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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
Capitol Multimedia, Inc.
(Name of Issuer)
Common Stock, par value $0.10
(Title of Class of Securities)
140628 10 8
(CUSIP Number)
Craig Cox
Philips Interactive Media of America
11111 Santa Monica Boulevard, Suite 700
Los Angeles, California 90025
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 31, 1992
(Date of Event which Requires Filing of this Statement)
If a filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with this statement [X]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
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- ---------------------
CUSIP NO. 140628 10 8
- ---------------------
- ------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Philips Interactive Media of America, Inc.
- ------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X ]
- ------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------
4. SOURCE OF FUNDS
WC, OO
- ------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- ------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 825,088
SHARES ----------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 20,000
EACH ----------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 825,088
WITH ----------------------------------------
10. SHARED DISPOSITIVE POWER
20,000
- ------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
845,088
- ------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- ------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.1%
- ------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- ------------------------------------------------------------
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- ---------------------
CUSIP NO. 140628 10 8
- ---------------------
- ------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Philips Electronics N.V.
- ------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X ]
- ------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------
4. SOURCE OF FUNDS
OO, WC
- ------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- ------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
The Netherlands
- ------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES ----------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 845,088
EACH ----------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH ----------------------------------------
10. SHARED DISPOSITIVE POWER
845,088
- ------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
845,088
- ------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- ------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.1%
- ------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- ------------------------------------------------------------
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SCHEDULE 13D
ITEM 1. Security and Issuer.
This statement relates to the acquisition by Philips
Interactive Media of America (formerly known as American
Interactive Media, Inc. and herein referred to as "PIMA") of
Common Stock, par value $.10 per share ("Common Stock"), of
Capitol Multimedia, Inc. (formerly known as Capitol Video
Communications, Inc.), a Delaware corporation (the "Issuer").
The principal executive offices of the Issuer are located at
2121 Wisconsin Avenue, N.W., Suite 300, Washington, D.C.
20007.
ITEM 2. Identity and Background.
This statement is being filed by Philips Electronics N.V.
("Philips"), a Netherlands corporation, and by Philips
Interactive Media of America, a Delaware corporation and a
wholly-owned indirect subsidiary of Philips, who together are
sometimes referred to herein as the "Reporting Persons."
Philips acts as the holding company of the Philips Group.
The Philips Group is engaged primarily in the manufacture and
distribution of electronic and electrical products, systems
and equipment. The principal office and business address of
Philips is Groenewoudseweg 1, 5621 BA, Eindhoven, The
Netherlands.
The principal office and business address of PIMA are
located at 11111 Santa Monica Boulevard, Suite 700, Los
Angeles, California 90025. The principal business of PIMA is
the development, production and distribution of entertainment
and educational software products in the compact disc
interactive ("CD-I") format, CD-ROM format and other formats.
All of the issued and outstanding shares of capital stock of
PIMA are owned by Philips (62.6%) and by Philips Interactive
Media International Limited, a wholly-owned indirect
subsidiary of Philips (37.4%).
Attached as Schedule I hereto and incorporated by
reference is a list of the members of the Supervisory Board
and the members of the Board of Management and the Group
Management Committee of Philips and the Directors and
executive officers of PIMA. Schedule I sets forth each of
such persons' name, business address, present principal
occupation or employment and citizenship and the name,
principal business and address of the corporation or other
organization in which such employment is conducted.
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Schedule I also sets forth the number of shares of the
Issuer's Common Stock, if any, beneficially owned by such
persons described therein. The total number of such shares
beneficially owned by such persons and, thereby, by the
Reporting Persons is 12,500.
During the past five years, neither the Reporting Persons
nor any of their directors, executive officers or controlling
persons have (a) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (b)
been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result
of such proceeding were or are subject to a judgment, decree
or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or State
securities laws or finding any violation with respect to such
laws.
ITEM 3. Source and Amount of Funds or Other Consideration.
In September 1988, PIMA and the Issuer entered into a
Warrant Purchase Agreement, dated September 14, 1988 (the
"Warrant Purchase Agreement"), providing for the formation of
a CD-I production facility. PIMA agreed to provide funding
for 50% of the equipment purchased in connection with the
establishment of such facility in consideration of the right
to receive one-third of the net revenue after recovery of its
investment. In connection with such transaction, warrants to
purchase up to 200,000 shares (subject to certain anti-
dilutive provisions) of Common Stock (the "Warrants") were
issued to PIMA. By letter agreement dated April 1, 1990 and
by the Modification to Warrant Purchase Agreement, dated as of
March 30, 1992, the Warrants were amended to provide PIMA with
rights to purchase an aggregate of 285,088 shares of Common
Stock.
On July 10, 1989, the Issuer and Philips Interactive
Media Corporation, a wholly-owned indirect subsidiary of
Philips ("PIMC"), entered into a joint venture agreement,
dated July 10, 1989 (the "Joint Venture Agreement"), defining
the terms and conditions of a joint venture to market CD-I
software and hardware to the professional market in the U.S.
(the "Joint Venture"). PIMC contributed $596,347 and the
Issuer contributed $640,585 to the Joint Venture. PIMC funded
such contribution out of its working capital. On December 31,
1991, PIMC and the Issuer entered into an Assignment and Stock
Transfer Agreement (the "Assignment and Stock Transfer
Agreement") whereby PIMC assigned all of its right, title and
interest in the Joint Venture to the Issuer in exchange for
15% of the Common
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Stock of the Issuer (calculated on the basis of the issued and
outstanding shares prior to the Issuer's initial public
offering (the "Offering") plus the 900,000 shares to be sold
as part of such Offering excluding any over-allotment) and
payment by the Issuer to PIMC of $96,347 (which represented
50% of the Joint Venture's accounts payable to PIMC, excluding
PIMC's capital contribution). On June 1, 1992, PIMC sold its
ownership interest in the Issuer to PIMA for $596,347. PIMA
funded such purchase out of its working capital. The
effective date of the Offering was March 31, 1992. After the
conclusion of the Offering, as part of the Issuer's purchase
price of PIMC's interest in the Joint Venture (subsequently
transferred to PIMA), PIMA was issued an additional 158,924
shares of Common Stock to maintain the Reporting Persons' 15%
ownership interest in the Issuer, resulting in the ownership
by the Reporting Persons of an aggregate of 540,000 shares of
Common Stock.
On April 8, 1993, PIMA exercised Warrants to purchase
125,000 shares of Common Stock at an exercise price of $6.25
per share. On February 8, 1994, the Reporting Person
exercised the remainder of the Warrants (the "February
Exercise") to purchase 108,919 shares of Common Stock at an
exercise price of $3.21 per share and 51,169 shares of Common
Stock at an exercise price of $3.59 per share. The purchase
price for all shares issued upon exercise of Warrants was paid
out of the working capital of PIMA.
ITEM 4. Purpose of Transaction.
The Reporting Persons acquired the shares of Common Stock
for investment purposes. All of such shares are "restricted
securities" within the meaning of Rule 144 promulgated under
the Securities Act of 1933, as amended.
Notwithstanding the foregoing, the Reporting Persons
reserve the right to dispose of some or all of the shares of
Common Stock, to maintain margin accounts with respect to the
Common Stock and to acquire additional shares of Common Stock
in the open market or in privately negotiated transactions to
or from third parties or otherwise, although it is not the
present intention of the Reporting Persons to acquire
additional shares of Common Stock. Pursuant to the terms of
the Warrant Purchase Agreement, dated September 14, 1988, the
Reporting Persons have obtained certain "piggy-back"
registration rights with respect to the 285,088 shares of
Common Stock acquired by them pursuant to the exercise of the
Warrants.
Except as set forth above, the Reporting Persons have no
present plan or proposal required to be described in
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Item 4 of Schedule 13D. The possible activities of the
Reporting Persons enumerated herein are subject to change at
any time as the Reporting Persons intend to review the
investment in the Issuer on a continuing basis and may
increase or decrease such investment.
ITEM 5. Interest in Securities of the Issuer.
Beneficial Ownership.
As of the date hereof, the Reporting Persons beneficially
owned a total of 845,088 shares of Common Stock, constituting
approximately 17.1% of the 4,930,425 shares of Common Stock
outstanding as disclosed in the Issuer's Annual Report on Form
10-KSB for the annual period ended March 31, 1994 as adjusted
for the issuance of shares pursuant to the February Exercise.
PIMA has sole power to vote or direct the vote and to dispose
or to direct the disposition of 825,088 of the shares of
Common Stock beneficially owned by the Reporting Persons.
PIMA has shared power to vote or direct the vote and to
dispose or to direct the disposition of 12,500 of the shares
of Common Stock beneficially owned by the Reporting Persons.
As the ultimate parent entity of PIMA, Philips is deemed to be
the beneficial owner of the 837,588 shares of Common Stock
beneficially owned by PIMA.
Transactions Within the Past 60 Days.
During the past 60 days, the Reporting Persons have not
acquired any shares of Common Stock.
Right to Receive Certain Funds.
To the best knowledge of the Reporting Persons, no other
person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of,
any shares of Common Stock which the Reporting Persons may be
deemed to beneficially own.
ITEM 6. Contracts, Arrangements, Understandings or
Relationships with Respect to the Securities of the
Issuer.
The Reporting Persons have certain registration rights
with respect to the shares of Common Stock acquired by them
pursuant to the exercise of the Warrants, which rights are
more fully described in the response to Item 4 hereto.
In connection with the acquisition by the Issuer of
PIMA's interest in the Joint Venture, and pursuant to the
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provisions of the Assignment and Stock Transfer Agreement,
dated December 31, 1991, PIMA obtained the right to nominate
for election one member to the Issuer's Board of Directors.
Nobel Investment Co. has agreed to use its best effort,
including voting any stock of the Issuer, to cause the Philips
nominee to be elected and continue in office as a Director of
the Issuer. Likewise, Philips has also agreed to vote its
shares in favor of Nobel Investment Co.'s nominee to the
Issuer's Board of Directors through March 30, 1997.
