<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
-------------
(Amendment No. ____)
CST ENTERTAINMENT, INC.
- --------------------------------------------------------------------------
(Name of Issuer)
Common Stock 12639V-10-5
par value $.15 per share
- ----------------------------------- -----------------------------------
(Title of class of securities) (CUSIP number)
John G. Murray
M&A Investments, Inc.
1220 Senlac Drive, Carrollton, Texas 75006
- --------------------------------------------------------------------------
(Name, address and telephone number of person authorized to receive
notices and communications)
July 19, 1995
- --------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the 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 the 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: When filing this statement in paper format, six copies of this
statement, including exhibits, should be filed with the Commission. See
Rule 13d-1(a) for other parties to whom copies are to be sent.
(Continued on following page(s))
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CUSIP No. 12639V-10-5 13D
1 NAME OF REPORTING PERSON: M&A Investments, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. 75-2521295
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF Delaware
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 1,519,230
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 1,519,230
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE -0-
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 1,519,230
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.47%
14 TYPE OF REPORTING PERSON: CO
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Item 1. Security and Issuer.
-------------------
This Statement on Schedule 13D (the "Statement") relates to
the common stock, par value $.15 per share (the "Common Stock"), of
CST Entertainment, Inc., a Delaware corporation (the "Issuer"). The
principal executive offices of the Issuer are located at 5901 Green
Valley Circle, Suite 400, Culver City, California.
Item 2. Identity and Background.
-----------------------
(a) This Statement is filed by M&A Investments, Inc., a
Delaware corporation (the "Company").
(b) The business address of the Company is 1220 Senlac
Drive, Carrollton, Texas 75006.
(c) The Company is a wholly-owned subsidiary of FoxMeyer
Health Corporation, a Delaware corporation ("FHC"). The business
address of FHC is 1220 Senlac Drive, Carrollton, Texas 75006. The
Company was formed by FHC as a vehicle through which to make various
investments. FHC is principally involved in (i) health care services,
including the distribution of a full line of pharmaceutical products
and health and beauty aids to independent drugstores, hospitals,
alternate care facilities and chain stores, as well as providing
managed care and information-based services to health care sponsors,
pharmacies and physicians, through its wholly-owned subsidiary,
FoxMeyer Corporation, and (ii) the franchising of general variety
stores and the franchising and operation of crafts stores, together
with the wholesale distribution of products to such stores, through
its 67.7%-owned subsidiary, Ben Franklin Retail Stores, Inc.
Attached as Schedule I and incorporated by reference is a list of the
----------
directors and executive officers of the Company and FHC, and the
business address and principal occupation or employment of such
officers.
(d) and (e) During the last five years, neither the Company
nor, to the best of the Company's knowledge, any of the persons with
respect to whom information is given in response to this Item 2, has
been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or has been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is 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.
(f) All of the individuals listed on Schedule I are
----------
citizens of the United States.
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Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
On July 19, 1995, the Company loaned $500,000 to the Issuer,
CST Featurizations, Inc. and CST Computoons, Inc. and received (i) a
Promissory Note in the original principal amount of $500,000 (the
"Note") and (ii) a Warrant to purchase 750,000 of Common Stock (the
"Warrant"). The source of the funds loaned by the Company to the
Issuer was general corporate funds.
Item 4. Purpose of Transaction.
----------------------
The Company acquired the Note and Warrant for investment
purposes and intends to review its investment in the Issuer on a
continuing basis.
Except as stated above, the Company has not formulated any
plans or proposals of the type referred to in clauses (a) through (j)
of Item 4 of Schedule 13D, although the Company reserves the right to
formulate such plans or proposals in the future.
Item 5. Interest in Securities of the Issuer.
------------------------------------
(a) The Note is convertible, at the option of the Company,
into Common Stock at any time prior to acceptance by the Company of
any payment or prepayment of the Note, at the rate of $.65 per share.
The Warrant may be exercised by the Company at any time before July
19, 2002, to purchase 750,000 shares of Common Stock at the purchase
price of $.65 per share. The conversion rate under the Note and the
purchase price under the Warrant shall each be reduced to $.50 per
share if the Note is not repaid in full or converted prior to or on
November 1, 1995.
According to the Issuer's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995 the Issuer had 26,229,624 shares of
Common Stock outstanding as of March 31, 1995. As of the date hereof,
the Company has beneficial ownership, pursuant to Rule 13d-3, of
1,519,230 shares of Common Stock, 769,230 shares of which would be
issuable upon conversion of the principal amount of the Note and
750,000 of which would be issuable upon exercise of the Warrant,
which represents approximately 5.47% of the Common Stock that would
be outstanding upon such conversion and exercise.
FHC, by virtue of its ownership of the Company, may be
deemed, for purposes of determining beneficial ownership pursuant to
Rule 13d-3, to have beneficial ownership of the shares of Common Stock
beneficially owned by the Company. The persons listed in the footnote
to Schedule I attached hereto, by virtue of their direct or indirect
control of the Company and FHC, may be deemed, for purposes of
determining beneficial ownership
NYFS05...:\35\64935\0001\6678\SCH7255X.370
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pursuant to Rule 13d-3, to have beneficial ownership of the shares of
Common Stock beneficially owned by the Company.
