SOUND SOURCE INTERACTIVE, INC.
26115 Mureau Road
Calabasas, California 91302
PRELIMINARY INFORMATION STATEMENT PURSUANT TO SECTIONS
14(c) and 14(f) OF THE SECURITIES EXCHANGE ACT OF 1934
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
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This Information Statement (the "Information Statement") is being mailed
on or about November 6, 2000, to the holders of record, as of the close of
business on November 6, 2000, of shares of the common stock, par value $0.001
per share (the "Common Stock"), of Sound Source Interactive, Inc., a Delaware
corporation (the "Company").
This Information Statement is being mailed to you to advise you of an
anticipated change in the composition of the Board of Directors of the Company
(the "Board"). On September 8, 2000, the Company and TDK USA Corporation
("TDK") entered into a common stock purchase agreement (the "Purchase
Agreement"), pursuant to which TDK agreed to purchase, and the Company agreed
to sell, a total of 16,667,000 shares of Common Stock, for the purchase price
of $.30 per share and an aggregate purchase price of $5,000,100. On September
11, 2000, TDK acquired 4,750,000 shares of Common Stock for an aggregate
purchase price of $1,425,000 (the "Initial Closing"). Pursuant to the
Purchase Agreement, TDK has agreed to purchase an additional 11,917,000 shares
of Common Stock for an aggregate purchase price of $3,575,000 (the "Subsequent
Closing"). The Subsequent Closing is subject to the satisfaction of certain
conditions, including (i) the filing of the Charter Amendment (as defined
below) and (ii) (a) the resignation of each of Richard Azevedo, Mark A. James
and Samuel L. Poole as directors of the Company and (b) the resulting
vacancies having been filled by certain persons designated by TDK (the "TDK
Nominees"). Each of Mr. Azevedo, Mr. James and Mr. Poole have submitted their
resignations as members of the Board, but these resignations will not become
effective until the Subsequent Closing. The TDK Nominees have been appointed
by the remaining members of the Board to fill such vacancies, and these
appointments also will become effective as of the Subsequent Closing. Subject
to the notification requirement of Rule 14(f) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), no further corporate approvals
of the appointment of the TDK Nominees are necessary. Therefore, no approval
rights are afforded to, nor are any consents or proxies being solicited from,
the Company's stockholders with respect to the appointment of the TDK
Nominees. Immediately after the Subsequent Closing, the Board of Directors is
expected to consist of five members, of whom a majority will be designated by
TDK.
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This Information Statement is also being mailed to you to advise you of
the approval by written consent in lieu of a meeting dated September 11, 2000
by holders of 5,984,634 shares of Common Stock, of amendments to the Company's
Certificate of Incorporation (the "Charter Amendment") to (a) change the name
of the Company to "TDK Mediactive, Inc." and (b) to increase the number of
shares of Common Stock the Company is authorized to issue from 20,000,000 to
50,000,000. Stockholder approval for the Charter Amendment was obtained by
written consent of stockholders holding a sufficient number of shares of the
Common Stock pursuant to Section 228 of the Delaware General Corporation Law
("Section 228"), but such approval will only become effective 20 days
following the mailing of this Information Statement to the Company's
stockholders as required under the Exchange Act. No further corporate
approvals of the Charter Amendment are required. The form of the Charter
Amendment is attached to this Information Statement as Exhibit A.
No dissenters' or appraisal rights under the Delaware General Corporation
Law are afforded to the Company's stockholders as a result of the Charter
Amendment or the appointment of the TDK Nominees. Accordingly, this
Information Statement is being furnished solely for the purpose of informing
you of these matters in compliance with Sections 14(c) and 14(f) of the
Exchange Act and subsection (d) of Section 228. Nevertheless, you are urged
to read this Information Statement carefully and in its entirety.
FORWARD-LOOKING STATEMENTS
From time to time, in written reports and oral statements, management may
discuss its expectations regarding the Company's future performance.
Generally, these statements relate to business plans or strategies, projected
or anticipated benefits, or other consequences of such plans or strategies or
other actions taken or to be taken by the Company, including the impact of
such plans, strategies or actions on the Company's results of operations or
components thereof, projected or anticipated benefits from operational
changes, acquisitions or dispositions made or to be made by the Company, or
projections involving anticipated revenues, costs, earnings or other aspects
of the Company's results of operations. The words "expect," "believe,"
"anticipate," "project," "estimate," "intend" and similar expressions, and
their opposites, are intended to identify forward-looking statements. These
forward-looking statements are not guarantees of future performance but rather
are based on currently available competitive, financial and economic data and
management's operating plans. These forward-looking statements involve risks
and uncertainties that could render actual results materially different from
management's expectations. Such risks and uncertainties include, without
limitation, the availability of capital to fund operations, including
expenditures for product development, risks related to the Company's limited
operating history, risks related to the Company's ability successfully to
implement its revised business strategy, general economic conditions and other
risk factors (the "Risk Factors") described from time to time in the Company's
reports filed with the Securities and Exchange Commission (the "SEC").
All statements herein that are not statements of historical fact are
forward-looking statements. Although management believes that the
expectations reflected in such forward-looking statements are reasonable,
there can be no assurance that those expectations will prove to have been
correct. Certain other important factors that could cause actual results to
differ materially from management's expectations ("Cautionary Statements") are
disclosed in this information statement and in the other filings of the
Company with the SEC. All written forward-looking statements by or
attributable to management in this information statement are expressly
qualified in their entirety by the Risk Factors and the Cautionary Statements.
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Investors must recognize that events could turn out to be significantly
different from what management currently expects.
INFORMATION RELATING TO THE COMPANY'S COMMON STOCK
As of October 24, 2000, the authorized capital stock of the Company
consisted of 20,000,000 shares of Common Stock, of which 10,661,796 shares
were issued and outstanding, and of which an additional 9,269,974 shares were
reserved for issuance upon exercise of outstanding warrants and options. As
described below under "Change of Control Transaction," on September 11, 2000,
TDK acquired 4,750,000 shares of Common Stock, representing beneficial
ownership of approximately 45% of the Company's outstanding Common Stock and
will, subject to certain conditions precedent, acquire an additional
11,917,000 shares of Common Stock. Upon consummation by TDK of the purchase
of an additional 11,917,000 shares of Common Stock, TDK will own a total of
16,667,000 shares of Common Stock representing beneficial ownership of
approximately 74% of the Company's outstanding Common Stock. See "Security
Ownership of Certain Beneficial Owners and Management."