To the best knowledge of the Reporting Persons, other
than as set forth in the preceding paragraph and the
agreements referred to therein, there are no contracts,
arrangements, understandings or relationships (legal or
otherwise) between the Reporting Persons and any other person
with respect to any securities of the Issuer. The summaries
of certain provisions of agreements referred to herein do not
purport to be complete and are qualified in their entirety by
reference to the detailed provisions of the agreements
incorporated by reference herein.
ITEM 7. Materials to be Filed as Exhibits.
1. Warrant Purchase Agreement, dated September 14, 1988, by
and between American Interactive Media, Inc. and Capitol
Video Communications, Inc.
2. Amendment to Letter Agreement, dated April 1, 1990.
3. Supplement to Amended Letter Agreement, dated April 1,
1990.
4. Assignment and Stock Transfer Agreement, dated
December 31, 1991.
5. Modification to Warrant Purchase Agreement, dated
March 30, 1992.
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SIGNATURES
After reasonable inquiry and to the best of the knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: July 29, 1994
PHILIPS INTERACTIVE MEDIA OF AMERICA
By: /s/ Craig C. Cox
Name: Craig C. Cox
Title: Senior Vice President,
Treasurer and Chief
Financial Officer
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: July 29, 1994
PHILIPS ELECTRONICS N.V.
By: /s/ J.D. Timmer By: /s/ D.G. Eustace
Name: J. D. Timmer Name: D. G. Eustace
Title: President Title: Executive
Vice-President
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SCHEDULE I
The following sets forth certain information as to the
directors and executive officers of Philips Interactive Media
of America:
NAME: SCOTT C. MARDEN
Position: Chairman of the Board, Director
Business Address: Philips Interactive Media of
America
11111 Santa Monica Boulevard
Suite 700
Los Angeles, California 90025
Principal Occupation: President and CEO of Philips
Media
Employer: Philips Media
Employer's Address: 825 8th Avenue, 25th Floor
New York, New York 10019
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: U.S.A.
Number of shares of
Issuer's Common Stock
beneficially owned: 12,500
NAME: JOHN HAWKINS
Position: Director
Business Address: Philips Interactive Media of
America
11111 Santa Monica Boulevard
Suite 700
Los Angeles, California 90025
Principal Occupation: President and General Manager
Philips Media Management
Information Systems and
President, Philips Media
Distribution
Employer: Philips Media Management
Information Systems
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Employer's Address: Building SFH 6
P.O. Box 80002
5600 JB Eindhoven
Netherlands
Principal Business of Media Development and
Employer: Distribution
Country of Citizenship: United Kingdom
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: MARC SEVENANS
Position: Director
Business Address: Philips Interactive Media of
America
11111 Santa Monica Boulevard
Suite 700
Los Angeles, California 90025
Principal Occupation: Chief Financial Officer, Philips
Media
Employer: Philips Media
Employer's Address: 188 Tottenham Court Road
London W1P 9LP
England
Principal Business of Media Development and
Employer: Distribution
Country of Citizenship: Belgium
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: CRAIG C. COX
Business Address: Philips Interactive Media of
America
11111 Santa Monica Boulevard
Suite 700
Los Angeles, California 90025
Position: Senior Vice President, Finance
and Administration and Chief
Financial Officer
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Principal Occupation: Senior Vice President, Finance
and Administration and Chief
Financial Officer
Employer: Philips Interactive Media of
America
Employer's Address: 11111 Santa Monica Boulevard
Suite 700
Los Angeles, California 90025
Principal Business of Software development and
Employer: distribution
Country of Citizenship: U.S.A.
Number of shares of
Issuer's Common Stock
beneficially owned: 7,500
NAME: BRADFORD C. AUERBACH
Business Address Philips Interactive Media of
America
11111 Santa Monica Boulevard
Suite 700
Los Angeles, California 90025
Position: Vice President of Business
Affairs, General Counsel and
Secretary
Principal Occupation: Vice President of Business
Affairs, General Counsel and
Secretary
Employer: Philips Interactive Media of
America
Employer's Address: 11111 Santa Monica Boulevard
Suite 700
Los Angeles, California 90025
Principal Business of Software development and
Employer: distribution
Country of Citizenship: U.S.A.
Number of shares of
Issuer's Common Stock
beneficially owned: 0
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The following sets forth certain information as to the
directors and executive officers of Philips Electronics N.V.
NAME: F.A. MALJERS
Position: Chairman of the Supervisory Board
and Chairman of the Board of Dr.
A.F. Philips Stichting
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Supervisory Board
and Chairman of the Board of Dr.
A.F. Philips Stichting
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: The Netherlands
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: A. LEYSEN
Position: Vice Chairman of the Supervisory
Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: President of the Board of
Directors
Employer: Agfa-Gevaert
Employer's Address: Septestraat 27, Mortsel, Belgium
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: Belgium
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Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: SIR PETER CAREY
Position: Secretary of the Supervisory
Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Retired
Employer: N/A
Employer's Address: N/A
Principal Business of N/A
Employer:
Country of Citizenship: United Kingdom
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: F.X. ORTOLI
Position: Member of the Supervisory Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: President Director General
Employer: Compagnie Francaise des Petroles
Total
Employer's Address: 24 Cours Michelet, 92800-
Puteaux, France
Principal Business of Petroleum Exploration
Employer:
Country of Citizenship: France
Number of shares of
Issuer's Common Stock
beneficially owned: 0
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NAME: M. KUILMAN
Position: Member of the Supervisory Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Retired
Employer: N/A
Employer's Address: N/A
Principal Business of N/A
Employer:
Country of Citizenship: The Netherlands
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: J.F. BENNETT
Position: Member of the Supervisory Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Retired
Employer: N/A
Employer's Address: N/A
Principal Business of N/A
Employer:
Country of Citizenship: U.S.A.
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: P.G. GYLLENHAMMER
Position: Member of the Supervisory Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Board
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Employer: A.B. Volvo
Employer's Address: S-405 08 Goteborg, Sweden
Principal Business of Automobile Manufacturing
Employer:
Country of Citizenship: Sweden
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: W. HILGER
Position: Member of the Supervisory Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Board of Hoechst
A.G.
Employer: Hoechst A.G.
Employer's Address: Bruningstrasse 64, 6230
Frankfurt/Main, Germany
Principal Business of Chemical Manufacturing
Employer:
Country of Citizenship: Germany
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: G. JEELOF
Position: Member of the Supervisory Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Retired
Employer: N/A
Employer's Address: N/A
Principal Business of N/A
Employer:
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Country of Citizenship: The Netherlands
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: L.C. VAN WACHEM
Position: Member of the Supervisory Board
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Retired
Employer: N/A
Employer's Address: N/A
Principal Business of N/A
Employer:
Country of Citizenship: The Netherlands
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: J.D. TIMMER
Position: President and Chairman of the
Board of Management and the Group
Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: President and Chairman of the
Board of Management and the Group
Management Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: The Netherlands
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Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: F.P. CARRUBBA
Position: Executive Vice-President, Member
of the Board of Management and
the Group Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Executive Vice-President and
member of the Board of Management
and the Group Management
Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: The Netherlands
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: D.G. EUSTACE
Position: Executive Vice-President/Chief
Financial Officer, Member of the
Board of Management and the Group
Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Executive Vice-President/Chief
Financial Officer, Member of the
Board of Management and the Group
Management Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
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Principal Business of Manufacturing Organization
Employer:
Countries of United Kingdom, Canada
Citizenship:
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: H. BODT
Position: Executive Vice-President, Member
of the Board of Management and
the Group Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Executive Vice-President and
member of the Board of Management
and the Group Management
Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: The Netherlands
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: P.J. EVERAERT
Position: Executive Vice-President, Member
of the Board of Management and
the Group Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Executive Vice-President, Member
of the Board of Management and
the Group Management Committee
Employer: Philips Electronics N.V.
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Employer's Address: c/o Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: U.S.A.
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: W. DE KLEUVER
Position: Chairman of the Management
Committee of the Components
Division and Member of the Group
Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Management
Committee of the Components
Division and Member of the Group
Management Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: The Netherlands
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: T. MEYER
Position: Member of the Group Management
Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Member of the Group Management
Committee
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Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: Switzerland
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: C. BOONSTRA
Position: Chairman of the Management
Committee of the Lighting
Division and Member of the Board
of Management and the Group
Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Management
Committee of the Lighting
Division and Member of the Board
of Management and the Group
Management Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: The Netherlands
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: A.M. LEVY
Position: Chief Executive Officer of
PolyGram N.V. (a majority-owned
subsidiary of Philips Electronics
N.V.) and Member of the Group
Management Committee
<PAGE>
<PAGE> 23
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Member of the Group Management
Committee and Chief Executive
Officer of Polygram N.V.
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: France
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: M.P. MOAKLEY
Position: Chairman of the Management
Committee of the Medical Systems
Division and Member of the Group
Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Management
Committee of the Medical Systems
Division and Member of the Group
Management Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: U.S.A.
Number of shares of
Issuer's Common Stock
beneficially owned: 0
<PAGE>
<PAGE> 24
NAME: L.G. NYBERG
Position: Chairman of the Management
Committee of the Communication
Systems Division and Member of
the Group Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Management
Committee of the Communication
Systems Division and Member of
the Group Management Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: Sweden
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: J.C. TOLLENAAR
Position: Member of the Group Management
Committee and Chairman of the
Management Committee of the Sound
& Vision Division
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Member of the Group Management
Committee and Chairman of the
Management Committee of the Sound
& Vision Division
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of
Employer: Manufacturing Organization
Country of Citizenship: The Netherlands
<PAGE>
<PAGE> 25
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: K. KENNEDY
Position: Chairman of the Management
Committee of the Domestic
Appliances and Personal Care
Division and Member of the Group
Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Management
Committee of the Domestic
Appliances and Personal Care
Division and Member of the Group
Management Committee
Employer: Philips Electronics N.V.
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of
Employer: Manufacturing Organization
Country of Citizenship: United Kingdom
Number of shares of
Issuer's Common Stock
beneficially owned: 0
NAME: D.J. DUNN
Position: Chairman of the Management
Committee of the Semiconductors
Division and Member of the Group
Management Committee
Business Address: c/o Philips Electronics N.V.
Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Occupation: Chairman of the Management
Committee of the Semiconductors
Division and Member of the Group
Management Committee
Employer: Philips Electronics N.V.
