 3. CHECKS AND DRAFTS. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness issued in the name of or payable to the corporation shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution or resolutions adopted by a vote of at least two thirds of the directors of the corporation. Section 4. LOANS. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution adopted by a vote of at least a majority of the directors of the corporation. Provided, however, that no loan may be made to a director or officer except as permitted by Section 823 of the California Corporations Code or any amendment thereof. Such authority may be general or confirmed to specific instances. Section 5. DEPOSITS. The Board of Directors or the President or a Vice President, when authorized by the Board of Directors, shall select banks, trust companies or other depositories in which all funds of the corporation not otherwise employed shall, from time to time, be deposited to the credit of the corporation. 33 12 Section 6. VOTING SECURITIES HELD BY THE CORPORATION. Unless otherwise ordered by the Board of Directors, the Chairman of the Board or the President shall have full power and authority on behalf of the corporation to attend and to act and to vote at any meeting of security holders of other corporations in which the corporation may hold securities. The Board of Directors may, from time to time, confer like powers upon any other person or persons. Section 7. CONTRACTS. The Board of Directors, except as the By-Laws or Articles of Incorporation otherwise specifically provide, may, by a majority vote of the directors of the corporation, authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation, and such authority may be general or confined in specific instances; unless so authorized by the Board of Directors, no officer, agent or employee shall have any power or authority to bind the corporation by and contract or agreement or to pledge its credit to render it liable for any purpose or for any amount. Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in its principal office for the transaction of business the original or a copy of the By-Laws as amended or otherwise altered to date, certified by the Secretary, which shall be open to inspection by the shareholders at all times during business hours. ARTICLE VI CERTIFICATES OF STOCK Section 1. CERTIFICATES OF STOCK. Certificates representing shares of the corporation shall be in such form as may be determined by the Board of Directors. Every shareholder shall be entitled to have a certificate signed by or in the name of the corporation by the President or a Vice President, and the Secretary or an Assistance Secretary of such corporation, certifying to the number of shares owned by him in such corporation. If such certificate is countersigned (a) by a transfer agent other than the corporation or its employee, or (b) by a registrar other than the corporation or its employee, or the signatures of the officers of the corporation may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer before the certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issuance. All certificates for shares of each class or series within a class shall be consecutively numbered. The name of the person owning the shares represented thereby with the number of shares and the date of issue shall be entitled on the books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares 34 13 shall have been surrendered and cancelled. Section 2. TRANSFER. (a) Upon surrender to the Secretary or Transfer Agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. (b) A person in whose name shares of stock stand on the books of the corporation shall be deemed the owner thereof as regards the corporation; provided that whenever any transfer of shares shall be made for collateral security, and not absolutely, and written notice thereof shall be given to the Secretary of the corporation or its transfer agent, if any, such fact shall be stated in the entry of the transfer. (c) When a transfer of shares is requested and there is reasonable doubt as to the right of the person seeking the transfer, the corporation or its transfer agent, before recording the transfer of the shares on its books or issuing any certificate therefor, may require from the person seeking the transfer reasonable proof of his right to the shares. If there remains a reasonable doubt of the right to the shares, the corporation may refuse a transfer unless the person gives adequate security or a bond of indemnity executed by a corporate surety or by two individual sureties satisfactory to the corporation as to form, amount and responsibility of the sureties. The bond shall be conditioned to protect the corporation, its officers, transfer agents and registrars or any of them, against loss, damage, expense or other liability to the owner of the shares by reason of the recordation of the transfer, and the issuance of a new certificate for shares. Section 3. LOST OR DESTROYED CERTIFICATES. (a) Where the holder of a share certificate claims that the certificate has been lost, destroyed or wrongfully taken, the corporation shall issue a new certificate in place of the original certificate if the owner so requests before the corporation has notice that the share has been acquired by a bona fide purchaser; and provided that the owner files with the corporation a sufficient indemnity bond; and satisfies any other reasonable requirements imposed by the Board of Directors. (b) Where a share certificate has been lost, apparently destroyed or wrongfully taken and the owner fails to notify the corporation of that fact within a reasonable time after he has notice of it, and the corporation registers a transfer of the share represented by the security before receiving such notification, the owner is precluded from asserting against';the corporation any claim for registering the transfer or any claim to a new security. (c) If, after the issue a new security as a replacement for a lost, destroyed or wrongfully taken certificate, a bona fide purchaser of the original certificate Presents it for 35 14 registration of transfer, the corporation must register the transfer unless registration would result in overissue. In addition to any rights on the indemnity bond, the corporation may recover the new security from the person to whom it was issued or any person taking under him except a bona fide purchaser. Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars which shall be an incorporated bank or trust company, either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate. ARTICLE VII DIVIDENDS The Board of Directors, by a majority vote of its members, may, from time to time, declare and the corporation shall pay, dividends on its outstanding shares in the manner and on the terms and conditions provided by the laws of the State of California. ARTICLE VIII WAIVER OF NOTICE Whenever any notice whatever is required to be given under the provisions of these By-Laws or under the provisions of the Articles of Incorporation or under the provisions of the Colorado Corporation Act then a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE IX AMENDMENTS Section 1. POWER OF SHAREHOLDERS. These By-Laws may be repealEd or amended, or new By-Laws may be adopted at an annual meeting, or at any other meeting of the shareholders, called for the purpose by the Board of Directors, by a vote representing a majority of the shares of common stock entitled to vote, or by the written consent of such shareholders. Section 2. POWER OF DIRECTORS. Subject to the right of shareholders, as provided in Section 1 of this ARTICLE IX, to adopt, amend or repeal the By-Laws, By-Laws other than a By-Law or amendment thereof changing the authorized number of directors, may be adopted, amended or repealed by a majority vote of the Board of Directors. 36 15 Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new By-Law is adopted, it shall be copied in the Minute Book with the original By-Laws, in the appropriate place. If any By-Law is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said Book. ARTICLE X SEAL The corporation shall adopt and use a corporate seal consisting of a circle setting forth on its circumference the name of the corporation and showing the state of incorporation. ARTICLE XI FISCAL YEAR The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. 37 16 I, Marlene White, hereby certify that I am the duly elected, qualified and acting Secretary of JILCO INDUSTRIES, INC., a California corporation; and that the foregoing Amended By-Laws of JILCO INDUSTRIES, INC. were duly and regularly adopted as the By-Laws of said corporation on October 16, 1972. IN WITNESS WHEREOF, I have hereunto set my And this 16th day of October, 1972. /s/ Marlene White ----------------------------------- Marlene White 38 EX-10.(1) 4 EXHIBIT 10(1) 1 EXHIBIT 10(1) REVOLVING DEMAND NOTE ("Note") $40, 000.00 December 18, 1987 Beverly Hills, California On demand, or if no demand is made then on December 18, 1989 ("Maturity Date" herein), for value received, the undersigned ("Maker" or "Payor" herein) promise(s) to pay to the order of LEONARD M. ROSS, a California resident ("Holder" or "Payee" herein), at Beverly Hills, California, or at such other address as is designated by Holder, the sum of FORTY THOUSAND DOLLARS ($40,000.00), or so much thereof as may be outstanding hereunder, together with interest thereon from and after the date hereof on the unpaid principal at the rate of NINE PER CENT (9%) per year (computed on the basis of a 360-day year for the actual number of days elapsed from the date set forth until paid). Interest shall be payable on or before the Maturity Date. Principal and interest shall be payable only in lawful money of the United States of America. All or any portion of the principal of this Note may be borrowed, repaid and reborrowed from time to time prior to the Maturity Date, provided that at the time of any borrowing no default exists, and provided further that the total borrowings outstanding hereunder at any one time shall not exceed $. Each borrowing and repayment hereunder will be endorsed on the reverse of this Note. The excess of borrowings over repayments shall evidence the principal balance due hereon from time to time and at any time. Any loan hereunder shall be conclusively presumed to have been made to or for the benefit of the undersigned when made in accordance with such request. Each of the following events shall constitute an "Event of Default" (collectively "Events of Default") under this Note: (1) The failure of the undersigned to pay any installment of principal or interest on this Note when the same becomes due and payable. (2) The undersigned shall make an assignment for the benefit of creditors. (3) The undersigned shall petition or apply to any tribunal for appointment of a trustee or receiver of the undersigned or commence any proceeding relating to the undersigned under any bankruptcy or reorganization statute or any provision of the Bankruptcy Act, or under any arrangement, insolvency, readjustment or debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect. (4) Any petition or application of the type described above is filed or any proceedings of the type described in subparagraph (3), above, are commenced against the undersigned, and the undersigned by any act indicates its approval thereof, consent thereto or 1 2 acquiescence therein, or an order is entered appointing any such trustee or receiver, or adjudicating the undersigned bankrupt or insolvent, or approving the petition in any such proceeding, and any such order remains in effect for more than sixty (60) days. Should any Event, of Default occur, the Payee of this Note may, if such Event of Default is not cured within five (5) days after receipt by Payor of written notice from Payee of such Event of Default (which receipt shall be deemed to have occurred THREE (3) DAYS after deposit of said written notice in the United States mail, certified, return receipt requested, postage and fees prepaid, addressed to Payor at the address set forth below), declare the whole sum of principal and interest to be, and thereafter the whole sum of principal and interest shall forthwith become, due and payable. Should principal or interest not be paid on the agreed or accelerated date of maturity, then