(b) Except as set forth in (a) above, the Company has sole
power to dispose or to direct the disposition and to vote or direct
the voting of the Common Stock issuable upon conversion of the Note and
exercise of the Warrant.
(c) The Company has not effected any transactions in the
Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
--------------------------------------------------------
with Respect to Securities of the Issuer.
----------------------------------------
Not applicable.
Item 7. Materials to be Filed as Exhibits.
---------------------------------
Exhibit 1 Promissory Note dated July 19, 1995 in the
original principal amount of $500,000,
executed by the Issuer, CST Featurizations,
Inc. and CST Computoons, Inc. as makers and
payable to the Company.
Exhibit 2 Letter Agreement dated July 19, 1995 between
the Company, the Issuer, CST Featurizations,
Inc. and CST Computoons, Inc.
Exhibit 3 Warrant dated July 19, 1995 executed by the
Issuer in favor of the Company.
<PAGE>
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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.
DATE: July 28, 1995
SIGNED: M&A INVESTMENTS, INC.
By: /s/ John G. Murray
-------------------------
John G. Murray
Assistant Treasurer
<PAGE>
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF M&A INVESTMENTS, INC.
The following information is provided for the directors and
executive officers of M&A Investments, Inc. (the "Company") listed
below: (a) name; (b) business address; (c) present principal
occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment is
conducted.
(a) Abbey J. Butler, Director of the Company
(b) 1220 Senlac Drive, Carrollton, Texas 75006 (the "FHC
Address")
(c) Co-Chairman of the Board of Directors and Co-Chief
Executive Officer of FoxMeyer Health Corporation
("FHC") and FoxMeyer Corporation ("FoxMeyer"); FHC
Address
(a) Melvyn J. Estrin, Director of the Company
(b) FHC Address
(c) Co-Chairman of the Board of Directors and Co-Chief
Executive Officer of FHC and FoxMeyer; FHC Address
(a) Thomas L. Anderson, Director and President of the
Company
(b) FHC Address
(c) President and Chief Operating Officer of FHC and
FoxMeyer; FHC Address
(a) Peter B. McKee, Senior Vice President and Chief
Financial Officer of the Company
(b) FHC Address
(c) Senior Vice President and Chief Financial Officer of
FHC and FoxMeyer; FHC Address
(a) Kevin J. Rogan, Senior Vice President and Secretary of
the Company
(b) FHC Address
(c) Senior Vice President, General Counsel and Secretary of
FHC and FoxMeyer; FHC Address
<PAGE>
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
OF FOXMEYER HEALTH CORPORATION
The following information is provided for the directors and
executive officers of FoxMeyer Health Corporation ("FHC") listed
below: (a) name; (b) business address; (c) present principal
occupation or employment and the name, principal business and the
address of any corporation or other organization in which such
employment is conducted.
* (a) Abbey J. Butler, Director, Co-Chairman of the Board of
Directors and Co-Chief Executive Officer of FHC
(b) FHC Address
(c) Co-Chairman of the Board of Directors and Co-Chief
Executive Officer of and FoxMeyer Corporation
("FoxMeyer"); FHC Address
* (a) Melvyn J. Estrin, Director, Co-Chairman of the Board of
Directors and Co-Chief Executive Officer of FHC
(b) FHC Address
(c) Co-Chairman of the Board of Directors and Co-Chief
Executive Officer of FHC and FoxMeyer; FHC Address
(a) Sheldon W. Fantle, Director of FHC
(b) FHC Address
(c) Chairman and Chief Executive Officer of Fantle
Enterprises, Inc., a venture capital, consulting and
public relations firm; Bethesda Metro Center, Suite
820, Bethesda, Maryland 20814
(a) Paul M. Finfer, Director of FHC
(b) FHC Address
(c) President and Chief Executive Officer of Franklin
Acceptance Corporation, a consumer finance company;
6401 Golden Triangle Drive, Greenville, Maryland 20770
(a) Alfred H. Kingon, Director of FHC
(b) FHC Address
(c) Principal of Kingon International, Inc., an
international investment and consulting firm; 301
Madison Avenue, 23rd Floor, New York, New York 10022
(a) William G. Tull, Director of FHC
(b) FHC Address
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<PAGE>
(c) Financial Consultant; 11311 South Glen Road, Potomac,
Maryland 20854
(a) Thomas L. Anderson, Director, President and Chief
Operating Officer of FHC
(b) FHC Address
(c) President and Chief Operating Officer of FHC and
FoxMeyer; FHC Address
(a) Peter B. McKee, Senior Vice President and Chief
Financial Officer of FHC
(b) FHC Address
(c) Senior Vice President and Chief Financial Officer of
FHC and FoxMeyer; FHC Address
(a) Kevin J. Rogan, Senior Vice President, General Counsel
and Secretary of FHC
(b) FHC Address
(c) Senior Vice President, General Counsel and Secretary of
FHC and FoxMeyer; FHC Address
(a) Edward L. Massman, Vice President and Controller of FHC
(b) FHC Address
(c) Vice President and Controller of FHC and FoxMeyer; FHC
Address
-------------------------
* The Centaur Group holds an aggregate of 3,777,000 (which equals
approximately 21.6% as of June 1, 1995) of the outstanding shares
of common stock of FHC and may be deemed to control FHC. The
Centaur Group is comprised of Messrs. Butler and Estrin, Centaur
Partners IV, a New York general partnership ("Centaur IV"),
Estrin Equities Limited Partnership, a Maryland limited
partnership ("Estrin Equities"), and Butler Equities II, L.P., a
Delaware limited partnership ("Butler Equities"). The general
partners of Centaur IV are Estrin Equities and Butler Equities.