<PAGE>
<PAGE> 26
Employer's Address: Groenewoudseweg 1, 5621 BA
Eindhoven, The Netherlands
Principal Business of Manufacturing Organization
Employer:
Country of Citizenship: United Kingdom
Number of shares of
Issuer's Common Stock
beneficially owned: 0
<PAGE> 1
Exhibit 99.1
WARRANT PURCHASE AGREEMENT
Agreement made this 14th day of September,
1988 by and between AMERICAN INTERACTIVE MEDIA, INC., a
Delaware corporation with its principal place of business at
11111 Santa Monica Boulevard, Suite 1000, Los Angeles,
California 90025 ("AIM") , and CAPITOL VIDEO COMMUNICATIONS,
INC. a Delaware corporation with its principal place of
business at 2121 Wisconsin Avenue N.W., Washington, D.C.,
20007 ("Company").
W I T N E S S E T H:
Simultaneously with the execution hereof, AIM
and Company are entering into (i) a Production and
Distribution Agreement (the General Terms and Conditions and
Specific Terms) (the "Agreement") pursuant to which AIM and
Company have agreed to develop, produce, market and distribute
compact disc interactive ("CD-I") programs for the CD-I player
and (ii) a CD-I Facility Agreement ("Facility Agreement")
pursuant to which AIM and Company have agreed to co-finance
certain equipment, hardware and software necessary to develop
and produce CD-I programs for the CD-I player.
In order to induce AIM to enter into the
Agreement and the Facility Agreement, Company has agreed to
issue and deliver a stock purchase warrant to AIM, and to
issue and deliver additional stock purchase warrants to AIM on
the terms and conditions hereinafter set forth.
NOW THEREFORE, it is agreed as follows:
1. Issue of Stock Purchase Warrants
(a) Initial Warrant On the effective date
hereof (the "Closing Date"), and subject
to the terms and conditions hereof,
Company shall issue and deliver to AIM a
stock purchase warrant in the form annexed
hereto as Exhibit A (the "Initial
Warrant") to purchase Two Hundred Thousand
(200,000) shares of Common Stock of
Company ("Common Stock") (subject to
adjustment as provided in the Initial
Warrant) at an initial purchase price of
$2.00 per share. The Initial Warrant shall
expire five (5) years after the date of
execution thereof, or two (2) years after
the
<PAGE>
<PAGE> 2
expiration of the Production Term (as
defined in the Agreement) of the
Agreement, whichever shall occur last.
(b) Additional Warrants Company further
agrees to issue and deliver additional
stock purchase warrants (each an
"Additional Warrant"), at the times and on
the conditions herein specified:
(i) An Additional Warrant to
purchase Fifty Thousand
(50,000) shares of Common
Stock at an initial
purchase price of $2.00 per
share, to be issued on the
date on which Company
delivers (as hereinafter
defined) the first of the
CD-I Programs (as defined
in the Agreement);
(ii) An Additional Warrant to
purchase Fifty Thousand
(50,000) shares of Common
Stock at an initial
purchase price of $2.00 per
share, to be issued on the
date on which Company
delivers the second of the
CD-I Programs.
As used herein, the term "delivers" shall mean Company's
delivery to AIM of the final, accepted master tapes of the CD-
I Program in question. In the event that funding of the
Production Costs (as defined in the Agreement) of any CD-I
Program is terminated by AIM, no Additional Warrant(s) shall
be issued for such CD-I Program or with respect to any
subsequent CD-I Program. All such Additional Warrants shall
be in the form of Exhibit A hereto and shall expire two (2)
years after the date of issuance thereof.
2. Representations and Warranties of Company
In order to induce AIM to enter into this Warrant Purchase
Agreement, Company hereby makes the following representations
and warranties to AIM:
(a) Corporate Status Company is a corporation
duly organized and in good standing under
the laws of the State of Delaware and is
duly qualified to do business and is in
good standing in the District of Columbia.
(b) No Violation This Warrant Agreement and
the issuance of the Initial Warrant and
Additional Warrants do not violate any
<PAGE>
<PAGE> 3
provision of any charter, bylaw, mortgage,
lien, agreement, instrument, order,
judgment or decree to which Company is a
party or by which Company is bound.
(c) Due Authorization; Validity This Warrant
Agreement (including all instruments
executed and delivered by Company pursuant
to this Warrant Agreement and all acts to
be performed hereunder) has been duly and
validly authorized, executed, and
delivered by Company and is a valid and
binding agreement of Company enforceable
in accordance with its terms.
(d) No Further Action Except for compliance
with any applicable state securities or
"blue sky" laws, no consent, approval,
authorization, or order of any court or
governmental agency or body is required in
connection with the consummation of the
transactions contemplated by this Warrant
Agreement. It is understood and agreed
that the issuance of the Initial Warrant,
Additional Warrants and Warrant Shares (as
hereinafter defined) will take place in
the District of Columbia.
(e) Reservation of Shares There have been
reserved, and Company shall at all times
keep reserved, out of Company's authorized
and unissued shares of Common Stock, a
number of shares of Common Stock
sufficient to accommodate the exercise of
the rights of purchase represented by any
of the outstanding Initial Warrant and/or
Additional Warrants.
(f) Issuance of the Warrant Shares Upon
payment of the respective exercise prices
for the Initial Warrant and/or Additional
Warrants, the shares of Common Stock
delivered upon the exercise of any of the
Initial Warrant and/or Additional Warrants
("Warrant Shares") issued hereby shall be
validly issued, fully paid, and
nonassessable and Company will pay all
taxes, if any, in respect of the issuance
of any of such Initial Warrant and/or
Additional Warrants or the Warrant Shares.
All corporate actions required to be taken
for the authorization, issuance and sale
of the
<PAGE>
<PAGE> 4
Warrant Shares, to the best of its
knowledge, have been validly and
sufficiently taken.
3. Representations and Warranties of AIM In order
to induce Company to enter into this Warrant Purchase
Agreement, AIM hereby makes the following representations and
warranties to Company:
(a) Corporate Status. AIM is a corporation
duly organized and in good standing under
the laws of the State of Delaware and is
duly qualified to do business and is in
good standing as a foreign corporation in
the State of California and in all other
jurisdictions in which such qualification
is required.
(b) No Violation. This Warrant Agreement and
the issuance of the Initial Warrant and
Additional Warrants do not, and the
issuance of the Warrant Shares will not,
violate any provision of any charter,
bylaw, mortgage, lien, agreement,
instrument, order, judgment or decree to
which AIM is a party or by which AIM is
bound.
(c) Due Authorization; Validity. This Warrant
Agreement (including all instruments
executed and delivered by AIM pursuant to
this Warrant Agreement and all acts to be
performed hereunder) has been duly and
validly authorized, executed and delivered
by AIM and is a valid and binding
agreement of AIM enforceable in accordance
with its terms.
(d) Acquisition for Investment. AIM is
acquiring the Initial Warrant and
Additional Warrants and will acquire the
Warrant Shares for investment for its own
account only and not with a view to
distribution thereof and AIM has no
present intention of dividing any interest
in such Initial Warrant, Additional
Warrants and/or the Warrant Shares (if and
when acquired) with others, or of
reselling or otherwise disposing all or
any part of such Initial Warrant,
Additional Warrants and/or Warrant Shares,
or any interest therein, or participating,
directly or indirectly, in a distribution
of such Initial Warrant, Additional
Warrants and/or Warrant Shares, or any
interest therein.
<PAGE>
<PAGE> 5
(e) No Registration. AIM understands and
agrees that the Initial Warrant,
Additional Warrants and/or Warrant Shares
(if and when acquired) or any interest
therein may not be sold, assigned or
otherwise transferred in the absence of an
effective registration statement under the
Securities Act of 1933 covering the
transfer or an opinion of counsel
satisfactory to Company that registration
under the Securities Act of 1933 is not
required.
(f) The Company Documents. Prior to the
execution of this Agreement, AIM has had
the opportunity to review, ask questions
and receive answers from Company
concerning the terms and conditions of the
transactions contemplated by the issuance
of the Initial Warrant, Additional
Warrants and Warrant Shares (if and when
acquired) and concerning Company, its
business and any of the documents listed
in items (i) - (ii) below and to obtain
such additional further information from
Company as it has deemed necessary to
verify the accuracy of the information
contained in the following documents or
any other information furnished to it:
(i) Company's audited financial
statements for the years
ended March 31, 1986 and
1987; and
(ii) Company's Certificate of
Incorporation, as amended
to date.
4.1 Company Registration.
(a) If (but without any obligation to do so)
the Company proposes to register
(including, for this purpose, a
registration effected by the Company for
stockholders other than the holders of
Registrable Securities) any of its Capital
Stock under the Securities Act of 1933
(the "1933 Act") in connection with the
public offering of such securities solely
for cash, the Company shall, at such time,
promptly give each Holder written notice
of such registration. Upon the written
request of any Holder given within twenty
(20) days after mailing of such notice by
the Company,
<PAGE>
<PAGE> 6
the Company shall, subject to the
provisions of Section 4.5, effect a
registration of all of the Registrable
Securities that each such Holder has
requested to be registered, subject to the
right of the Company to withdraw such
registration in its entirety.
(b) The Company shall not, however, be
required to give notice or to include such
Registrable Securities in any such
registration if the proposed registration
relates solely to: (i) securities to be
offered to employees pursuant to a stock
option, stock savings, or other employee
benefit plan, (ii) securities proposed to
be issued in exchange for securities or
assets of, or in connection with a merger
or consolidation with, another
corporation, (iii) securities to be
offered by the Company generally to any
class of its then existing security
holders, (iv) securities issuable upon
conversion of securities which are the
subject of an underwritten redemption, or
(v) securities to be offered or issued
pursuant to a combination of transactions
referred to in clauses (i) through (iv).
4.2 Request for Registration.
The Company covenants and agrees as follows:
(a) If the Company shall receive at any time
subsequent to the effective date of any
registration of the Capital Stock of the
Company under either the 1933 Act or the
Securities Exchange Act of 1934 ("1934
Act"), a written request from the Holders
of Fifty Percent (50%) or more of the
Warrant Shares issued under or pursuant to
the Initial Warrant and the Additional
Warrants (on a fully converted and
exercised basis) (collectively the
"Registrable Securities") that the Company
register any Registrable Securities then
outstanding under the 1933 Act ("Demand
Registration"), then the Company shall
effect the registration under the 1933 Act
of all Registrable Securities which the
Holders shall in writing request to be
included in such registration.