Holders of shares of Common Stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of shares of
Common Stock are entitled to share ratably in dividends, if any, as may be
declared from time to time by the Board of Directors in its discretion, from
funds legally available therefor. In the event of a liquidation, dissolution
or winding up of the Company, the holders of shares of Common Stock are
entitled to share pro rata all assets remaining after payment in full of all
liabilities. Holders of Common Stock have no preemptive rights to purchase
Common Stock. There are no conversion rights or redemption or sinking fund
provisions with respect to the Common Stock.
The foregoing description of the Company's capital stock is a summary,
does not purport to be complete and is subject in all respects to the
applicable provisions of the Company's Certificate of Incorporation, and the
information herein is qualified in its entirety by this reference.
CHANGE OF CONTROL TRANSACTION
AGREEMENTS WITH TDK
On September 8, 2000, the Company and TDK entered into the Purchase
Agreement pursuant to which TDK agreed to purchase, and the Company agreed to
sell, a total of 16,667,000 shares of Common Stock, for the purchase price
$.30 per share and an aggregate purchase price of $5,000,100. The Purchase
Agreement contains representations, warranties, covenants and conditions
customary for a transaction of this size and nature.
On September 11, 2000, TDK acquired 4,750,000 shares of Common Stock for
an aggregate purchase price of $1,425,000 (the "Initial Closing", as
previously defined). Pursuant to the Purchase Agreement, TDK has agreed to
purchase an additional 11,917,000 shares of Common Stock for an aggregate
purchase price of $3,575,000 (the "Subsequent Closing", as previously
defined). The Subsequent Closing is subject to the satisfaction of certain
conditions, including (i) the filing of the Charter Amendment and (ii) (a) the
resignation of each of Richard Azevedo, Mark A. James and Samuel L. Poole as
directors of the Company and (b) the resulting vacancies having been filled by
the remaining directors appointment of the TDK Nominees. Each of Mr. Azevedo,
Mr. James and Mr. Poole have submitted their resignations as members of the
Board, but these resignations will not become effective until the Subsequent
Closing. The TDK Nominees have been appointed by the remaining members of the
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Board to fill such vacancies, and these appointments also will become
effective as of the Subsequent Closing. The TDK Nominees have been appointed
to serve as members of the Board until the next annual meeting of the
stockholders or until their successors have been duly elected and qualified.
Immediately after the Subsequent Closing, the Board of Directors is expected
to consist of five members, of whom a majority will be designated by TDK.
There can be no assurance that all of the conditions will be satisfied and
that the Subsequent Closing will occur on the terms set forth in this
Information Statement or at all.
Following the consummation of the Initial Closing, TDK became the
Company's largest stockholder. Upon the consummation of the Subsequent Closing
and based upon the current number of shares of Common Stock outstanding, TDK
will own approximately 74% of the outstanding Common Stock.
The Company intends to use the proceeds of the issuance of Common Stock
to TDK for general corporate purposes, and pursuant to the Purchase Agreement,
is prohibited from using such proceeds for (i) the payment of any dividend or
other distribution in respect of any of the Common Stock, or (ii) the
repurchase, redemption or other acquisition of any of the shares of Common
Stock or other securities of the Company, without the prior approval of TDK.
Simultaneous with the Initial Closing, the Company and TDK entered into a
registration rights agreement (the "Registration Rights Agreement") pursuant
to which the Company granted to TDK certain registration rights with respect
to the Common Stock purchased and owned by TDK pursuant to the Purchase
Agreement.
Upon the consummation of the Subsequent Closing, the exercise price of
the Company's public warrants (the "Public Warrants") will decrease to $2.18
and the number of shares of Common Stock issuable thereunder will increase to
12,622,397.
LOCK-UP AGREEMENT WITH VINCENT J. BITETTI
Simultaneous with the Initial Closing, the Company, TDK and Mr. Bitetti
entered into a Lock-Up Agreement, whereby Mr. Bitetti agreed to certain
limitations on his rights to sell or otherwise transfer any Common Stock that
he now owns or may acquire from the Company pursuant to options that he now
holds. The Lock-Up Agreement provides that until the first anniversary of the
Subsequent Closing, Mr. Bitetti may not sell or otherwise transfer any such
Common Stock. The foregoing restriction shall lapse and expire as follows:
(a) on the first anniversary date of the date of the Subsequent Closing, as to
forty percent (40%) of the Common Stock then owned by Bitetti, (b) on the
second anniversary date of the date of the Subsequent Closing, as to one-third
(1/3) of the Common Stock then owned by Bitetti that are subject to
restriction under the Lock-Up Agreement immediately prior to such anniversary
date, (c) on the third anniversary date of the date of the Subsequent Closing,
as to one-half (1/2) of the Common Stock then owned by Bitetti that are
subject to restriction under the Lock-Up Agreement immediately prior to such
anniversary date; and (d) on the fourth anniversary date of the date of the
Subsequent Closing, as to any remaining Common Stock then owned by Bitetti.
CHARTER AMENDMENT
On August 29, 2000 the Board authorized, and on September 11, 2000, more
than 50% of the Company's issued and outstanding Common Stock approved by
written consent, an amendment to the Company's Certificate of Incorporation
(the "Charter Amendment", as previously defined) to (i) increase the number of
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authorized shares of Common Stock from 20,000,000 to 50,000,000 and to (ii)
change the name of the Company to "TDK Mediactive, Inc." The increase in the
number of authorized shares and the change of the corporate name will become
effective upon the filing of the Charter Amendment with the Secretary of State
of the State of Delaware, which will occur on the first business day that is
at least twenty (20) days after the date this Information Statement is mailed
to the Company's stockholders. The filing of the Charter Amendment is a
condition precedent to the consummation of the Subsequent Closing.