The general partners of Estrin Equities are HSG Acquisition Co.
and MJE, Inc. HSG Acquisition Co. is a Delaware corporation, the
outstanding capital stock of which is owned by Human Service
Group, Inc., a Delaware corporation, and Mr. Estrin owns 69.8% of
the outstanding capital stock of Human Service Group, Inc. MJE,
Inc. is a Virginia corporation controlled by Mr. Estrin.
<PAGE>
<PAGE>
The sole general partner of Butler Equities is AB Acquisition
Corp., a Delaware corporation, and Mr. Butler owns all of the
outstanding capital stock of AB Acquisition Corp.
Estrin Equities has designated Mr. Estrin and Butler Equities has
designated Mr. Butler to act as a "Coordinating Person" pursuant
to the Centaur IV partnership agreement. Messrs. Estrin and
Butler, acting together, manage the affairs of Centaur IV and
have the authority to make all decisions concerning Centaur IV's
interest in FHC Common Stock.
The address of Centaur IV and Butler Equities is c/o CB
Equities Corporation, 207 Dune Road, Box 137, Westhampton
Beach, New York 11978; the address of Estrin Equities is
7200 Wisconsin Avenue, Suite 600, Bethesda, Maryland 20814.
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT
------- -------
Exhibit 1 Promissory Note dated July 19, 1995 in the
original principal amount of $500,000,
executed by the Issuer, CST Featurizations,
Inc. and CST Computoons, Inc. as makers and
payable to the Company.
Exhibit 2 Letter Agreement dated July 19, 1995 between
the Company, the Issuer, CST Featurizations,
Inc. and CST Computoons, Inc.
Exhibit 3 Warrant dated July 19, 1995 executed by the
Issuer in favor of the Company.
<PAGE>
EXHIBIT 1
PROMISSORY NOTE
---------------
$500,000
--------
FOR VALUE RECEIVED, CST Entertainment, Inc., CST Featurizations,
Inc. and CST Computoons, Inc. (collectively, "Makers"), hereby
promise to pay to the order of M & A Investments, Inc., a
Delaware corporation ("M&A"), at 1220 Senlac Drive, Carrollton,
Texas 75006, or at such other address as the holder hereof
advises in writing from time to time, the principal sum of
$500,000 together with interest thereon, as hereinafter
described.
The principal of this Note from day to day unpaid shall bear
interest at a rate of twelve and one-half percent (12.5%) per
annum and such interest shall be computed on the basis of a year
of 365 or 366 days, as the case may be, and on actual days
elapsed.
The principal of this Note and all accrued interest shall be
due and payable on November 1, 1995. Any payments of principal and
interest due hereunder which are not paid when due, and other
amounts which may be owed by Makers hereunder, including without
limitation attorneys' fees and expenses, shall bear interest at
the lesser of (a) the highest lawful rate or (b) the rate of
eighteen percent (18%) per annum. The provisions of this
paragraph shall not be construed as waiving the right of the
holder hereof to punctual payment of principal or interest, or
any part thereof, when due hereunder.
Subject to M&A's right to convert this note, Makers may
prepay all or any part of the principal or accrued interest at
any time and from time to time, without premium or penalty. All
partial prepayments shall be applied first to accrued and unpaid
interest and then to principal.
The holder hereof may declare the entire unpaid principal of
and accrued interest on this Note immediately due and payable,
without notice, demand, or presentment, foreclose any liens or
security interests securing all or any part hereof, offset
against this Note any sum or sums owed by the holder hereof to
Makers, or exercise any other right or remedy to which the holder
hereof may be entitled by agreement, at law, or in equity, if
(a) Makers fail or refuse to pay any part of the principal or
accrued interest when due, (b) a default should occur under this
Note or under any agreement, document, or instrument securing or
assuring payment of any part hereof or executed in connection
herewith, or (c) any of the Makers shall become insolvent, fail
to pay Maker's debts generally as they become due, or voluntarily
or involuntarily be made the subject of any proceeding provided
for by any bankruptcy or similar debtor relief laws. Each right
and remedy available to the holder hereof shall be cumulative of
and in addition to each other such right and remedy. No delay on
the part of the holder hereof in the exercise of any right or
remedy available to the holder hereof shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
right or remedy preclude other or further exercise thereof or
exercise of any other such right or remedy.