<PAGE>
<PAGE> 7
(b) If the Holders initiating the registration
request hereunder intend to distribute the
Registrable Securities covered by their
request by means of an underwriting, they
shall so advise the Company as a part of
their request made pursuant to this
Section 4.2. In such event, the right of
any Holder to include its Registrable
Securities in such registration shall be
conditioned upon such Holder's
participation in such underwriting and the
inclusion of such Holder's Registrable
Securities in the underwriting to the
extent provided herein. All Holders of
Registrable Securities proposing to
distribute their securities through such
underwriting shall (together with the
Company) enter into an underwriting
agreement in customary form with the
underwriter or underwriters selected for
such underwriting by a majority in
interest of the Holders, provided that
such underwriter or underwriters must be
reasonably satisfactory to the Company.
Neither the Company nor any person who is
not a Holder may participate in the
offering covered by the registration
statement to be filed hereunder without
the consent of a majority in interest of
the Holders. Notwithstanding any other
provision of this Section 4.2, if the
underwriter advises the Holders in writing
that marketing factors require a
limitation of the number of shares to be
underwritten, then the Holders shall so
advise all participating Holders and the
number of shares of Registrable Securities
that may be included in the underwriting
shall be allocated pro rata among all
participating holders (including the
Holders) thereof.
(c) Notwithstanding anything to the contrary
in this Section 4.2, at any time after a
request for registration is made under
Section 4.2(a) any Holder who has
requested registration of its Registrable
Securities or has notified the Company of
its desire to include its Registrable
Securities in such registration may
withdraw from such registration by giving
written notice to such effect to the
Company, provided that such Holder shall
be liable for his pro rata share of
registration expenses charged to all
Holders requesting
<PAGE>
<PAGE> 8
registration to the extent incurred prior
to the date of withdrawal.
(d) The Company is obligated to effect only
one (1) such registration pursuant to this
Section 4.2.
4.3 Obligations of the Company and Holders.
(a) Obligations of Company and Holders
Whenever required under this Section 4 to
effect the registration of any Registrable
Securities, the Company shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the
SEC a registration
statement with respect to
such Registrable
Securities, promptly
prepare and file any
amendments or supplements
thereto, use its best
efforts to cause such
registration statement to
become effective and keep
such registration statement
effective until the Holders
participating therein have
informed the Company in
writing that the
distribution of their
securities has been
completed, provided,
however, that the date by
which any such Demand
Registration under Section
4.2 shall be filed or
declared effective may be
extended by the Company
once for up to an
additional sixty (60) days
in the event that the
Company is engaged in
negotiations looking
towards its participation
in a material merger,
acquisition or other form
of business combination or,
if in the good faith
judgment of the Company by
reason of such transaction
or other event, the Company
is not in a position to
timely prepare and file
such registration statement
(a "Material Event"). If,
after a Demand Registration
is effective, a Material
Event occurs, the Company
may notify the Holders of
Registrable Securities not
to sell any Registrable
Securities pursuant
<PAGE>
<PAGE> 9
to such registration statement for a
period up to ninety (90) days and,
after receiving such notice the
Holders of Registrable Securities
hereby agree not to sell any
Registrable Securities pursuant to
such registration statement during
such period, in which event the
Company shall extend the period
during which such Demand Registration
shall be maintained effective
pursuant to this Agreement by the
number of days during such period,
from and including the date of the
giving of such notice.
(ii) Furnish to the Holders
copies of a prospectus,
including a preliminary
prospectus and such other
documents as they may
reasonably request in order
to facilitate the
disposition of Registrable
Securities owned by them.
(iii) Use its best efforts to
register and qualify the
securities covered by such
registration statement
under such other securities
or Blue Sky laws of such
jurisdictions as shall be
reasonably requested by the
Holders.
(iv) In the event of any
underwritten public
offering, enter into and
perform its obligations
under an underwriting
agreement, in usual and
customary form, with the
managing underwriter of
such offering.
(v) List the securities being
registered on the national
securities exchange on
which the same class of the
Company's equity securities
are listed or, if the
Company does not then have
a class of equity
securities listed on any
national securities
exchange, use its best
efforts to qualify the
securities being registered
for
<PAGE>
<PAGE> 10
inclusion on the automated quotation
system of the National Association of
Securities Dealers, Inc. or any
successor automated quotation system.
(b) Obligations of Holders Any request for
registration of Registrable Securities by
any Holder under Section 4.1 or Section
4.2 hereof shall specify, in writing, the
name and address of the Holder, the amount
of Registrable Securities held by such
Holder, the number of Registrable
Securities the Holder desires to sell, and
contain the undertaking of such Holder to
provide all such information as may be
reasonably required by the Company in
connection with the preparation of any
registration statement or prospectus and
in order to permit the Company to comply
with all applicable requirements of the
federal, state and District securities
authorities and to obtain acceleration of
the effective date of the registration
statement, identify any proposed
underwriters and specify the proposed
method of offering and sale.
4.4 Expenses of Registration. All expenses (other
than underwriting discounts and commissions relating to
Registrable Securities) incurred in connection with the
registration, filing and related qualifications pursuant to
Section 4.1 shall be borne by the Company including, without
limitation, all registration, filing and qualification fees,
printing and accounting fees, fees and disbursements of
counsel for the Company and the reasonable fees and dis-
bursements of one counsel for the selling Holders. All such
expenses (including underwriting discounts and commissions
relating to Registrable Securities) incurred in connection
with the registration, filing and related qualifications
pursuant to Section 4.2 shall be borne by the selling Holders
and any and all other persons participating in such
Registration, pro rata based on the number of Registrable
Securities included in such Registration.
4.5 Underwriting Requirements. In connection with
any offering involving an underwriting of Securities being
issued by the Company, the Company shall not be required under
Section 4.1 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters
selected by it and then only in such quantity
<PAGE>
<PAGE> 11
(if any) as, in the opinion of the underwriters, can be
successfully offered, or is feasible to offer in connection
with the offering. The Company shall, however, in all events,
seek to include the Holders' Registrable Securities on a
pro-rata basis with the inclusion of any other securities of
any other person (the Registrable Securities so included to be
apportioned pro-rata among the selling Holders, or in such
other apportions as shall be mutually agreed to by such
selling Holders).
4.6 Assignment of Registration Rights. The rights
to cause the Company to register Registrable Securities
pursuant to this Section 4 may be assigned by a Holder to a
transferee or assignee of Registrable Securities if the
Company is, within a reasonable time prior to such transfer,
furnished with written notice of the name and address of such
transferee or assignee and the Registrable Securities with
respect to which such registration rights are being assigned,
subject to the provisionf of Section 12 hereof.
4.7 Limitations on Subsequent Registration Rights.
From and after the date of this Agreement, the Company shall
not, without the prior written consent of the Holders of a
majority of the Registrable Securities then outstanding, enter
into any agreement with any holder or prospective holder of
any other securities of the Company relating to registration
rights unless such agreement provides (a) that the rights of
such holder to participate in a registration under Section 4.1
hereof shall not be on a senior or more favorable basis than
that of the Holders; and (b) that such holder is prohibited
from including his securities in any registration filed under
Section 4.2 hereof without the approval of the Holders of a
majority of the Registrable Securities included in such
request for registration.
4.8 Waiver. Compliance by the Company with any
requirement to register any and all securities pursuant to
this Section 4 may be waived at any time by an affirmative
vote of Holders of a majority of the Registrable Securities.
5. Indemnification of AIM.
(a) In the event AIM exercises the Initial
Warrant and/or either of the Additional
Warrants and is issued Warrant Shares and
Company registers any of the Warrant
Shares under the 1933 Act, Company will
indemnify and hold AIM harmless from any
and all losses, claims, damages, expenses
or liabilities, joint or several, to which
AIM becomes subject under the 1933 Act or
under
<PAGE>
<PAGE> 12
any other statute or common law or
otherwise and, except as hereinafter
provided will reimburse AIM for any
reasonable legal or other direct
out-of-pocket expenses reasonably incurred
by AIM in connection with defending any
actions, whether or not resulting in any
liability, provided that any such losses,
claims, damages, expenses, liabilities or
actions arise out of or are based upon an
untrue statement or alleged untrue
statement of a material fact contained in
the registration statement, in any
preliminary or amended preliminary
prospectus or in the prospectus (or the
registration statement or prospectus as
from time to time amended or supplemented
by Company), or arise out of or are based
upon the omission or alleged omission to
state therein a material fact required to
be stated therein or necessary in order to
make the statements therein not misleading
or any material violation by Company of
any rule or regulation promulgated under
the Securities Act of 1933 applicable to
Company and relating to action or inaction
reasonably required of Company in
connection with such registration, unless
such untrue statement or omission was made
in such registration statement,
preliminary or amended, preliminary
prospectus, or prospectus in reliance upon
and in conformity with information
furnished in writing to Company by AIM.
(b) Promptly after receipt by AIM of notice of
the commencement of any action in respect
to which indemnity may be sought against
Company under Paragraph (a) hereinabove,
AIM will notify Company in writing of the
commencement thereof and, subject to the
provisions hereinafter stated, Company
shall assume the defense of such action
and all costs thereof (including the
employment of legal counsel, who shall be
reasonably satisfactory to AIM). AIM
shall have the right to employ separate
legal counsel in any such action and to
participate in the defense thereof but the
fees and expenses of such counsel shall
not be at the expense of Company unless
the employment of such counsel has been
specifically authorized by Company.
Company
<PAGE>
<PAGE> 13
shall not be liable to indemnify any
person for any settlement of any such
action effected without Company's consent.
Company shall not, except with the
approval of each party being indemnified
under this Paragraph, consent to entry of
any judgment or enter into any settlement
which does not include as an unconditional
term thereof the giving by the claimant or
plaintiff to the parties being so
indemnified of a release from all
liability in respect to such claim or
litigation.