The Board of Directors of the Company and the management of the Company
believe that changing the Company's corporate name to TDK Mediactive, Inc. is
justified and appropriate because the name "TDK" is more readily recognizable to
the general public. There will be no exchange of stock certificates following
the effectiveness of the name change; instead, existing supplies of stock
certificates will be overprinted with the Company's new name and used in all
future issuances. Existing outstanding certificates bearing the name "Sound
Source Interactive, Inc." will continue to represent shares of outstanding
Common Stock following the name change.
Currently, there is an insufficient number of shares of Common Stock
available to consummate the Subsequent Closing. Thus, the increase in the
number of shares of Common Stock is to allow for the issuance of shares of
Common Stock to TDK at the Subsequent Closing. The remaining shares of Common
Stock will be available for issuance in the future. The rights of the
Company's stockholders will not be affected by the increase in the number of
authorized shares of Common Stock, although their ownership percentage of the
Company may be diluted upon the issuance of any of the shares of Common Stock
referenced above.
SUBSIDIARY NAME CHANGE
Sound Source Interactive, Inc., a California corporation, is a wholly-
owned subsidiary of the Company (the "Subsidiary"). Pursuant to the Purchase
Agreement, on September 8, 2000 the board of directors of the Subsidiary
authorized, and the Company, as the Subsidiary's sole shareholder, approved by
written consent, an amendment to the Subsidiary's Articles of Incorporation to
change the name of the Subsidiary to "TDK Mediactive, Inc.", which was filed
with the California Secretary of State on September 11, 2000.
COMPOSITION OF THE BOARD OF DIRECTORS
Following the appointment of the TDK Nominees, the Board of Directors
will consist of two continuing directors, Vincent J. Bitetti and John T.
Wholihan (the "Continuing Directors") and three new TDK Nominees. The name,
age and present principal occupation or employment and material occupations,
positions, offices or employment for the past five years, of the two
Continuing Directors are set forth below:
Vincent J. Bitetti, age 45, founded Sound Source Interactive, Inc., a
California corporation, now known as "TDK Mediactive, Inc." (the "Subsidiary",
as previously defined), in 1989 and served as the President of the Subsidiary
from its formation. For the period from the acquisition by the Company of the
Subsidiary in 1994 until November 12, 1999, Mr. Bitetti served as the Chairman
of the Board and Chief Executive Officer and as a director of both the Company
and the Subsidiary. Effective November 12, 1999, Mr. Bitetti resigned as
Chairman of the Board of the Company. Mr. Bitetti has been a director of the
Company since 1994.
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John T. Wholihan, age 62, has been Dean of the College of Business
Administration at Loyola Marymount University since 1984. Previously, he
served for five years as an Associate Dean at Bradley University, where he
also served as Director of the MBA Program and as Director of the Small
Business Institute. During this period, he also taught in the areas of
strategic management and international business. He was a Fulbright Scholar in
Brazil in 1977. Mr. Wholihan holds a B.S. from the University of Notre Dame,
an MBA from Indiana University and a Ph.D. from The American University. He
has published numerous articles and other scholarly works. He is a member of
several academic associations and honor societies, including the Academy of
Management, the Small Business Institute Directors Association, Beta Gamma
Sigma and Alpha Sigma Nu. He currently is President of the Western Association
of Collegiate Schools of Business. He is past President of the Association of
Jesuit Colleges and Universities - Business Deans. He was the founding
President of the International Association of Jesuit Business Schools. He is a
member of the Rotary Club of Los Angeles, the Financial Executives Institute
and the Jonathan Club. He has served on the board of directors of several
small companies and currently is a member of the Board of Trustees of the TIP
Funds, a family of publicly traded mutual funds. He is the immediate past
Chairman of the Board of Notre Dame Academy in Los Angeles. Mr. Wholihan has
been a director of the Company since April 1998.
The name, age and present principal occupation or employment, and
material occupations, positions, offices or employment for the past five
years, of each of the three TDK Nominees are set forth below. TDK has
informed the Company that each of such persons has consented to act as a
director.
Kenichi Aoshima, age 55, has been the President of TDK USA Corporation
since 1995.
Masatoshi Shikanai, age 51, has been the President of TDK Recording Media
Europe S.A. ("TRE") since May 1999. He served as TRE's Executive Vice-
President, General Manager of Sales Division from April 1995 to April 1999,
and TRE's Executive Director Corporate Strategies from January 1990 to March
1995.
Shin Tanabe, age 47, has been an Executive Director of TRE since April
1999, where he is responsible for the TDK Mediactive, a dedicated business
unit for the entertainment software business established in April 1999. He
served as TRE's Recording Media Sales Executive Director from June 1995 to
March 1999, and TRE's Recording Media Marketing Director from June 1991 to May
1995.
The Company has been advised by TDK that, to the best of TDK's knowledge,
none of the TDK Nominees (i) is currently a director of, or holds a position
with, the Company, (ii) has a familial relationship with any of the directors
or executive officers of the Company, (iii) beneficially owns any securities
(or rights to acquire securities) of the Company, (iv) is a party adverse to
the Company or any of its subsidiaries, or has a material interest adverse to
the Company or any of its subsidiaries, in any legal proceeding, or (v) has
been involved in any transactions with the Company or any of its directors,
executive officers or affiliates which are required to be disclosed pursuant
to the rules and regulations of the SEC.
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EXECUTIVE OFFICERS
The executive officers of the Company, their ages and their positions
with the Company as of September 30, 2000 are as described below. Additional
information concerning Mr. Bitetti is set forth above.
Name Age Position
---- --- ---------
Vincent J. Bitetti 45 Interim Chief Executive
Officer and Director
Jeffrey Court 48 Vice President of Finance and acting
Chief Financial Officer
Eugene Code 54 Vice President of International Business
Affairs and Corporate Secretary
Jeffrey Court was recruited to Sound Source in August 1998 to manage the
accounting and management control systems and to support the production of
financial statements. On January 8, 1999, Mr. Court was appointed Vice
President of Finance and acting Chief Financial Officer. He came to the
Company with over 18 years of experience as a senior accountant, corporate
controller and chief financial officer. Since May 1988, Mr. Court has held
finance management positions in related industries, including serving as
controller of Metropolis, a Southern California-based publisher of video game
magazines, from July 1997 to July 1998, serving as corporate controller of
Klasky Csupo, Inc., a Southern California-based animation production company,
from May 1995 to June 1997; and serving as chief financial officer of Full
Moon Entertainment, a Southern California-based motion picture production and
distribution company, from May 1988 to April 1995.