If this Note is placed in the hands of an attorney for
collection, or if it is collected through any legal proceedings,
Makers agree to pay all court costs, reasonable attorneys' fees,
and other costs of collection of the holder hereof.
<PAGE>
<PAGE>
Any provision herein, or in any document or agreement
securing this Note or in any other document executed in
connection herewith, or in any other agreement or commitment,
whether written or oral, express or implied, to the contrary
notwithstanding, no holder hereof shall in any event be entitled
to receive or collect, nor shall or may amounts received
hereunder be credited so that any holder hereof shall be paid as
interest a sum greater than the maximum amount permitted by
applicable law to be charged to the person, firm, or corporation
primarily obligated to pay this Note at the time in question. If
any construction of this Note, any document or agreement securing
this Note, or in any and all other papers, agreements, or
commitments indicates a different right given to holder hereof to
ask for, demand, or receive any larger sum as interest, such is a
mistake in calculation or wording which this clause shall
override and control, it being the intention of the parties that
this Note and all other instruments securing the payment of this
Note shall in all things comply with applicable law, and proper
adjustment shall automatically be made accordingly. In the event
any holder hereof ever receives, collects, or applies as interest
any sum in excess of the maximum legal rate, such excess amount
shall be applied to the reduction of the unpaid principal balance
of this Note in the inverse order of maturity, and if this Note
is paid in full, any remaining excess shall be paid to Makers.
In determining whether or not the interest paid or payable under
any specific contingency exceeds the highest lawful rate, Makers
and holder hereof shall, to the maximum extent permitted under
applicable law, (a) characterize any nonprincipal payment as an
expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) "spread"
the total amount of interest throughout the entire term of this
Note so that the interest rate is uniform throughout the entire
term of this Note; provided that, if this Note is paid and
performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of
existence hereof exceeds the maximum lawful rate, the holder
hereof shall refund to Makers the amount of such excess or credit
the amount against the principal balance of this Note at the time
in question.
Each of the Makers and any endorser, surety and guarantor
hereby waives demand for payment, presentment for payment, notice
of nonpayment, protest, notice of protest, notice of dishonor,
notice of intention to accelerate maturity, notice of
acceleration of maturity, notice of intent to foreclose on any
collateral securing this Note, and all other notices as to this
Note and diligence in collection as to each and every payment due
hereunder, and agrees that without any notice the holder hereof
may take additional security herefor or may release any or all
security herefor, or alone, or together with any present or
future owner or owners of any property covered by any instrument
or agreement given to secure this Note, may from time to time
extend, renew or otherwise modify the date or dates or amount or
amounts of payment above recited, or the holder hereof may from
time to time release any part or parts of the property and
interests securing this Note, with or without consideration, and
that in any such case, each of the Makers and any endorser,
surety and guarantor shall continue to be bound hereby and to be
liable to pay the unpaid balance of the indebtedness evidenced
hereby, as so additionally secured, extended, renewed, or
modified, notwithstanding any such release.
All of the obligations contained herein shall be considered
the joint and several obligations of each of the Makers and any
endorser, surety and guarantor hereof.
NYFS05...:\35\64935\0001\6678\NOTE
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<PAGE>
This Note shall be secured by certain collateral more fully
described in a Security Agreement executed by Makers and
delivered to M&A, and is convertible into Common Stock of CST
Entertainment, Inc. pursuant to the Letter Agreement of even date
herewith executed by Makers and M&A.
Makers shall deliver to the holder hereof such financial and
operating statements as may be requested from time to time, and
in such form as is reasonably acceptable to such holder.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA FOR ALL PURPOSES,
EXCLUDING THAT BODY OF LAW RELATING TO CONFLICT OF LAWS.
This Note is executed as of July 19, 1995.
MAKERS: CST ENTERTAINMENT, INC.
5901 Green Valley Circle, Suite 400
Culver City, California 90230
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CST FEATURIZATIONS, INC.
5901 Green Valley Circle, Suite 400
Culver City, California 90230
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CST COMPUTOONS, INC.
5901 Green Valley Circle, Suite 400
Culver City, California 90230
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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EXHIBIT 2
M & A INVESTMENTS, INC.
1220 Senlac Drive
Carrollton, Texas 75006
July 19, 1995
CST Entertainment, Inc.
CST Featurizations, Inc,
CST Computoons, Inc.
5901 Green Valley Circle
Suite 400
Culver City, California 90230
Attn: Mr. Jonathan Shapiro
Re: M & A Investments, Inc./CST Entertainment, Inc.
-----------------------------------------------
Dear Sirs:
In connection with the Promissory Note dated July 19, 1995
in the original principal amount of $500,000 (the "Note"), executed by
CST Entertainment, Inc. ("CST"), CST Featurizations, Inc. and CST
Computoons, Inc. (collectively, Debtors") as makers and payable to M &
A Investments, Inc. ("M&A"), Debtors and M&A hereby agree that:
1. The Note shall be convertible, at the option of M&A,
into Common Stock, par value $.15, of CST at any time prior to
acceptance by M&A of any payment or prepayment of the Note, at the
rate of $.65 per share; provided, however, that the conversion price
shall be reduced to $.50 per share if the Note is not repaid in full
or converted prior to or on November 1, 1995. M&A reserves the right
to waive, in whole or in part, its right to convert the Note.