6. Indemnification of Company.
(a) In the event that AIM exercises the
Initial Warrant and/or either of the
Additional Warrants and is issued Warrant
Shares and the Company registers any of
the Warrant Shares under the Securities
Act of 1933, AIM will indemnify and hold
harmless Company, each of its directors,
each of its officers who have signed the
registration statement, each underwriter
of Warrant Shares so registered (including
any broker or dealer through whom such of
the shares may be sold) and each person,
if any, who controls Company within the
meaning of Section 15 of the Securities
Act of 1933 from and against any and all
losses, claims, damages, expenses or
liabilities, joint or several, to which
they or any of them may become subject
under the Securities Act of 1933 or under
any other statute or at common law or
otherwise and, except as hereinafter
provided, will reimburse Company and each
such director, officer, underwriter or
controlling person for any legal or other
expenses reasonably incurred by any of
them in connection with defending any such
actions whether or not resulting in any
liability, provided that any such losses,
claims, damages, expenses, liabilities or
actions arise out of or are based upon any
untrue statement or alleged untrue
statement of a material fact contained in
the registration statement, in any
preliminary or amended preliminary
prospectus or in the prospectus (or the
registration statement or prospectus as
from time to time amended or supplemented)
or arise out of or are based upon the
omission or alleged
<PAGE>
<PAGE> 14
omission to state therein a material fact
required to be stated therein or necessary
in order to make the statements therein
not misleading but, in each case, only
insofar as any such statement or omission
was made in reliance upon information
furnished in writing to Company by AIM, or
any parent, subsidiary or Affiliate
thereof.
(b) Promptly after receipt of notice of the
commencement of any action in respect of
which indemnity may be sought against AIM,
Company will notify AIM in writing of the
commencement thereof and AIM shall,
subject to the provisions hereinafter
stated, assume the defense and costs
thereof such action and all costs thereof
(including the employment of legal counsel
who shall be reasonably satisfactory to
Company). Company and each such director,
officer, underwriter or controlling person
shall have the right to employ separate
counsel in any such action and to
participate in the defense thereof but the
fees and expenses of such counsel shall
not be at the expense of AIM unless
employment of such counsel has been
specifically authorized by AIM. AIM shall
not be liable to indemnify any person for
any settlement of any such action effected
without its consent. AIM shall not,
except with the approval of each party
being indemnified under this Paragraph,
consent to entry of any judgment or enter
into any settlement which does not include
as an unconditional term thereof the
giving by the claimant or plaintiff to the
parties being so indemnified of a release
from all liability in respect to such
claim or litigation.
7. Antidilution and Adjustment
(a) No Dilution or Impairment. The Company
will not, by amendment of its Certificate
of Incorporation or through any
reorganization, transfer of assets,
consolidation, merger, dissolution, issue
or sale of securities, any "Extraordinary
Event" (as hereinafter defined), or any
other voluntary action, avoid or seek to
avoid the observance or performance of any
of the terms of the Warrant, but will at
all times in good faith
<PAGE>
<PAGE> 15
assist in the carrying out of all such
terms and in the taking of all such action
as may be necessary or appropriate in
order to prtect the rights of the Holder
of the Warrant against dilution or other
impairment. For purposes of this
Paragraph 7(a), an "Extraordinary Event"
shall occur in the event that Company (i)
shall issue additional shares of the
Common Stock as a dividend or other
distribution on outstanding shares of
Common Stock, (ii) subdivide its
outstanding shares of Common Stock, or
(iii) combine its outstanding shares of
the Common Stock into a smaller number of
shares of the Common Stock. Without
limiting the generality of the foregoing,
Company will (a) not increase the par
value of any shares of stock above the
amount to be received by the Company as
the exercise of this Warrant, (b) take all
such action as may be necessary or
appropriate in order that Company may
validly and legally issue fully paid and
non-assessable shares of stock on the
exercise of this warrant and (c) will not
consolidate with or merge into any other
person or permit any such person to
consolidate with or merge into Company (if
Company is not the surviving person),
unless such other person shall expressly
assume in writing and will be bound by all
the terms of this Warrant. The parties
hereby acknowledge that as of the date
hereof, there are Five Million (5,000,000)
shares of Company Common Stock authorized,
at ten cents par value, there are Three
Million, Six Hundred Forty-Five Thousand,
Seven Hundred Sixty-Seven (3,645,767)
shares of said Common Stock issued and
outstanding and there are Four Hundred
Thirty-Nine Thousand, Nine Hundred
Eighty-Four (439,984) warrants issued and
outstanding for the purchase of Common
Stock.
(b) Reorganization, Reclassification or
Recapitalization of Company. In case of
any capital reorganization or
reclassification or recapitalization of
the capital stock of the Company or in
case of the consolidation or merger of the
Company with or into another corporation,
or in case of the sale or transfer of the
property of the Company as an entirety or
substantially as an entirety,
<PAGE>
<PAGE> 16
there shall thereafter be deliverable upon
the exercise of the Warrant or any portion
thereof (in lieu of or in addition to the
number of shares of Common Stock
theretofore deliverable, as appropriate)
the number of shares of stock or other
securities or property to which the holder
of the number of shares of Common Stock
which would otherwise have been
deliverable upon the exercise of the
Warrant or any portion thereof at the time
would have been entitled upon such capital
reorganization or reclassification of
capital stock, consolidation, merger or
sale, and at the same aggregate purchase
price.
Prior to and as a condition of the
consummation of any transaction described
in the preceding sentence, the Company
shall make equitable, written adjustments
in the application of the provisions
herein set forth, so that the provisions
set forth herein shall thereafter be
applicable, as nearly as possible, in
relation to any shares of stock or other
securities or other property thereafter
deliverable upon exercise of the Warrant.
(c) Splits and Combinations. In case the
Company, after the date hereof, splits or
sub-divides any of its outstanding shares
of common stock into a greater number of
shares, or if the Company shall declare a
dividend on shares of its outstanding
common stock payable in shares of Common
Stock, the number of shares of Common
Stock issuable upon exercise of the
Warrant in exchange for payment of the
Purchase Price per share shall be adjusted
such that the Holder will receive the same
number of shares of Common Stock as such
Holder would have held had the Holder
exercised the Warrant on the date hereof
as to the number of shares for which the
Purchase Price per share is tendered.
Conversely, in case of a Combination of
shares of Common Stock or a reverse stock
split, the number of shares of Common
Stock deliverable upon exercise of the
Warrant shall be adjusted such that the
Holder will receive the number of shares
of Company Stock
<PAGE>
<PAGE> 17
that the Holder would hold had the Holder
exercised the Warrant on the date hereof
as the number of shares for which the
Purchase Price is tendered.
(d) Extraordinary Corporate Events. In case
the Company after the date hereof shall
propose to (i) pay any dividend payable in
stock to the holders of shares of Common
Stock or to make any other distribution of
securities, or rights, warrants or options
to purchase securities, of the Company to
the holders of shares of Common Stock,
(ii) make any distribution of cash or
property (other than shares of Common
Stock), (iii) offer to the holders of
shares of Common Stock rights to subscribe
for or purchase any additional shares of
any class of stock or any other rights or
options or (iv) effect any
reclassification of the Common Stock
(other than a reclassification involving
merely the subdivision or combination of
outstanding shares of Common Stock), or
any redemption, capital reorganization or
any consolidation or merger (other than a
merger in which no distribution of
securities or other property is to be made
to holders of shares of Common Stock), or
any sale, transfer or other disposition of
its property, assets and business as an
entirety or substantially as an entirety,
or the liquidation, dissolution or winding
up of the Company, then in each such case,
the Company shall mail to the holder of
the Warrant notice of such proposed
action, which shall specify the date on
which the books of the Company shall
close, or a record shall be taken, for
determining the holders of Common Stock
entitled to receive such stock dividends
or other distribution or such rights or
options, or the date on which such
reclassification, reorganization,
consolidation, merger, sale, transfer,
other disposition, liquidation,
dissolution or winding up shall take place
or commence, as the case may be, and the
date as of which it is expected that
holders of Common Stock of record shall be
entitled to receive securities or other
property deliverable upon such action, if
any such date is to be fixed. Such notice
shall be mailed in the case of any action
covered by clause (i), (ii) or
<PAGE>
<PAGE> 18
(iii) above at least fifteen (15) days
prior to the record date for determining
holders of Common Stock for purposes of
receiving such payment or offer, or in the
case of any action covered by clause (iv)
above at least thirty (30) days prior to
any record date to determine holders of
Common Stock entitled to receive such
securities or other property.
(d) Effect of Failure. Failure to file any
certificate or notice or to mail any
notice or any defect in any certificate or
notice, pursuant to Section 7 shall not
affect the legality or validity of the
adjustment of the number of shares
purchasable upon exercise of the Warrant,
or any transaction giving rise thereto nor
shall the exercise by any holder of any
rights or remedies based on such failure
affect the holder's rights to exercise the
Warrant.
(e) Application. Except as otherwise
expressly provided in this Section 7, all
sub-sections of Section 7 are intended to
operate independently of one another. If
an event occurs that requires the
application of more than one subsection,
all applicable sub-sections shall be given
independent effect.
8. Notices, etc. All notices and other
communications hereunder shall be in writing and shall be
deemed to have been given when delivered or mailed by
first-class, registered or certified mail, postage prepaid,
addressed (a) if to Company, attention of the Chairman, at
2121 Wisconsin Avenue N.W., Washington, D.C. 20007 and (b) if
to AIM, attention of the Chairman, 1111 Santa Monica
Boulevard, Suite 1000, Los Angeles, CA 90025.
9. Entire Agreement The parties hereto agree that
this Warrant Agreement, including all of the Exhibits hereto,
constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior
agreements and understandings between them as to such subject
matter.
10. Waivers and Further Agreements Any waiver of
any terms or conditions of this Warrant Agreement shall not
operate as a waiver of any other branch of such terms or
conditions or any other term or condition, nor shall any
failure to enforce any provision hereof operate as a waiver
<PAGE>
<PAGE> 19
of such provision or of any other provision hereof. Each of
the parties hereto agrees to execute all such further
instruments and documents and to take all such further action
as the other party may reasonably require in order to
effectuate the terms and purposes of this Warrant Agreement.