Eugene Code was appointed Vice President of International Affairs and
Corporate Secretary on January 8, 1999 after having served in various
capacities within the Company since 1994. While at the Company, Mr. Code has
managed contract administration and the international product republishing
program. He successfully negotiated the Company's entry into the world market
by coordinating development of over 30 localized products. He has recently
concluded agreements with TRE for localization, republishing and distribution.
He manages the Company's efforts in support of TRE's product localization
initiative to bring the Company's products to market in as many as 20
languages for distribution in over 60 countries. His mandate is to explore new
market areas for product adaptation and development. Mr. Code joined the
Company in 1994 with over 20 years of international contract management and
administration experience. Prior to joining the Company, Mr. Code served in
management positions in the defense industry where he managed development of
projects associated with advanced weapons systems. Earlier positions also
included liaison with the Navy and industry for fleet weapons retrofitting and
repair.
ORGANIZATION AND REMUNERATION OF THE BOARD OF DIRECTORS
BOARD COMMITTEES
The Board currently has appointed three standing committees: the Audit
Committee, the Compensation Committee and the Strategic Planning Committee.
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The Audit Committee consists of Richard Azevedo, Mark A. James and Samuel
L. Poole. Its purpose is to recommend the appointment of an independent
auditor for the Company, review the scope of the audit, examine the auditor's
reports, make appropriate recommendations to the Board of Directors as a
result of such review and examination and make inquiries into the
effectiveness of the financial and accounting functions and controls of the
Company. In the event of and upon consummation of the Subsequent Closing, it
is anticipated that the Audit Committee shall consist of Kenichi Aoshima,
Masatoshi Shikanai and John T. Wholihan.
The Compensation Committee consists of Richard Azevedo, Samuel L. Poole and
John T. Wholihan. It is responsible for reviewing and setting the compensation
of executive officers of the Company and for administering the Company's stock
option plans. In the event of and upon consummation of the Subsequent Closing,
it is anticipated that the Compensation Committee shall consist of Kenichi
Aoshima, Masatoshi Shikanai and John T. Wholihan.
The Strategic Planning Committee consists of Vincent J. Bitetti, Mark A.
James and Samuel L. Poole. The Strategic Planning Committee is responsible for
overseeing the development of the Company's strategic planning process. In the
event of and upon consummation of the Subsequent Closing, it is anticipated that
the Strategic Planning Committee shall consist of Vincent J. Bitteti, John T.
Wholihan and Shin Tanabe.
BOARD AND COMMITTEE MEETINGS
In fiscal 2000, the Board of Directors held four meetings. Board
committees met as follows during fiscal 2000: the Compensation Committee did
not meet, the Audit Committee met one time and the Strategic Planning
Committee met one time. The total combined attendance for all Board and
Committee meetings was 92%. All directors attended at least 92% of the
meetings of the Board and of the committees on which they served.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to
receive a director's fee of $15,000 per year, and to be reimbursed for out-of-
pocket expenses incurred in connection with his attendance at meetings.
However, no such fees have been paid since June 1998. Instead, each director
of the Company agreed to accept shares of the Company's Common Stock in lieu
of cash in payment of the accrued fees and all fees that became payable
through June 30, 2000 pursuant to the Company's 1999 Director Stock Plan (the
"1999 Director Stock Plan"). The Company paid all of the director fees accrued
through June 30, 2000, which totaled $120,000 in the aggregate, in 333,888
shares of its Common Stock. The purchase price for the Common Stock issuable
in payment of such director fees was .3594 per share, which was the fair
market value of the Common Stock on December 29, 1999, the date on which the
Company's stockholders approved the 1999 Director Stock Plan and the issuance
of such 333,888 shares of Common Stock in payment of the director's fees.
In addition, pursuant to the 1999 Director Stock Plan, each non-employee
director receives nonqualified stock options to acquire 10,000 shares of
Common Stock upon appointment as a director, and receives nonqualified stock
options to acquire an additional 10,000 shares of Common Stock for each
additional year that the non-employee director continues to serve on the Board
of Directors. Such options previously were granted pursuant to the Company's
1995 Amended and Restated Stock Option Plan (the "1995 Stock Option Plan").
Each option granted to a non-employee director vests and becomes exercisable
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as to 50 percent of the shares of Common Stock subject to the option on the
first anniversary date of the grant and as to the remaining 50 percent on the
second anniversary date of the grant, and expires on the earlier of ten years
from the date the option was granted, the expiration of the 1995 Stock Option
Plan or the 1999 Director Plan, as applicable, or three weeks after the
optionee ceases to be a director of the Company. The exercise price of such
options is equal to 100 percent of the fair market value of the Common Stock
issuable upon exercise of the option on the date on which such options are
granted. Each option is subject to the other provisions of the 1995 Stock
Option Plan or the 1999 Director Plan, as applicable.
Each of Richard Azevedo, Mark A. James and Samuel L. Poole shall have
resigned as directors of the Company effective as of the Subsequent Closing.
Of the options to purchase 20,000 shares of Common Stock granted to each of
such nonemployee directors, options to purchase 5,000 shares are currently
vested, and options to purchase 15,000 shares of common stock are currently
unvested. On August 29, 2000, the Board resolved that the unvested options to
purchase 15,000 shares of Common Stock held by each of Richard Azevedo, Mark
A. James and Samuel L. Poole shall immediately accelerate and vest in full
upon consummation of the Subsequent Closing.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth information concerning compensation of the
Company's Chief Executive Officer and the Company's only other employee who
received salary and bonus compensation from the Company in excess of $100,000
for the fiscal year ended June 30, 2000 (the "Named Executives").
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SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
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Fiscal Stock All Other
Name and Principal Position Year Salary Bonus(1) Options (Shares) Compensation(2)
--------------------------- ------ ------ ------- ---------------- ----------------
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Vincent J. Bitetti 2000 290,692 29,412 0 24,612
Chief Executive Officer 1999 240,000 132,500 0 23,288
1998 210,466 79,000 50,000 22,543
Tanya Baker 2000 100,436 0 10,000 11,858
Vice President of Sales(3) 1999 61,167 0 15,000 4,682
----------------------
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(1) The bonus paid in fiscal 1999 was earned in fiscal 1998. $60,000
of Mr. Bitetti's 1999 bonus was accrued in fiscal 1998.