2. If the Note is converted into Common Stock of CST in
accordance with paragraph 1 of this letter agreement, then the
indebtedness of Debtors to M&A evidenced by the Note shall be reduced
by an amount equal to the conversion price per share (either $.65 or
$.50 per share) times the number of shares of Common Stock so
acquired.
3. Any shares of Common Stock, par value $.15, of CST into
which the Note may be converted shall have the same registration
rights applicable to the Shares as set forth in the Warrant issued by
CST in favor of M&A of even date herewith.
NYFS05...:\35\64935\0001\6678\LETTER
<PAGE>
<PAGE>
CST Entertainment, Inc.
CST Featurizations, Inc,
CST Computoons, Inc.
July 19, 1995
Page 2
4. The proceeds of the Note may be used by Debtors for
general corporate purposes, but not to pay any existing indebtedness
of Debtors.
Very truly yours,
M & A INVESTMENTS, INC.
By:
---------------------------
John G. Murray
Assistant Treasurer
Agreed and accepted:
CST ENTERTAINMENT, INC.
By:
--------------------------------
Jonathan Shapiro
President
CST FEATURIZATIONS, INC.
By:
--------------------------------
Jonathan Shapiro
President
CST COMPUTOONS, INC.
By:
--------------------------------
Jonathan Shapiro
President
<PAGE>
EXHIBIT 3
CST ENTERTAINMENT, INC.
WARRANT TO PURCHASE COMMON STOCK
DATED JULY 19, 1995
WARRANT NO. 367
CST Entertainment, Inc. ("Company") certifies that, for valuable
consideration, receipt of which is hereby acknowledged, the Holder is
entitled to purchase from the Company a number of shares of the
Company's Common Stock set forth in Section 1(h) hereof (the "Shares")
at the purchase price set forth in Section 1(e) hereof.
This Warrant and the Common Stock issuable upon exercise hereof
are subject to the terms and conditions hereinafter set forth:
1. Definitions. As used in this Warrant, the following terms
shall mean:
(a) "Common Stock" - the Common Stock, par value $.15 of
the Company.
(b) "Company" - CST Entertainment, Inc.., a Delaware
corporation.
(c) "Effective Date" - July 19, 1995
(d) "Holder" - M & A Investments, Inc.
(e) "Purchase Price" - $.65 per share, reducible to $.50
per share if the Promissory Note of even date herewith executed
by the Company, CST Featurizations, Inc. and CST Computoons, Inc. as
makers and payable to M & A Investments, Inc., is not repaid in full
or converted by M & A Investments, Inc. prior to or on November 1,
1995.
(f) "Subscription Form" - The form attached to this Warrant
as Exhibit "A"
(g)"Warrant" - This Warrant and any warrants delivered in
substitution or exchange therefor as provided herein.
(h) "Shares" - 750,000 shares of Company Common Stock.
(i) "Expiration Date" - July 19, 2002.
NYFS05...:\35\64935\0001\6678\WARRANT
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<PAGE>
2. Exercise.
(a) Time of Exercise. This Warrant may be exercised in
whole or in part (but not as to a fractional shares) at the office of
the Company, at any time or from time to time, commencing on the
Effective Date, provided, however, that this Warrant shall expire and
be null and void if not exercised in the manner herein provided, by
5:00 p.m., Los Angeles time, on the Expiration Date.
(b) Manner of Exercise. This Warrant is exercisable at
the Purchase Price, payable in cash or by check, payable to the order
of the Company, subject to adjustment as provided in Section 3 hereof.
Upon surrender of this Warrant with the annexed Subscription Form duly
executed, together with payment of the Purchase Price for the Shares
purchased (and any applicable transfer taxes) at the Company's
principal executive offices, the Holder shall be entitled to receive a
certificate or certificates for the Shares so purchased. If this
Warrant shall be exercised in part only, the Company shall, upon
surrender of this Warrant, execute and deliver a new Warrant
evidencing the rights of the Holder to purchase the balance of the
shares purchasable hereunder.
(c) Delivery of Stock Certificates. As soon as
practicable, but not exceeding 30 days, after complete or partial
exercise of this Warrant, the Company, at its expense, shall cause to
be issued in the name of the Holder (or upon payment by the Holder, of
any applicable transfer taxes, the Holder's assigns) a certificate or
certificates for the number of fully paid and non-assessable Shares to
which the Holder shall be entitled upon such exercise, together with
such other stock or securities or property or combination thereof to
which the Holder shall be entitled upon such exercise, determined in
accordance with Section 3 hereof.
(d) Record Date of Transfer of Shares. Irrespective of the
date of issuance and delivery of certificates for any stock or
securities issuable upon the exercise of this Warrant, each person
(including a corporation or partnership) in whose name any such
certificate is to be issued shall for all purposes be deemed to have
become the holder of record of the stock or other securities
represented thereby immediately prior to the close of business on the
date on which a duly executed Subscription Form containing notice of
exercise of this Warrant and payment of the Purchase Price is received
by the Company.