11. Amendments The terms and provisions of this
Warrant Agreement may not be modified or amended, or any of
the provisions hereof or thereof waived, except pursuant to
the written consent of Company and AIM.
12. Assignment, Successors and Assigns This
Warrant Agreement and any rights and obligations hereunder
shall be assignable by any party other than to any competitor
of the Company. All of the terms of this Warrant Agreement
shall be fully binding upon any such assigns of the parties.
Notwithstanding anything herein to the contrary, in the event
that, at any time AIM proposes to effect a sale or other
transfer of all or a portion of the Initial Warrant and/or any
Additional Warrant and/or any of the Warrant Shares (in each
such case, the "Offered Securities") then, in each such case
AIM shall provide the Company with written notice, specifying
the terms (including, without limitation, number of securities
proposed to be sold, the name and address of each purchaser
and the purchase price therefor) of such proposed sale (the
"Sale Notice"). In the event of any proposed sale or transfer
at any time prior to the earlier to occur of: (i) the Company
effecting a registration of any of its securities under the
1933 Act; or (ii) the Company otherwise becoming subject to
the registration requirements of the 1934 Act, then AIM shall
also provide Company with an opinion of counsel reasonably
satisfactory to Company that compliance with the registration
provisions of the 1933 Act is not required for any such sale
or transfer. Upon receipt of the Sale Notice, the Company
shall have a right of first refusal to purchase all such
Offered Securities from AIM upon the terms and conditions
contained in the Sale Notice (except for such sales or
transfers as are either: (a) proposed in connection with any
registration or public offering of Company securities; or (b)
to any affiliate, subsidiary, parent or successor-in-interest
to AIM, whether by merger, asset sale or any other business
combination or acquisition). The Company shall notify AIM in
writing, within twenty (20) days of the Company's receipt of
the Sale Notice, whether the Company elects to purchase the
Offered Securities. If the Company so notifies AIM of its
election not to purchase the Offered Securities, or if the
Company fails to provide AIM with written notice of its
intentions within such twenty (20) day period, AIM shall be
free to sell or transfer such Offered Securities to the
prospective
<PAGE>
<PAGE> 20
purchaser thereof, in accordance with the terms of the Sale
Notice, provided however, that if AIM does not sell the
Offered Securities to such prospective purchaser on
substantially the same terms as set forth in the Sale Notice,
AIM shall not effect any other sale or transfer of Company
securities without again complying with the provisions of this
Section 12. If the Company has notified AIM within such
twenty (20) day period of the Company's election to purchase
such Offered Securities, the parties shall consummate such
transaction within thirty (30) days of AIM's receipt of such
notice, on the terms and conditions contained in the Sale
Notice. Each party shall indemnify and hold the other party
harmless from any and all losses and damages, costs and other
expenses which the indemnified party may incur or suffer as a
result of the indemnifying party's failure to comply fully
with its obligations under this Section 13 including, without
limitation, reasonable legal costs and expenses in connection
with any action or lawsuit by the indemnified party against
the indemnifying party.
13. Severability In case any one or more of the
provisions or parts of a provision contained in this Warrant
Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect
any other provision or part in a provision of this Warrant
Agreement or any other jurisdiction, but this Warrant
Agreement shall be reformed and construed in any such
jurisdiction as if such valid or illegal or unenforceable
provision or part of a provision had never been contained
herein and such provisions or part reformed so that it would
be valid, legal and enforceable to the maximum extent
permitted in such jurisdiction.
14. Counterparts This Warrant Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
15. Delaware Law to Govern This Warrant Agreement
shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware.
<PAGE>
<PAGE> 21
16. Effective Date This Warrant Agreement shall be
deemed to have become effective on the Effective Date as
specified in the CD-I Facility Agreement.
IN WITNESS WHEREOF, the parties have executed
this agreement a sealed instrument on the date first above
written.
CAPITOL VIDEO COMMUNICATIONS, INC.
("Company")
By:_____________________________
Title:__________________________
AMERICAN INTERACTIVE MEDIA, INC.
("AIM")
By:_____________________________
Title:__________________________
Recommended By: ________________
<PAGE> 1
Exhibit 99.2
AMERICAN INTERACTIVE MEDIA, INC.
11111 Santa Monica Boulevard, Suite 700
Los Angeles, CA 90025
Effective Date: April 1, 1990
Capitol Video Communications, Inc.
2121 Wisconsin Avenue N.W.
Washington, D.C. 20007
Re: Amendment to Letter Agreement
Gentlemen:
This will confirm that the Letter Agreement dated
September 14, 1988 (the "Letter Agreement") between American
Interactive Media, Inc. ("AIM") and Capitol Video
Communications, Inc. ("Capitol") with respect to the
establishment of a compact disc interactive pre-mastering
facility and authoring system (the "Facility") is hereby
amended in the following respects:
Notwithstanding anything to the contrary contained
in the Letter Agreement, AIM and Capitol hereby agree as
follows:
1. (a) Subject to AIM's continuing Security Interest,
AIM's interest in the Facility is terminated, effective upon
execution of this amendment on the terms set forth below.
(b) AIM shall have no further obligation to share
in the cost of purchasing any additional tools pursuant to
paragraph 2 of the Letter Agreement, to furnish any additional
Emulation Components pursuant to paragraph 9 of the Letter
Agreement or to share in any way in any additional costs,
expenses, liabilities or obligations of any kind or nature
heretofore or hereafter arising in connection with the
Facility, and Capitol shall protect, defend, indemnify and
hold AIM harmless from and against any such costs, expenses,
liabilities and/or obligations.
(c) AIM shall have no further right to share in net
receipts derived from use of the Facility pursuant to
paragraph 7(a) of the Letter Agreement or to receive
accountings pursuant to paragraph 7(b) of the Letter
Agreement. Nor shall AIM have the right to participate in
<PAGE>
<PAGE> 2
the establishment of any additional facility with Capitol
pursuant to paragraph 7(c) of the Letter Agreement.
2. In consideration of AIM's termination of its
interest in the Facility pursuant to paragraph 1 above,
Capitol agrees to pay AIM the sum of Two Hundred Seventy Five
Thousand Dollars ($275,000), payable as follows:
(a) Seventy Five Thousand Dollars ($75,000) shall
be paid upon execution hereof; and
(b) The remaining balance of Two Hundred Thousand
Dollars ($200,000) shall be paid in monthly installments over
a period of sixty (60) months with interest accruing on the
unpaid balance at the rate of Eight Percent (8%) per annum.
Concurrently with the execution of this amendment, Capitol
shall execute a promissory note in the form of Exhibit "A"
attached hereto and incorporated herein by reference (the
"Note"), which sets forth in greater detail the terms upon
which such sum shall be paid.
3. The Security Interest granted to AIM and all of
AIM's rights in connection therewith pursuant to paragraph 10
of the Letter Agreement shall continue in full force and
effect. However, the Security Period will end upon the later
of Capitol's payment to AIM of all sums due to AIM under the
Note or completion of all of the CD-I programs currently being
developed or produced with the involvement of AIM at the
Facility, which are as follows: "Treasures of the
Smithsonian", "Children's Musical Theater", "Rand McNally
Atlas", "Windows on the World", "Sesame St. Numbers", "Sesame
St. Letters" and "Time-Life Photography" (collectively, the
"Current Programs"). The Security Interest shall be security
for (i) the performance by Capitol of its obligations to AIM
under the Note and the Letter Agreement as modified by this
amendment, and (ii) Capitol's agreement that AIM will have
full right to utilize and have access to the Facility in
accordance with the Letter Agreement, as modified by this
amendment. It is the intent of the parties that the Security
Interest shall be a continuing security interest with full
effect and priority from the date it was originally granted to
AIM.
4. AIM shall continue to have first priority use of the
Facility for the Current Programs pursuant to paragraph 5 of
the Letter Agreement, but not for any future CD-I programs
developed with the involvement of AIM. AIM's right of
priority shall apply to both the personnel and the equipment
at the Facility location.
<PAGE>
<PAGE> 3
5. The "rate card" for the Current Programs shall be
revised as of the Effective Date of this amendment to exclude
any charge for the use of the prototype and MRS systems.
Moreover, AIM will not be charged at all for the use of any
software tools developed at AIM's expense in the course of
work done on CD-I programs, and AIM will be charged in
accordance with the reduced rate card, which is attached
hereto as Exhibit "B" and incorporated herein by reference,
for the balance of production and any subsequent testing
and/or revision of the Current Programs.
6. Capitol shall have the right to bid on any future
CD-I production undertaken by AIM in the Washington, D.C. area
on the same basis accorded by AIM to the owners of other
comparable facilities.
7. AIM's entitlement to warrants to purchase Two
Hundred Thousand (200,000) shares of Capitol's common stock
pursuant to the Letter Agreement and paragraph 1(a) of the
Warrant Purchase Agreement is hereby modified as follows:
(a) The number of shares which AIM is entitled to
purchase pursuant to the Initial Warrant (as defined in the
Warrant Purchase Agreement) is hereby reduced from Two Hundred
Thousand (200,000) to Seventy-Five Thousand (75,000).
(b) A new subparagraph 1(b)(iii) is hereby added to
the Warrant Purchase Agreement as follows:
"An Additional Warrant to purchase an
additional Twelve Thousand Five Hundred
(12,500) shares of Common Stock at an initial
purchase price of $2.00 per share for each
additional CD-I program (up to a maximum of ten
additional CD-I programs) which AIM elects to
develop or produce at the facility described in
the Facility Agreement and which commence
development or production on or before December
31, 1992, to be issued on the date(s) when AIM
gives written notice that it has elected to use
the facility for the applicable CD-I
program(s). Notwithstanding the foregoing, for
warrants issued in 1992 pursuant to this
subparagraph 1(b)(iii), the initial purchase
price shall be $3.00 per share. Each such
Additional Warrant shall expire unless
exercised on or before September 14, 1993."