(2) The amounts in this column consist of the following: (1) personal
use of Company car: Mr. Bitetti - $12,000 (2000), $12,000 (1999),
$12,000 (1998); Ms. Baker - $3,200 (2000), $1,400 (1999); (b)
life insurance premiums: Mr. Bitetti - $7,333 (2000), $6,358
(1999), $6,143 (1998); (c) medical insurance premiums: Mr.
Bitetti - $5,279 (2000), $4,930 (1999), $4,400 (1998); Ms. Baker
- $8,658 (2000), $3,282 (1999).
(3) Ms. Baker became an employee of the Company during October 1998.
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OPTION GRANTS
The following table sets forth information regarding grants of options to
and exercises of options by the Named Executives during the fiscal year ended
June 30, 2000.
OPTION GRANT TABLE
Number of Percentage of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Base Price Date
---- ---------- ------------- ----------- -----------
Vincent J. Bitetti 0 -- -- --
Tanya Baker 10,000 11% $.315 3/1/10
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning each exercise of a
stock option during the fiscal year ended June 30, 2000 by each of the Named
Executives and the number and value of unexercised options granted by the
Company held by each of the Named Executives on June 30, 2000.
AGGREGATE OPTIONS EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Value of
Shares Under- Unexercised
lying Un- in-the-money
exercised Options
Options at at
Number of 6/30/00 6/30/00
Shares Value Exercisable/ Exercisable/
Name Acquired Realized (1) Unexercisable Unexercisable(2)
---- ---------- ------------- ----------- ----------------
Vincent J. Bitetti 0 $0 50,000/0 $0/$0
Tanya Baker 0 0 21,250/3,750 $0/$0
(1) Market value on the date of exercise of shares covered by options
exercised, less option exercise price.
(2) Market value of the shares covered by in-the-money options on
June 30, 2000, less the option exercise price.
EMPLOYMENT AGREEMENT
The Company has entered into a Succession Agreement with Vincent J. Bitetti
dated as of November 12, 1999, which was amended pursuant to an amendment dated
as of April 15, 2000. Pursuant to the Succession Agreement, as amended, Mr.
Bitetti serves as the Company's Chief Executive Officer, but has agreed to
resign from this position on the earlier of (i) December 31, 2002 and
(ii) the date of the appointment of a new Chief-Executive Officer. The
Succession Agreement further provides that upon his resignation as Chief
Executive Officer prior to December 31, 2002, Mr. Bitetti will be appointed
to serve as Chairman of the Company until December 31, 2002.
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The Succession Agreement terminated Mr. Bitetti's Third Amended and
Restated Employment Agreement, dated as of April 24, 1998 (the "Bitetti
Employment Agreement"). The Succession Agreement, however, provides that Mr.
Bitetti will remain entitled to receive substantially the same compensation
and benefits to which he would have been entitled under the Bitetti Employment
Agreement until December 31, 2002. A description of the compensation and
benefits that Mr. Bitetti is entitled to receive pursuant to the Bitetti
Employment Agreement, and which he remains entitled to receive by virtue of
the Succession Agreement, is set forth below.
The Bitetti Employment Agreement entitled Mr. Bitetti to receive annual base
salary of $240,000 effective April 27, 1998, subject to annual increases in
accordance with the Consumer Price Index (the "CPI") commencing on April 27,
1999. Currently, Mr. Bitetti is entitled to receive annual base salary of
$252,836.
Pursuant to the Bitetti Employment Agreement, Mr. Bitetti was entitled to
receive a bonus in the following amounts if the Company attained the specified
gross revenues for fiscal 2000:
Cumulative
Gross Revenues Cash Bonus
--------------- ----------
$19,200,000 $ 25,000
25,600,000 75,000
38,400,000 125,000
The gross revenue attainment levels required to receive each bonus level
for each subsequent fiscal year were to increase by 60% annually.
Pursuant to the Bitetti Employment Agreement, Mr. Bitetti was entitled to
receive a bonus in the following amounts if the Company attained the specified
gross profits for fiscal 1999:
Cumulative
Gross Profits Cash Bonus
------------- -----------
$5,120,000 $ 50,000
5,760,000 75,000
6,400,000 100,000
The gross profit levels required to receive each bonus level for each
subsequent fiscal year were to increase by 60% annually.
The Bitetti Employment Agreement entitled Mr. Bitetti to receive a bonus in
the following amounts if the Company attained the specified levels of pre-tax
profitability (defined as annual earnings before interest, taxes, depreciation
and amortization divided by gross revenues) for any fiscal year during the term
of Mr. Bitetti's employment agreement:
Cumulative
Pre-Tax Profitability Cash Bonus
---------------------- ----------
10% $ 50,000
15% 100,000
For the fiscal year ended June 30, 2000, Mr. Bitetti did not qualify to
receive a bonus under any of the three standards described above.
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Mr. Bitetti was entitled to receive certain fringe benefits under the
Bitetti Employment Agreement, including use of a Company automobile or
automobile allowance, $5,000,000 in life insurance coverage (provided that in
no event could the Company be required to pay a premium for such insurance in
excess of $7,500 per year) and the right to participate in the Company's
customary benefit plans. The Bitetti Employment Agreement further provided
that following the voluntary or involuntary termination of his employment by
the Company, Mr. Bitetti would be entitled to two demand registration rights
with respect to the Common Stock held by or issuable to him. The Bitetti
Employment Agreement further provided that if the Company employs a new Chief
Executive Officer, Mr. Bitetti's salary could not be less than that of such
new Chief Executive Officer, up to a maximum of $300,000.
In addition, pursuant to the April 15, 2000 amendment to the Succession
Agreement, the Company agreed to pay Mr. Bitetti (i) additional compensation
of $100,000 during the remainder of calendar year 2000, and (ii) a bonus of
$35,000 for each calendar quarter during which the Company realizes a profit.