3. Adjustment of Purchase Price.
The Purchase Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares
of its capital stock (other than an issuance of shares of capital
stock to holders of Common Stock who have elected to receive a
dividend in shares in lieu of cash), (ii) subdivide its outstanding
shares of Common Stock, (iii) reduce, consolidate or combine its
outstanding shares of Common Stock into a smaller number of shares, or
(iv) issued by reclassification of its shares of Common Stock any
shares of the Company, the Purchase Price in effect immediately prior
thereto shall be adjusted to that amount determined by
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multiplying the Purchase Price in effect immediately prior to such
date by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding on such date before giving effect
to such division, subdivision, reduction, combination or consolidation
or stock dividend and of which the denominator shall be the number of
shares of Common Stock after giving effect thereto. Such adjustment
shall be made successively whenever any such effective date or record
date shall occur. An adjustment made pursuant to this subsection (a)
shall become effective retroactively, immediately after the record
date in the case of a dividend and shall become effective immediately
after the effective date in the case of a subdivision, reduction,
consolidation, combination or reclassification.
(b) In case the Company shall issue rights or warrants to
all or substantially all holders of its Common Stock entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price per share (the
"Offering Price") less than the Purchase Price at the record date
mentioned below, the Purchase Price shall be determined by dividing
the Purchase Price in effect immediately prior to such issuance by a
fraction of which the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock
outstanding offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding
on the date of issuance of such rights or warrants plus the number of
shares which the aggregate Offering Price of the total number of shares
so offered would purchase at such fair market value. Such adjustment
shall be made whenever such rights or warrants are issued, and shall
become effective retroactively, immediately after the record date for
the determination of shareholder entitled to receive such rights or
warrants.
(c) In case the Company shall distribute to all or
substantially all holders of its Common Stock evidences of its
indebtedness, shares of any class of the Company's stock other than
Common Stock or assets (excluding cash dividends) or rights or
warrants to subscribe (excluding those referred to in subsection (b)
above), then in each such case the Purchase Price shall be determined
by dividing the Purchase Price in effect immediately prior to such
issuance by a fraction, of which the numerator shall be the Purchase
Price on the date of such distribution and of which the denominator
shall be such fair market value per share of the Common Stock, less
the then fair market value (as determined by the board of directors of
the Company, whose determination shall be conclusive, and described in
a statement, which will have the applicable resolutions of the board
of directors attached thereto, filed with the Company) of the portion
of the assets or evidences of indebtedness or shares so distributed or
of such subscription rights or warrants applicable to one share of the
Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective retroactively
immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(d) If the Common Stock issuable upon the conversion of the
Warrant shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise( other than a subdivision or combination
of shares or stock dividend provided for above, or a reorganization,
merger, consolidation or sale of assets
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provided for in this Section 3), then, and in each such event, the
Holder of this Warrant shall have the right thereafter to convert such
Warrant into the kind and amount of shares of Common Stock and other
securities and property receivable upon such reorganization,
reclassification, or other change by the Holders of the number of
shares of Common Stock into which such Warrant might have been
converted, as reasonably determined by the Company's board of
directors, immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(e) If at any time or from time to time there shall be a
capital reorganization of the Common Stock (other than a subdivision,
combination, reclassification or exchange of shares provided for
elsewhere in this Section 3) or a merger or consolidation of the
Company with or into another corporation, or the sale of all or
substantially all of the Company's properties and assets to any other
person, then, as a part of such reorganization, merger, consolidation
or sale, provision shall be made as reasonably determined by the
Company's board of directors so that the Holder of the Warrant shall
thereafter be entitled to receive upon conversion of such Warrant, the
number of shares of stock or other securities or property of the
Company or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock deliverable
upon conversion would have been entitled on such capital
reorganization, merger, consolidation or sale.
(f) In the event the Company issues shares of Common Stock
(except for an issuance for which an adjustment has already been
provided for pursuant to this Section 3) for a price per share less
than the Purchase Price in effect immediately prior to such issuance
("Additional Shares") then the Purchase Price shall be adjusted to a
price determined by multiplying the Purchase Price then in effect by a
fraction (i) the numerator of which shall be the sum (A) the number of
shares of Common Stock outstanding immediately prior to such issuance
or sale (assuming the conversion of all outstanding securities which
are convertible into common stock and the exercise of all outstanding
options and warrants into common stock) and (B) the total
consideration paid for the Additional Shares divided by the Purchase
Price then in effect, and (ii) the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to
such issuance or sale (assuming the conversion of all outstanding
securities which are convertible into common stock and the exercise of
all outstanding options and warrants into common stock).
(g) The adjustments provided for in this Section 3 are
cumulative and shall apply to successive divisions, subdivisions,
reductions, combinations, consolidations, issues, distributions or
other events contemplated herein resulting in any adjustment under the
provisions of this section, provided that, notwithstanding any other
provision of this section, no adjustment of the Purchase Price shall
be required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price then in effect;
provided, however, that any adjustments which by reason of this
subsection (h) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
(h) Notwithstanding Section 3(b) and (c) above, no
adjustment shall be made in the Purchase Price if provision is made
for the Holder of this Warrant to participate in such distribution as
if they had converted all of the principal balance of the Warrant into
shares of common stock at the Purchase Price in effect immediately
prior to such distribution.