the interest rate provided for under this Note shall, without notice, be increased to an amount TWO PER CENT (28) per year over and above the rate originally contracted for, effective from the day following the date that such payment of principal or interest became overdue, with such unpaid interest compounded; but in no event shall the interest payable hereunder exceed the maximum rate permitted by law. Such increased rate of interest shall continue until such overdue payment of principal and interest shall be been paid in full. The failure to exercise, in case of one or more Events of Default, any right or remedy given in this paragraph shall not preclude the Payee of this Note from exercising any right or remedy given in this paragraph in case of one or more subsequent Events of Default. All or any portion of principal or interest, or both, of this Note may be prepaid, in whole or in part, at any time or from time to time, without penalty or premium. In the event this Note is not paid on the agreed or accelerated date of maturity according to its terms, Maker promise(s) to pay all costs of collect-ion of this Note and reasonable attorneys' fees in connection therewith, whether or not suit is filed hereon. The makers and endorsers of this Note hereby waive diligence, demand, presentment, protest and notice of any kind. If this Note is executed by two or more makers, the obligations and liability of the undersigned shall be joint and several. This Note shall be binding upon Maker and the heirs, successors and assigns of Maker, and shall inure to the benefit of Holder, its heirs, successors and assigns. Address: JILCO INDUSTRIES, INC. P. O. Box 10539 Beverly Hills, CA 90213 By /s/ Byron Wayne --------------------------- Byron Wayne, President "Payor/Maker" [Revolving Demand Note to JILCO INDUSTRIES, INC. December 18, 1987 in the original principal amount of $40,000.00.] 2 EX-10.(2) 5 EXHIBIT 10(2) 1 EXHIBIT 10(2) NOTE EXTENSION AND MODIFICATION AGREEMENT THIS NOTE EXTENSION AND MODIFICATION AGREEMENT ("Agreement" herein) is entered into by and between JILCO INDUSTRIES, INC., a California corporation ("Payor" herein) and LEONARD M. ROSS, a California resident, ("Payee" herein). Payor and Payee do hereby mutually acknowledge and agree that Payor is presently liable for the indebtedness represented by a certain promissory note payable to Payee in the original principal amount of FIVE THOUSAND DOLLARS ($5000.00) ("Note" herein), which has a present outstanding balance as of the date hereof of FIVE THOUSAND DOLLARS ($5,000.00) plus accrued interest. NOW, THEREFORE, FOR VALUABLE CONSIDERATION IN HAND RECEIVED, the parties hereto, and each of them, do hereby agree that effective as of the date hereof, the unpaid principal portion of the Note and all unpaid accrued interest, if any, shall be all due and payable on December 31, 1989. Nothing contained herein shall be deemed to affect the obligation of Payor regarding the payment of interest accrued on the Note through the date hereof, or to affect any obligations of Payor under the Note, except as set forth herein. IN WITNESS WHEREOF, the parties hereto, and each of them, have executed this Agreement as of the 13th day of July, 1988. JILCO INDUSTRIES, INC. a California corporation By/s/ Byron Wayne -------------------------- Byron Wayne, President "Payor" /s/ Leonard M. Ross ---------------------------- Leonard M. Ross "Payee" 1 EX-10.(3) 6 EXHIBIT 10(3) 1 EXHIBIT 10(3) PROMISSORY NOTE EXTENSION AGREEMENT THIS PROMISSORY NOTE EXTENSION AGREEMENT ("Agreement") dated as of the 8th day of August, 1986, is by and between LEONARD M. ROSS, a California resident ("Ross") and JILCO INDUSTRIES, INC., a California corporation ("Jilco"). R E C I T A L S A. On August 9, 1972, Jilco executed a certain Promissory Note ("Note") in the principal amount of FIVE THOUSAND DOLLARS ($5,000.00) in favor of Ross, a copy of which Note, as previously modified, is attached hereto as Exhibit "A" and incorporated herein by reference. B. The parties hereto desire to extend the due date of such Note and the indebtedness which it represents. NOW, THEREFORE, the parties hereto agree as follows: 1. The Recitals set forth above are incorporated herein by reference. 2. Ross and Jilco hereby agree that the indebtedness represented by the Note, as previously modified, shall be due on demand, but if no demand is made, then on August 9, 1988. 3. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. "Ross": October 15, 1986 /s/ Leonard M. Ross --------------------------- LEONARD M. ROSS "Jilco": JILCO INDUSTRIES, INC. October 15, 1966 By/s/ Gary W. Pickett --------------------------- Gary W. Pickett President 1 2 P R O M I S S O R Y N O T E $5,000.00 August 9, 1972 For value received, the undersigned promises to pay on demand, but if no demand is made then one year after date, to the order of Leonard M. Ross the principal sum of --Five Thousand--- Dollars, together with interest from date hereof at the rate of 7 Per Cent per annum. Interest shall be payable at the same time as principal. Upon default, the whole sum of principal and interest shall become due immediately at the option of the holder hereof. Default shall include, but not be limited to, the filing, as to the undersigned of a voluntary or involuntary petition under the provisions of the Federal Bankruptcy Act, or the issuance of any attachment or execution against any asset of the undersigned. If this note is not paid when due, the undersigned promises to pay, in addition to the principal and accrued interest, all cost and expenses of collection and reasonable attorney's fees incurred by the holder hereof on account of such collection, whether or not suit is filed thereon. The undersigned hereby waives demand and protest and the right to assert any statute of limitations. The undersigned shall have the right to prepay all or a portion of the principal and/or interest at any time without penalty. IN WITNESS WHEREOF, the undersigned has duly executed this Note on the date set forth above. JILCO INDUSTRIES, INC. By /s/ GEORGE ROSS ----------------------------------- George Ross, Vice President 3 -----END PRIVACY-ENHANCED MESSAGE-----