No such bonus was earned for the quarter ended June 30, 2000, the first
quarter for which Mr. Bitetti was eligible to receive this bonus.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Common Stock of the Company by (i) each of the Company's
current directors, the TDK Nominees and the Named Executives, (ii) all
directors and Named Executives and other executive officers as a group and
(iii) each person who is known to the Company to own, of record or
beneficially, more than five percent of the Common Stock. Where the persons
listed have the right to acquire additional shares of Common Stock through the
exercise of options or warrants within 60 days, such additional shares are
deemed to be outstanding for the purpose of computing the percentage of
outstanding shares owned by such persons, but are not deemed to be outstanding
for the purpose of computing the percentage ownership interests of any other
person. Unless otherwise indicated, each of the stockholders shown in the
table below has sole voting and investment power with respect to the shares
beneficially owned.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Owned Assuming
Consummation of Consummation of
Subsequent Closing(13) Subsequent Closing(13)
---------------------- ----------------------
Shares Percent Shares Percent
------ ------- ------ --------
Name and Address of Beneficial Owner (1)
----------------------------------------
<S> <C> <C> <C> <C>
Current Directors
Vincent J. Bitetti (2) 1,284,634(2) 11.99% 1,284,634(2) 5.67%
Richard Azevedo 15,000(3) 0 113,472(5) 0
Mark A. James 35,000(4) 0 133,472(6) 0
Samuel L. Poole 15,000(3) 0 113,472(5) 0
John T. Wholihan 17,000(3) 0 17,000(3) 0
TDK Nominees
Kenichi Aoshima 0 0% 0 0%
Masatoshi Shikanai 0 0% 0 0%
Shin Tanabe 0 0% 0 0%
Other Named Executives
Tanya Baker 21,250(7) 0 21,250(7) 0
All directors and Named Executives
and other executive officers as a group(8) 1,404,682(9) 12.97% 1,700,098(10)(11) 7.38%
Other Beneficial Owners
Louis A. Habash (12) 1,140,000 10.69% 1,140,000 5.05%
TDK USA Corporation 4,750,000 44.55% 16,667,000 73.82%
* Less than 1%
</TABLE>
(1) The address of the current directors and the other Named
Executive is 26115 Mureau Road, Suite B, Calabasas, California 91302. The
address of TDK Nominees Masatoshi Shikanai and Shin Tanabe is Z.I.
Bommelscheuer P.O. Box 120 L-4902 Bascharage, Grand Duchy of Luxembourg. The
address of the TDK Nominee Kenichi Aoshima is 12 Harbor Park Drive, Port
Washington, New York 11050. The address of Louis Habash is 5075 Spyglass Hill
Drive, Las Vegas, Nevada 89122. The address of TDK USA Corporation is 12
Harbor Park Drive, Port Washington, N.Y. 11050.
(2) Includes 50,000 shares of Common Stock issuable to Mr. Bitetti
under presently exercisable options. Also includes 100,000 shares of Common
Stock which Eric H. Winston is entitled to acquire from Mr. Bitetti pursuant
to a presently exercisable option. Excludes 1,140,000 shares of Common Stock
held by ASSI, Inc. as to which Mr. Bitetti has shared voting rights (which
shared voting rights will expire upon consummation of the Subsequent Closing).
On September 8, 2000, Vincent J. Bitetti granted TDK an irrevocable proxy to
vote all shares of capital stock of the Company then owned or thereafter
acquired by Mr. Bitetti, subject to certain limitations. See "Voting
Arrangements."
(3) Includes 15,000 shares of Common Stock issuable upon exercise of
presently exercisable options. Excludes 83,472 shares vested to such
director's account under the 1999 Director Stock Plan, as to which such
director disclaims beneficial ownership.
(4) Includes 35,000 shares of Common Stock issuable upon exercise of
presently exercisable options.
(5) Includes options to purchase 15,000 shares of Common Stock
issuable upon exercise of presently exercisable options, options to purchase
15,000 shares of Common Stock that will vest upon such director's removal from
Board at Subsequent Closing and 83,472 shares of Common Stock that will vest
upon such director's removal from Board at Subsequent Closing pursuant to the
1999 Director Stock Plan.
(6) Includes 35,000 shares of Common Stock issuable upon exercise of
presently exercisable options, 15,000 shares of Common Stock that will vest
upon removal from Board at Subsequent Closing and 83,472 Shares of Common
Stock that will vest upon removal from Board at Subsequent Closing pursuant to
the 1999 Director Stock Plan.
(7) Includes 21,250 shares of Common Stock issuable upon exercise of
presently exercisable options.
(8) Includes 11,250 shares of Common Stock issuable to Jeff Court
upon exercise of presently exercisable options and 5,548 shares of Common
Stock issuable to Eugene Code upon exercise of presently exercisable options.
(9) Includes 8 persons.
(10) Includes 11 persons.
(11) Upon consummation of the Subsequent Closing, Mr. Azevedo, Mr.
James and Mr. Poole will no longer be members of the Board.
(12) Based on information set forth in the Schedule 13(D) filed by
ASSI, Inc. with the Securities and Exchange Commission on April 11, 1998, all
such Common Stock is owned of record by ASSI, Inc., of which Mr. Habash is the
sole beneficial owner. Excludes 1,284,634 shares of Common Stock held by
Vincent J. Bitetti as to which ASSI, Inc. has shared voting rights (which
shared voting rights will expire upon consummation of the Subsequent Closing).
(13) On September 8, 2000, the Company and TDK entered into a
Purchase Agreement pursuant to which TDK has agreed to purchase a total of
16,667,000 shares of Common Stock, for the purchase price of $.30 per share
and an aggregate purchase price of $5,000,100. On September 11, 2000, TDK
acquired 4,750,000 shares of Common Stock for an aggregate purchase price of
$1,425,000. TDK has agreed to purchase an additional 11,917,000 of Common
Stock for an aggregate purchase price of $3,575,100 immediately upon the
filing of the Charter Amendment increasing the number of shares of Common
Stock the Company is authorized to issue from 20,000,000 to 50,000,000. See
"Change of Control Transaction." On September 8, 2000, Vincent J. Bitetti
granted TDK an irrevocable proxy to vote all shares of capital stock of the
Company then owned or thereafter acquired by Mr. Bitetti, subject to certain
limitations. See "Voting Arrangements."