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(i) Upon each adjustment of the Purchase Price, the Company
shall give prompt written notice thereof addressed to the registered
Holders at the address of such Holders as shown on the records of the
Company, which notice shall state the Purchase Price resulting from
such adjustment and the increase or decrease, if any, in the number of
shares issuable upon the conversion of such Holder's Warrant, setting
forth in reasonable detail the method of calculation and the facts
upon which such calculation is based.
(j) In the event of any question arising with respect to
the adjustments provided for in this Section 3, such question shall be
conclusively determined by an opinion of independent certified public
accountants appointed by the Company (who may be the auditors of the
Company) and acceptable to the Holder of this Warrant. Such accountants
shall have access to all necessary records of the Company, and such
determination shall be binding upon the Company and the Warrant
Holder.
(k) The Company may in its sole discretion and without any
obligation to do so reduce the Purchase Price then in effect by giving
15 days' written notice to the Holders. The Company may limit such
reduction as to its temporal duration or may impose other conditions
thereto in its sole discretion.
(l) Notwithstanding any language to the contrary contained
herein, the provisions of this Section 3, including all the
subsections hereto, shall not be applicable, triggered, effective or
enforceable with respect to Common Stock issued by the Company
pursuant to either its 1985, 1986, or 1990 Employee Stock Option
Plans, Common Stock issued by the Company to creditors participating
in the Company's Debt Conversion & Restructuring Plan, Common Stock
issued pursuant to options or warrants outstanding as of the Effective
Date, and Common Stock issued by the Company to Holder, all of said
shares being hereby expressly excluded from the provisions of this
Section 3.
4. Restriction on Transfer.
(a) The Holder, by its acceptance hereof, represents,
warrants, covenants and
agrees that (i) the Holder has knowledge of the business and affairs
of the Company, and (ii) this
Warrant and the Shares issuable upon the exercise of this Warrant are
being acquired for investment and not with a view to the distribution
hereof and that absent an effective registration statement under the
Securities Act of 1933 covering the disposition of this Warrant or the
Shares issued or issuable upon exercise of this Warrant, they will not
be sold, transferred, assigned, hypothecated or otherwise disposed of
without first providing the Company with an opinion of counsel (which
may be counsel for the Company) or other evidence, reasonably
acceptable to the Company, to the effect that such sale, requirements
of the Securities Act of 1933 and the registration or qualification
requirements of any applicable state securities laws. The Holder
consents to the making of a notation in the Company's records or
giving to any transfer agent of the Warrant or the Shares an order to
implement such restriction on transferability.
This Warrant shall bear the following legend or a legend of
similar import, provided,
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however, that such legend is no longer necessary to assure compliance
with the Securities Act of 1933, as amended:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, EXCHANGED,
HYPOTHECATED OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
CONDITIONS OF THE AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED.
5. Registration Under the Securities Act of 1933.
(a) The Company shall advise the Holder of Warrants or the
Shares or any then holder of the Warrants or Shares (such persons
being collectively referred to herein as "holders") by written notice
at least thirty (30) days prior to the filing of any registration
statement under the Securities Act of 1933 (the "Act") (other than a
registration statement on Form S-4, Form S-8 or subsequent similar
forms) covering securities of the Company and will upon the request of
any such holder, include in any such registration statement such
information as may be required to permit a public offering of the
Shares; provided, however, that if the registration statement relates
to a public offering by the Company of its securities and the managing
underwriters advise the holder that the inclusion in the offering of
securities being sold by the holder would adversely affect the ability
of the Company to complete the public offering (and other selling
stockholders, if any, are similarly advised), then the holder will
agree to reduce the number of Shares to be registered to a number of
shares which shall be not less than ten percent (10%) of the number of
shares being offered by the Company and the holder will further agree
not to make any sales of the securities so included for a period of
one hundred eighty (180) days from the effective date of such
registration statement. The Company shall keep such registration
statement current for a period of up to nine (9) months from the
conclusion of such one hundred eighty (180) day period; provided,
however, that the Company shall not be required to keep the
registration statement effective beyond the date after which the
registration statement must be amended to include updated audited
financial statements. The Company shall supply prospectuses, qualify
the Warrants and the Shares for sale in such states any such holder
reasonably designates and furnish indemnification in the manner as set
forth in Section 5(b) (ii). Such holders shall furnish information
and provide indemnification as set forth in Section 5(b) (ii).
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(b) The following provisions shall also be applicable:
(i) The Company shall bear the entire cost and expense
of any registration of securities initiated by it under Section 5 of
this Warrant. Any holder whose Shares are included in any such
registration statement pursuant to this Section 5 shall, however, bear
the fees of his own counsel and accountants and any transfer taxes or
underwriting discounts or commissions applicable to the Shares sold by
him pursuant thereto.