<PAGE>
<PAGE> 4
8. Undefined capitalized terms used in this amendment
shall have the same meaning as in the Letter Agreement or the
Warrant Purchase Agreement, as applicable. Except as
expressly modified by this amendment, the Letter Agreement and
the Warrant Purchase Agreement shall remain unchanged and in
full force and effect. The amendment shall not be deemed to
modify any of the terms of the PDA Agreement, which shall
remain unchanged and in full force and effect notwithstanding
anything contained in this amendment.
Please indicate your acceptance of the foregoing by
signing in the place indicated below.
Very truly yours,
AMERICAN INTERACTIVE MEDIA, INC.
("AIM")
By:
Title:
AGREED TO AND ACCEPTED:
CAPITOL VIDEO COMMUNICATIONS, INC.
("Capitol")
By:
Title:
<PAGE> 1
Exhibit 99.3
AMERICAN INTERACTIVE MEDIA, INC.
11111 Santa Monica Boulevard, Suite 700
Los Angeles, CA 90025
Effective Date: 4/1/90
Capitol Video Communications, Inc.
2121 Wisconsin Avenue N.W.
Washington, D.C. 20007
Re: Supplement to Amended Letter Agreement
Gentlemen:
This will confirm that the Letter Agreement dated
September 14, 1988 between American Interactive Media, Inc.
("AIM") and Capitol Video Communications, Inc. ("Capitol")
with respect to the establishment of a compact disc
interactive pre-mastering facility and authorizing system (the
"Facility"), as amended by an amendment having an effective
date of April 1, 1990, is hereby supplemented with respect to
the seven CD-I Programs currently in production at the
Facility -- i.e., "Treasures of the Smithsonian", "Children's
Musical Theater", "Rand McNally Atlas", "Windows on the
World", "Sesame St. Numbers", "Sesame St. Letters" and "Time-
Life Photography" (collectively, the "Current Programs") -- as
follows:
1. During the period from delivery of the Alpha
test version of each Current Program until completion thereof
(the "Test Phase"), Capitol will cause all of the project
specific software engineers working on the applicable Current
Program to remain available on a first priority basis to work
on AIM's Current Programs. "First priority" means that the
project specific software engineers will be available to work
on AIM projects no later than two (2) business days after
notification.
2. During the Test Phase, Capitol will submit to
AIM on a weekly basis written schedules setting forth the
anticipated availability of the project specific software
engineers as far in advance as possible to enable AIM to
determine how to best use their services.
<PAGE>
<PAGE> 2
3. In consideration of Capitol's agreement to keep
the project specific engineers available for AIM's first
priority use during the Test Phase, AIM will pay Capitol a
monthly retainer fee of $8,000 per month per engineer. To the
extent these engineers perform services in connection with a
Current Program in excess of $8,000 a month based on the
Capitol Video rate care (Exhibit B), AIM will be invoiced and
will pay the overage.
In the event the project specific engineer is assigned by
Capitol to another paying customer, AIM will receive a credit
against its retainer up to $8,000, less the actual cost of the
services performed by that engineer in connection with a
Current AIM Program.
Please indicate your acceptance of the foregoing by
signing in the place indicated below.
Very truly yours,
AMERICAN INTERACTIVE MEDIA, INC.
("AIM")
By:
Title:
AGREED TO AND ACCEPTED:
CAPITOL VIDEO COMMUNICATIONS, INC.
("Capitol")
By:
Title:
<PAGE> 1
Exhibit 99.4
ASSIGNMENT AND STOCK TRANSFER AGREEMENT
THIS ASSIGNMENT AND STOCK TRANSFER AGREEMENT is entered
into this 31st day of December, 1991, by and between PHILIPS
INTERACTIVE MEDIA CORP., a Delaware corporation ("PHILIPS"),
One Philips Drive, Knoxville, TN 37914-1810 and CAPITOL
MULTIMEDIA, INC. (formerly CAPITOL VIDEO COMMUNICATIONS, INC.)
("CMI"), a Delaware corporation, 2121 Wisconsin Avenue, N.W.,
Washington, DC 20007.
WHEREAS, the parties hereto executed a certain joint
venture agreement entitled Capitol Disc Interactive Joint
Venture Agreement, effective as of July 10, 1989, and attached
hereto as Exhibit A, and incorporated herein by this reference
("the Joint Venture Agreement");
WHEREAS, the Joint Venture Agreement has governed the
relationship of the parties in their joint effort to create a
business of producing and marketing information systems with
hardware and interactive software in the compact disc
interactive format to institutional and professional users;
WHEREAS, CMI has entered into a certain Letter of Intent
with Noble Investment Co. of Palm Beach (hereinafter the
"Underwriter") dated November 7, 1991, and anticipates
executing a firm Underwriting Agreement sometime in early
1992, to effectuate an initial public offering of its stock,
<PAGE>
<PAGE> 2
the capital of which will be used to expand its CD-I Division
(the "Public Offering");
WHEREAS, in light of the Public Offering the parties
hereto believe the business of the joint venture would be
better served were it part of CMI's CD-I Division rather than
as an independent business and accordingly desire to terminate
the joint venture and recast their relationship;
WHEREAS, in furtherance of that desire, Philips will
transfer, as of December 31, 1991, all of its rights, title
and interest in and to the assets, properties and rights of
every description in the joint venture to CMI;
WHEREAS, in consideration of said transfer, CMI shall
among other things (i) continue the business of the joint
venture as part of CMI's CD-I Division, (ii) assume the
payment and discharge of all liabilities and obligations of
Philips in connection with the joint venture, except as may be
specifically excluded herein, (iii) issue Philips fifteen
percent (15%) of the common stock of CMI as of a certain date
and subject to the provisions set forth herein; and (iv) grant
Philips the right to designate for election one Board member
on the Board of CMI; and
WHEREAS, in consideration of this restructured
relationship Philips further agrees that CMI will continue to
be the primary provider for Philips for CD-I programs in the
institutional and professional market in the United States,
pursuant to the nonexclusive arrangement set forth
<PAGE>
<PAGE> 3
in Sections 2(c) and 2(d) of the Joint Venture Agreement; as
provided in Article 4 of this Agreement
NOW, THEREFORE, in consideration of the foregoing, and of
other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Philips and CMI hereby agree as
follows:
ARTICLE I.
ASSIGNMENT
1.1 As of December 31, 1991, Philips hereby assigns,
transfers, sets over and delivers to CMI, its successors and
assigns, all of its right, title and interest in and to all of
the assets and liabilities of the joint venture as established
by the Joint Venture Agreement excluding the employment
agreement of John Gray, which will remain in effect as
negotiated between Philips and John Gray (hereinafter the
"Property"); and to have and to hold the Property hereby
assigned, transferred, set over and delivered or intended so
to be unto CMI, its successors and assigns forever.
1.2 Philips hereby covenants and agrees with CMI, and
its successors and assigns, to execute, acknowledge and
deliver such further conveyances and instruments or documents
and to do such further acts as may be necessary or appropriate
to assure CMI, and its successors and assigns, all Philips'
right, title and interest in and to the
<PAGE>
<PAGE> 4
Property hereby assigned, transferred, set over and delivered
or intended so to be, to aid and assist CMI in collecting and
reducing to possession any and all of the Property hereby
assigned, transferred, set over and delivered or intended so
to be, or in connection with the settlement of any obligations
or liabilities to Philips.
1.3 Philips hereby assigns to CMI all rights, powers and
privileges of Philips in and to all the covenants and
warranties by others heretofore given or made in respect of
any and all of the Property and substitutes CMI in its name,
place and stead.
1.4 Philips hereby constitutes and appoints CMI its true
and lawful attorney, with full power of substitution, for it
and in its name and stead, but on behalf of and for the
benefit of CMI:
1.4.1 to demand, receive and collect from time to
time any and all monies, credits, claims or rights due or to
become due relating to the Property hereby assigned,
transferred, set over and delivered or intended so to be, by
this Agreement or by any other instruments of conveyance or
assignment from Philips to CMI, and to give receipts and
releases for and in respect of the same or any part thereof;
1.4.2 to collect, for the account of CMI, all
receivables and other items of Philips transferred to CMI as
provided herein and to endorse in the name of Philips or in
<PAGE>
<PAGE> 5
the name of CMI any checks received on account of any such
receivables or other items;
1.4.3 [Intentionally omitted]
1.4.4 to collect, assert, protect and enforce any
claim, right, title, debt, account or interest of any kind in
or to any of the Property and to defend, compromise, settle
and release any and all claims, actions, suits or proceedings
in relation thereto; and
1.4.5 to do all such further and other acts and
things in relation to the Property as CMI shall deem
desirable.
1.4.6 Philips hereby declares that the appointment
made and the powers granted by this paragraph are coupled with
an interest and are and shall be irrevocable by Philips and
shall extend to CMI's successors and assigns. Philips will
transfer and deliver to CMI any cash or other property that
Philips may receive in respect of any items transferred to CMI
as provided herein.
1.5 CMI accepts the assignments and transfers set forth
herein and in consideration thereof, assumes and agrees to
pay, perform and discharge all the liabilities and obligations
of Philips in connection with the Joint Venture of every kind
and description, whatsoever, except as may be excluded herein,
whether fixed or contingent, known or unknown, including the
satisfaction of any judgment, order
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<PAGE> 6
or decree which may be entered against Philips in any pending
suit.
1.6 CMI agrees that (a) Article 2 of the Uniform
Commercial Code as in effect in the applicable jurisdiction
will not apply to any goods transferred and waives any rights
thereunder, except for those rights with respect to which such
waiver is expressly prohibited; (b) to accept such assets,
property and rights in an "as is" condition, and that no
representations or warranties shall have been made by Philips
of such assets, property, or rights as to title to, or to the
physical condition, fitness for a particular use,
merchantability, or state of repair of the assets, property or
rights conveyed; and (c) to be bound by all covenants, terms,
conditions, or provisions pertaining to the assets, property,
and rights stated herein.
ARTICLE II.