<PAGE>
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Although the Company utilizes several international distributors to
actively promote and sell the Company's English language products throughout
most of the English speaking countries, the majority of international business
is conducted via a Republishing and Distribution agreement with TRE to
distribute its software titles throughout Europe and other territories. The
Company signed an expanded worldwide agreement with TRE on February 28, 2000.
Under the terms of the TRE agreement, the Company is paid a republishing fee
on each product sold. All costs of localization of the product, product boxes
and collateral materials, as well as all costs or replication, marketing,
warehousing and fulfillment, are borne by TRE. The success of the localization
is dependent upon the international appeal of certain of the Company's
products, growth of the interactive software market internationally, the
ability of the republishing partners to successfully localize and market the
products and the ability of the Company to continue to obtain licenses with
worldwide appeal.
SETTLEMENT AGREEMENT
On April 27, 1998 the Company entered into a Settlement Agreement (the
"Settlement Agreement") dated as of April 24, 1998 with ASSI, Inc., NCD, Inc.,
The Boston Group, L.P., Vincent J. Bitetti, Ulrich E. Gottschling, Mark A.
James and Robert G. Kalik. Pursuant to the Settlement Agreement the Company
settled with prejudice two legal proceedings which were pending against it,
its former Chairman and Chief Executive Officer Vincent J. Bitetti, and its
former President and Chief Operating Officer Ulrich E. Gottschling, in Los
Angeles Superior Court and which related to an attempted expansion of the
Company's Board of Directors and the election of four persons to fill the
expansion seats. In connection with the Settlement Agreement, the Company (i)
exchanged 1,100,000 shares of its Common Stock for 4,816,657 common stock
purchase warrants held by ASSI, Inc.; (ii) amended its Bylaws to provide for a
seven-member Board of Directors and to permit resigning directors to vote on
the appointment of their successors; (iii) appointed Richard Azevedo, Samuel
L. Poole, Wayne M. Rogers and John T. Wholihan to fill vacancies on the Board
of Directors; and (iv) entered into certain related agreements described
below.
Pursuant to the Settlement Agreement, ASSI, Inc., NCD, Inc., Louis Habash
and the Company entered into a Lock-Up Agreement. Such agreement provided that
during the year ending May 30, 1999, ASSI, Inc., NCD, Inc. and Louis Habash
(who is the beneficial owner of all of the voting securities of ASSI, Inc. and
NCD, Inc.) could not sell shares of the Common Stock beneficially owned by
them in an aggregate amount in excess of an amount determined by a formula,
which equates to the product of approximately 94,620 shares times the number
of full months, commencing with the month of May 1998, elapsed since the
settlement.
Pursuant to the Settlement Agreement, the Company entered into a Third
Amended and Restated Employment Agreement (the "Bitetti Employment Agreement,"
as previously defined) with Vincent J. Bitetti, which amended and restated Mr.
Bitetti's prior employment agreement. For a description of the Bitetti
Employment Agreement, see "Executive Compensation Employment Agreement."
VOTING ARRANGEMENTS
Pursuant to the Underwriting Agreement (the "Underwriting Agreement")
dated July 1, 1996 pertaining to the Company's initial public offering, the
<PAGE>
<PAGE>
Company granted the underwriters for such offering, The Boston Group, L.P. and
Joseph Stevens & Co., L.P., each the right to nominate from time to time one
director of the Company or to have an individual designated thereby attend all
Board meetings as a nonvoting advisor. In addition, Vincent J. Bitetti and
Eric H. Winston agreed to vote all of their Common Stock in favor of the two
director nominees selected by the underwriters. The voting agreement with the
underwriters will terminate on July 8, 2001. Effective November 20, 1997,
Joseph Stevens & Co., L.P. assigned to The Boston Group, L.P. its director
nomination rights under the foregoing agreement.
Pursuant to a Stockholder Voting Agreement (the "Stockholder Voting
Agreement") dated as of April 30, 1996 among Vincent J. Bitetti, Eric H. Winston
and ASSI, Inc., Messrs. Bitetti and Winston agreed to vote all of their Common
Stock in favor of one director nominee selected by ASSI, Inc. and in favor of an
amendment to the Company's Bylaws providing that the number of directors would
be five, which provision could not be amended except with the consent of ASSI,
Inc. In addition, ASSI, Inc. agreed to vote all of its shares of Common Stock
for two directors nominated by Mr. Bitetti as long as he held at least 20
percent of the outstanding Common Stock, and for one director nominated by Mr.
Bitetti for as long as he held at least ten percent but less than 20 percent of
the outstanding Common Stock. The Stockholder Voting Agreement will terminate on
the earlier of July 1, 2001 or the date when Messrs. Bitetti and Winston
together cease to own at least ten percent of the outstanding Common Stock. This
condition will be satisfied as of the Subsequent Closing, whereupon the
Stockholder Voting Agreement will terminate.
Pursuant to the Settlement Agreement, the Company received the consent
(the "Consent") of ASSI, Inc. to certain matters relating to the Stockholder
Voting Agreement. Among other things, the Consent provides that as between the
Company, ASSI, Inc., The Boston Group, L.P. and Vincent J. Bitetti, the
nominees for the seven-person Board of Directors will be determined as
follows: two persons may be nominated by Bitetti as long as he holds 750,000
or more shares of the Common Stock (but only one person, if Bitetti holds more
than 500,000 and less than 750,000 shares, and no person if Bitetti holds
500,000 or fewer shares); one person may be nominated by ASSI, Inc. as long as
it holds 500,000 or more shares of the Common Stock (but no person if ASSI,
Inc. holds fewer than 500,000 shares); up to two persons may be nominated by
The Boston Group, L.P. (including as assignee of the rights of Joseph Stevens
& Co., L.P.) pursuant to the Underwriting Agreement so long as it may be in
effect in pertinent part; one person (an "Expansion Member") may be nominated
by Mr. Bitetti (subject to approval of such person by ASSI, Inc. (unless a
renomination of a presently serving nominee)); and one person (another
"Expansion Member") may be nominated by ASSI, Inc. (subject to approval of
such person by Mr. Bitetti (unless a nomination of a presently serving
nominee)). Each Expansion Member must be independent of the Company and the
person nominating such Expansion Member, and must meet certain other
requirements set forth in the Consent.