(ii) The Company shall indemnify and hold harmless each
such holder and each underwriter, within the meaning of the Act, who
may purchase from or sell for any such holder any Warrants and/or
Shares from and against any and any losses, claims, damages and
liabilities caused by any untrue statement of a material fact
contained in the Registration Statement or any post-effective
amendment thereto or any registration statement under the Act or any
prospectus included therein required to be filed or furnished by
reason of this Section 5 or any application or other filing under any
state securities law caused by any omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading to which such holder or any such
underwriter or any of them may become subject under the Act, the
Securities Exchange Act of 1934, as amended, or other Federal or state
statutory law or regulation, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or
omission based upon information furnished or required to be furnished
to the Company by any such holder or underwriter expressly for use
therein, which indemnification shall include each person, if any, who
controls any such underwriter within the meaning of such act;
provided, however, that any such holder or underwriter shall at the
same time indemnify the Company, its directors, each officer signing
the related registration statement, each person, if any, who controls
from and against any and all losses, claims, damages and liabilities
caused by any untrue statement of a material fact contained in any
registration statement or any prospectus required to be filed or
furnished by reason of this Section 5 or caused by any omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, insofar as
such losses, claims, damages or liabilities are caused by any untrue
statement or omission based upon information furnished to the Company
by any such holder or underwriter expressly for use therein.
(c) The Company's agreements with respect to Warrants or
Shares in this Section 5 shall continue in effect regardless of the
exercise and surrender of this Warrant.
(d) Notwithstanding any contrary provisions of this Section
5 the holder of this Warrant may, at its election, include this
Warrant as well as the Shares issuable upon exercise of this Warrant
in any registration statement filed pursuant to this Section 5;
provided, however, that in the event that both (i) this Warrant shall
be included in any such registration statement and (ii) this Warrant
shall be transferred at a time subsequent to the effective date of
such registration statement at which time the registration statement
is current, then this Warrant shall cease to be exercisable after 5:00
P. M., New York City Time on the thirtieth (30th) day after the date
of such transfer or, if such thirtieth (30th) day shall be a day on
which banking institutions in the State of New York are authorized by
law to close, then on the next succeeding day which shall not be such
a day. In the
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event that any registration statement referred to in the preceding
sentence shall cease to be current during the thirty (30) day period
referred to above, then, notwithstanding the preceding sentence, the
exercisability of this Warrant shall not be affected by the transfer
of this Warrant. Nothing in this Warrant shall be construed in any
manner to require the Company to take steps to create or provide for a
public market for the Warrants.
6. Payment of Taxes. All Shares issued upon the exercise of
this Warrant shall be validly issued, fully paid and non-assessable
and the Company shall pay all taxes and other governmental charges
(other than income tax) that may be imposed in respect of the issue or
delivery thereof. The Company shall not be required, however, to pay
any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Shares in any name other
than that of the Holder surrendered in connection with the purchase of
such Shares, and in such case the Company shall not be required to
issue or deliver any stock certificate until
such tax or other charge has been paid or it has been established to
the Company's satisfaction that no tax or other charge is due.
7. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of issuance upon the exercise
of this Warrant, such number of shares of Common Stock as shall be
issuable upon the exercise hereof. The Company covenants, and agrees
that, upon exercise of this Warrant and payment of the Purchase Price
thereof, all Shares of Common Stock issuable upon such exercise shall
be duly and validly issued, fully paid and non-assessable.
8. Notices to Holder. Nothing contained in this Warrant shall
be construed as conferring upon the Holder hereof the right to vote or
consent or to receive notice as a shareholder in respect of any
meetings of shareholders for the election of directors or any other
matter or as having any rights whatsoever as a shareholder of the
Company. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly
made when delivered or mailed by registered or certified mail, postage
prepaid, return receipt requested:
(a) If to the Holder, to the address of such Holder as
shown on the books of the Company; or
(b) If to the Company, to the principal executive offices
of the Company.
9. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and (in case of loss, theft
or destruction) upon delivery of an indemnity agreement in an amount
reasonably satisfactory to the Company, or (in the case of mutilation)
upon surrender and cancellation of the mutilated Warrant, the Company
will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
10. Successors. All the covenants, agreements, representations
and warranties contained in this Warrant shall bind the parties hereto
and their respective heirs, executors, administrators,
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distributes, successors and assigns.
11. Change; Waiver. Neither this Warrant nor any term hereof
may be changed, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
12. Headings. This section headings in this Warrant are
inserted for purposes of convenience only and shall have no
substantive effect.
13. Law Governing. This Warrant shall for all purposes be
construed and enforced in accordance with, and governed by, the
internal laws of the State of California, without giving effect to
principles of conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer and this Warrant to be dated as
of the date first above written.
CST ENTERTAINMENT, INC.
By:
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Name:
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Title:
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EXHIBIT A
SUBSCRIPTION FORM
(To be Executed by the Registered Holder
in order to Exercise the Warrant)
The undersigned hereby irrevocably elects to exercise the right
to purchase of the Shares covered by this Warrant according to
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the conditions hereof and herewith makes payment of the Purchase Price
of such Shares in full.
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Signature
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Name
Address:
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Dated ,19 .
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