STOCK TRANSFER
2.1 CMI shall issue and deliver to Philips, within a
reasonable time after the Public Offering, anticipated to
commence and be completed sometime in the first quarter of
1992 by the Underwriter, a stock certificate representing that
numerical amount of common stock in CMI necessary to give
Philips a fifteen percent (15%) interest in the common stock
of CMI at the conclusion of the Public Offering. Philips' 15%
interest will be calculated after taking into
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<PAGE> 7
account the common stock (but not the warrants) sold in the
public offering but can be diluted, pro rata, with all
existing CMI shareholders by the following events:
(a) exercise of outstanding warrants held by Philips'
sister corporation, Philips Interactive Media of America,
Corp. ("PIMA");
(b) exercise of outstanding warrants held by existing
shareholders prior to the Public Offering;
(c) exercise of warrants offered in the Public Offering;
(d) exercise of Warrants given to Underwriter as
compensation for Public Offering;
(e) exercise of over-allotment option given to
Underwriter as part of Public Offering;
(f) any future stock or warrants sold, transferred,
or allocated as part of an employee stock option plan in CMI
or pursuant to an employment agreement with CMI; and
(g) any future stock or warrants sold or otherwise
transferred in CMI that will increase the number of shares
issued and outstanding.
2.2 Philips' assignment of its interest in the
joint venture to CMI shall be subject to the condition
subsequent of CMI's delivery of its stock as set forth in 2.1.
2.3 The transfer of the stock from CMI to Philips
pursuant to this Agreement will vest good and valid title to
said stock to Philips, as of December 31, 1991, free and
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<PAGE> 8
clear of all liens, encumbrances, restrictions and claims of
any kind and nature except (i) such as may be imposed under
Delaware corporate law, (ii) such as may be imposed under the
Securities Act of 1933 with specific reference to Rule 144,
and (iii) such as is imposed by the Underwriter as part of the
Public Offering which restriction will preclude Philips from
selling its stock in the public market for a period of twelve
months from the effective date of the Public Offering.
Philips' signature below shall serve as evidence that it
agrees to be bound by said restrictions and further agrees
that its stock shall have a legend thereon evidencing said
restrictions.
2.4 CMI shall also pay to Philips an amount equal
to fifty percent of the amount of money listed as an accounts
payable to Philips as stated in the Joint Venture's Balance
Sheet as of December 31, 1991. CMI shall pay said principal
amount in nine equal monthly installments plus interest
beginning April 1, 1992 and ending December 1, 1992. Said
obligation shall bear interest at prime which prime rate shall
be the prime rate at large U.S. money center commercial banks
as listed in the Wall Street Journal in the column entitled
"Money Rates."
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<PAGE> 9
ARTICLE III.
BOARD MEMBERS
3.1 Each year Philips shall have the right to
nominate for election one Board member to CMI's Board
representing Philips' Interest in CMI. As of December 31,
1991, Bernard S. Luskin, President of PIMA, shall fill the
Board seat allocated to Philips and approved by the current
shareholders of CMI at CMI's annual shareholder meeting of
December 3, 1991.
3.2 From the effective date of the Public Offering
for a period of five years, Philips agrees to vote its shares
in favor of the Underwriter's nomination for election of one
Board Member to CMI's Board representing the Underwriter's
interest.
ARTICLE IV.
JOINT VENTURE AGREEMENT
4.1 As of December 31, 1991, the Joint Venture
Agreement shall terminate, except that the agreement that CMI
shall be the primary provider for Philips* of CD-I programs in
the institutional and professional markets in the United
States set forth in Sections 2(c) and 2(d) of the Joint
Venture Agreement shall remain in force, and the Joint
* which shall for the purposes of this Article 4 be
defined as the Professional Interactive Media
Systems Department of Philips Consumer Electronics
Company.
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<PAGE> 10
Venture Agreement shall survive this Agreement and the
delivery of stock contemplated herein to the extent necessary
to define CMI's role as primary provider.
ARTICLE V.
MISCELLANEOUS
5.1 Number and Gender. The terms and words used in
this Agreement, regardless of the number and gender in which
they are used, shall be deemed and construed to include any
other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context or sense of this
Agreement or any paragraph or clause herein may require, the
same as if such words had been fully and properly written in
the number and gender.
5.2 Severability. This Agreement is intended to be
performed in accordance with, and only to the extent permitted
by, all applicable laws, ordinances, rules and regulations of
the jurisdiction in which the Corporation is organized or
qualified to do business. If any provision of this Agreement,
or the application thereof to any person or circumstance shall
fail for any reason and to any extent, be invalid or
unenforceable, the remainder of this Agreement and the
application of such provision to other persons or
circumstances shall not be affected thereby, but rather shall
be enforced to the greatest extent permitted by law.
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5.3 Captions. Any paragraph title or captions
contained in this Agreement are for convenience only and shall
not be deemed part of the context of this Agreement.
5.4 Counterparts. This Agreement may be executed
in any number of counterparts, each of which, but all of which
together, shall constitute only one Agreement.
5.5 Waiver. Failure of either party to complain of
any act or omission on the part of the other party, no matter
how long the same may continue, shall not be deemed to be a
waiver by such party of any of its rights hereunder. No
waiver by any party at any time, express or implied, of any
breach of any provision of this Agreement shall be deemed a
waiver of breach of any other provision of this Agreement or a
consent to any subsequent breach of the same or any other
provision hereunder. If any act or omission by any party
shall require the consent or approval of another party, such
consent or approval of such act or omission on any one
occasion shall not be deemed a consent to or approval of said
act or omission on any subsequent occasion or consent to or
approval of any other act or omission on the same or any
subsequent occasion.
5.6 Assignment and Binding Effect. Philips shall
have the right to assign the CMI stock it receives pursuant to
this Agreement to PIMA without CMI's consent, provided PIMA
agrees to be bound by the terms and conditions of this
Agreement. Philips shall not assign its obligation to honor
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<PAGE> 12
CMI as its primary provider as set forth in Article IV without
CMI's prior consent.
5.7 Entire Agreement. This Agreement and the
Exhibit attached hereto embody the entire agreement among the
parties in connection with the transaction embodied herein and
supersedes all prior agreements, understandings and
communications of any nature whatsoever except as may be set
forth in Article IV herein, and there are no oral or parole
agreements existing between the parties relating to this
transaction which are not expressly set forth herein and
covered hereby. This Agreement may not be modified, except in
writing signed by all parties.
IN WITNESS WHEREOF, the parties hereto have caused
this Assignment and Stock Transfer Agreement to be duly
executed as of the day and year first above written.
ATTEST PHILIPS INTERACTIVE
MEDIA CORP.
__________________________ By:________________________
ATTEST CAPITOL MULTIMEDIA, INC.,
(formerly Capitol Video
Communications, Inc.)
By:________________________
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<PAGE> 13
_________________________ By:________________________
:
:
:
BEFORE ME, the undersigned authority, a Notary
Public, on this day personally appeared Gerald S. Calabrese,
known to me to be the person whose name is subscribed to the
foregoing instrument, and known to me to be the Vice President
for Philips Interactive Media Corp., a Delaware corporation,
and acknowledged to me that he executed the same for the
purposes and consideration therein expressed and in the
capacity therein set forth.
GIVEN UNDER MY HAND AND SEAL of office, this 16th
day of January, 1991.
______________________________
NOTARY PUBLIC
My Commission expires: My commission expires May 23, 1994
WASHINGTON :
:
DISTRICT OF COLUMBIA :
BEFORE ME, the undersigned authority, a Notary
Public, on this day personally appeared Robert Bogin, known to
me to be the person whose name is subscribed to the foregoing
instrument, and known to me to be the President for Capitol
Multimedia, Inc. (formerly Capitol Video Communications,
Inc.), a Delaware corporation, and acknowledged to me that he
executed the same for the purposes and consideration therein
expressed and in the capacity therein set forth.
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<PAGE> 14
GIVEN UNDER MY HAND AND SEAL of office, this 17th
day of January, 1992.
______________________________
NOTARY PUBLIC
My Commission expires: 4-30-94
<PAGE> 1
Exhibit 99.5
March 30, 1992
MODIFICATION TO WARRANT PURCHASE AGREEMENT
WHEREAS, Philips Interactive Media of America (PIMA) (formerly
American Interactive Media) and Capitol Multimedia, Inc.
(Capitol) (formerly Capitol Video Communications, Inc.)
entered into a Warrant Purchase Agreement dated September 14,
1988;
WHEREAS, such Warrant Purchase Agreement was modified by
Paragraph 7 of the Amendment to Letter Agreement dated
April 1, 1990;
WHEREAS, implementation of the Warrant Purchase Agreement will
have unexpected and detrimental consequences to Capitol and to
PIMA;
THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, PIMA and Capitol agree to modify
the Warrant Purchase Agreement as follows:
1. As of March 30, 1992, Paragraph 7 of the Purchase Warrant
Agreement shall be deleted.
2. As of March 30, 1992, Capitol agrees that as long as PIMA
has warrants outstanding, Capitol will not issue any
stock, warrants, options or securities convertible into
any of the foregoing below the then fair market value of
such securities and/or which provide for the issuance of
stock upon exercise or conversion for a price below the
then fair market value of the stock. In the event of
such an occurrence, PIMA will be afforded the same anti-
dilution protection as has been provided the Series A
Warrant Holders.
3. In addition to the 108,919 outstanding warrants PIMA
already holds at an exercise price of $3.21 expiring in
February 1994, Capitol will issue as of April 1, 1992 to
PIMA an additional 51,169 warrants at an exercise price
of $3.59 expiring in February 1994 and 125,000 warrants
at an exercise price of $6.25 expiring February 1996.
The warrants issued to PIMA by Capitol as of April 1,
1992 and the shares issuable pursuant to those warrants
will together constitute an additional class of
Registrable Securities
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<PAGE> 2
under the Warrant Purchase Agreement and, in addition to
any other rights PIMA may have to cause the registration
of Registrable Securities under the Warrant Purchase
Agreement, PIMA shall also have the right, on the same
terms and conditions contained in the Warrant Purchase
Agreement to cause the Company to register this
additional class of Registrable Securities upon the
request of the Holders of 50% or more of such additional
class of Registrable Securities.
4. Except as expressly modified by this agreement, the
Warrant Purchase Agreement as previously modified shall
remain unchanged and in full force and effect and is
hereby ratified and confirmed.
Agreed:
By: ______________________ By: _______________________
Title: ___________________ Title: ____________________