Mr. Bitetti determined that it was in the Company's interests to limit the
size of the Board, and therefore at the Company's most recent annual meeting of
stockholders did not exercise his right to nominate one of the two persons he
was then entitled to nominate pursuant to the Stockholder Voting Agreement and
the Consent, and the Expansion Member he was then entitled to nominate as
provided in the Consent. Accordingly, pursuant to the foregoing arrangements,
the directors elected at the Company's most recent annual meeting of
stockholders were nominated as follows:
Vincent J. Bitetti as the nominee of Vincent J. Bitetti pursuant to the
Stockholder Voting Agreement and the Consent.
<PAGE>
<PAGE>
Richard Azevedo and Samuel L. Poole as the two nominees of The Boston
Group, L.P. pursuant to the Underwriting Agreement.
Mark A. James as the nominee of ASSI, Inc. pursuant to the Stockholder
Voting Agreement and the Consent.
John T. Wholihan as the Expansion Member nominated by ASSI, Inc. as
provided in the Consent.
The Consent is terminable at the option of ASSI, Inc. in the event of a
breach of the Stockholder Voting Agreement, the Settlement Agreement or the
Consent by the Company, Vincent J. Bitetti or Ulrich E. Gottschling prior to
the termination of the Stockholder Voting Agreement. In the event of such
termination, the authorized number of directors will be automatically reduced
from seven to five at the next annual meeting of stockholders, and nominations
and elections for the resulting five-member Board will be governed by the
Stockholder Voting Agreement and the Underwriting Agreement, without regard to
the Consent. The Consent terminates automatically upon the termination of the
Stockholder Voting Agreement, which will occur as of the Subsequent Closing.
On September 8, 2000, Vincent J. Bitetti granted TDK an irrevocable proxy
to vote, or to execute and deliver written consents or to otherwise act with
respect to, all shares of capital stock of the Company then owned or
thereafter acquired by Mr. Bitetti (the "Proxy"). Notwithstanding, for so long
as the Stockholder Voting Agreement or the Underwriting Agreement remain in
effect, TDK shall not be permitted to vote Mr. Bitetti's stock in connection
with the election of directors of the Company or any other matters covered by
the Stockholder Voting Agreement or the Underwriting Agreement. Furthermore,
TDK shall not be permitted to vote the stock of Mr. Bitetti after the
Subsequent Closing, unless TDK's stockholding percentage in the Company is
reduced to less than fifty percent (50%).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the copies of the forms furnished to the
Company and written representations of the Company's directors and executive
officers, the Company believes that all filing requirements applicable to its
officers, directors and ten-percent beneficial owners were complied with
during fiscal 2000.
Pursuant to Section 16(a) of the Exchange Act, the Company is required to
identify any person who, at any time during fiscal year 2000, was a director
of the Company, an executive officer of the Company or its subsidiaries, or a
beneficial owner of more than 10% of the Common Stock or any other person who
was subject to Section 16(a) of the Exchange Act with respect to the Company
that during fiscal 2000 and failed to file on a timely basis with the SEC any
report required by Section 16(a) of the Exchange Act, (which reports are on
Form 3 (an initial report of beneficial ownership of common stock) and on Form
4 and Form 5 (relating to changes in beneficial ownership of common stock)).
Based solely on a review of such Forms 3, 4 and 5, and amendments thereto,
furnished to the Company by the reporting persons known to it, as required by
Exchange Act Rule 16a-3(e), no reporting person that was required during
fiscal 2000 to comply with Section 16(a) of the Exchange Act failed to comply
with such requirements.
<PAGE>
<PAGE>
ADDITIONAL INFORMATION
The Company files annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any reports,
statements or other information filed by the Company at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information regarding the
public reference rooms. The Company's public filings are also available to the
public from commercial document retrieval services and at the Internet World
Wide Web site maintained by the SEC at http://www.sec.gov.
INCORPORATION BY REFERENCE
The following document has been previously filed by the Company with the
SEC and is hereby incorporated by reference as of its respective date and to
the extent required to be included in or incorporated by reference into this
Information Statement by Item 13 of Schedule 14A under the Exchange Act:
The Company's Annual Report on Form 10-KSB, for the fiscal year ended
June 30, 2000.
A copy of the Company's Annual Report on Form 10-KSB is being mailed to
each stockholder together with this Information Statement. Any stockholder of
the Company will be able to obtain additional copies of such document by
contacting the SEC or retrieving copies from the SEC's Internet World Wide Web
site. You may also obtain any current documents mentioned in this Information
Statement by requesting them in writing or by telephone to the following:
Sound Source Interactive, Inc., 26115 Mureau Road, Calabasas, California
91302, Attention: Corporate Secretary, (818) 878-0505. If you request
documents from the Company, they will be mailed to you by first class mail, or
other equally prompt means within five business days of the receipt of your
request.
<PAGE>
<PAGE>
Exhibit A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Sound Source Interactive, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a special
meeting of its members, filed with the minutes of the Board, adopted
resolutions proposing and declaring advisable the following amendment (the
"Amendment") to the Second Restated Certificate of Incorporation of said
corporation:
Articles First and Fourth of the Second Restated Certificate of
Incorporation of Sound Source Interactive, Inc. are hereby amended to
read in their entirety as follows, effective on the date of filing of
this Amendment with the Secretary of State of the State of Delaware:
FIRST: The name of the Corporation is TDK Mediactive, Inc.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Fifty Million
(50,000,000) shares of Common Stock, par value $.001 per share,
amounting in the aggregate of Fifty Thousand Dollars ($50,000).
SECOND: That in lieu of a meeting and vote of stockholders, a majority
of the stockholders have given written consent to said amendment in accordance
with the provisions of Section 228 of the General Corporation Law of the State
of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, said Sound Source Interactive, Inc. has caused this
certificate to be signed by , its President, this day of
August, 2000.
SOUND SOURCE INTERACTIVE, INC.
By:
------------------------------
, President
