SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PAYFORVIEW.COM CORP.
(Exact name of registrant as specified in its charter)
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Commission File Number: 0-27161
Nevada, U.S.A. 91-1976310
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
509 Madison Avenue, 16th Floor, New York, New York 10022
(Address of principal executive offices)
(212) 605-0150
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
PAYFORVIEW.COM CORP.
C/O CAPITOL DOCUMENT SERVICES
202 S. MINNESOTA STREET
CARSON CITY, NEVADA 89703
(___) ___-____
(Address, including zip code, and telephone
number, including area code, of agent for service)
COPY TO:
Christopher H. Dieterich, Esq.
DIETERICH & ASSOCIATES
11300 W. Olympic Boulevard, Suite 800
Los Angeles, California 90064
(310) 312-6888
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration
Statement.
If any of the securities being registered on this form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box: |X|
If the registrant elects to deliver its latest annual report
to security holders, or a complete and legible facsimile thereof,
pursuant to Item 11(a)(1)of this form, check the following box.
|_|
If this form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. |_|
If this form is filed to register additional securities for
an offering pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. |_|
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
effective registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box: |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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TITLE OF EACH AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SHARES REGISTERED OFFERING PRICE OFFERING PRICE REGISTRATION
TO BE REGISTERED PER SHARE FEE(1)
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Common Stock, Underlying
Investment Agreement......18,000,000 $0.28 5,040,000 1,336
Common Stock Underlying
Swartz Warrant(1)......... 2,000,000 $0.28 560,000 148
Total Registration
and Fee...........20,000,000 $5,600,000 1,484
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</TABLE>
(1) Pursuant to Rule 416 under the Securities Act, such additional number of
shares of common stock subject to the Warrants and Options are also being
registered to cover any adjustment resulting from the operation of the
anti-dilution provisions relating to the Warrants. The indeterminate number
of additional shares shall be issuable pursuant to Rule 416 to prevent
dilution resulting from stock splits, stock dividends or similar
transactions.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Prospectus
UP TO 20,000,000 SHARES
[PAYFORVIEW.COM's Logo]
PAYFORVIEW.COM CORP.
Common Stock
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The selling shareholders listed below may use this
prospectus in connection with the following resales of our common
stock:
Swartz Private Equity, LLC may offer up to 20,000,000
shares that we may issue to it when we exercise our right to
"Put" shares to Swartz under our equity line agreement with
Swartz or upon the exercise of warrants.
The selling shareholders may sell the common stock at prices
and on terms determined by the market, in negotiated transactions
or through underwriters. Swartz is an "underwriter" within the
meaning of the Securities Act in connection with its sales of our
common stock.
We will not receive any proceeds from the sale of shares by
the selling shareholders. However, we will receive proceeds from
the sale of shares to Swartz and upon the exercise of warrants
held by Swartz.
INVESTING IN THE SHARES INVOLVES A HIGH DEGREE OF RISK.
"RISK FACTORS" BEGIN ON PAGE _.
Our common stock is presently listed and traded on the
National Association of Securities Dealers' Over-The-Counter
Bulletin Board under the symbol "PAYV." The last reported sales
price of our common stock on November 10, 2000 was $0.312 per
share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SUBJECT TO COMPLETION, DATED NOVEMBER 17, 2000
The date of this prospectus is _______, 2000
TABLE OF CONTENTS
Page
----
Prospectus Summary..............................................
Risk Factors....................................................
Special Note Regarding Forward-Looking Statements..............
Use of Proceeds................................................
Determination of Offering Price................................
Dilution.......................................................
The Investment Agreement.......................................
Selling Security Holders.......................................
Plan Of Distribution...........................................
Legal Proceedings..............................................
Directors, Executive Officers, Promoters and
Control Persons...
Security Ownership of Certain Beneficial Owners
and Management.
Description of Securities......................................
Interest of Named Experts and Counsel..........................
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...............................
Organization Within Last Five Years............................
Description of Business........................................
Management's Discussion and Analysis or Plan
of Operation.................................................
Description of Property........................................
Certain Relationships and Related Transactions.................
Market for Common Equity and Related Stockholder
Matters......................................................
Executive Compensation.........................................
Financial Statements...........................................
Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure..........................
Information Incorporated by Reference..........................
Where You Can Find More Information............................
Indemnification of Directors and Officers......................
Other Expenses of Issuance and Distribution....................
Recent Sales of Unregistered Securities........................
Exhibits.......................................................
Undertakings...................................................
Signatures.....................................................
As used in this prospectus, unless otherwise indicated, any
reference to our business, our products or our financial
condition includes all of our subsidiaries, including our
wholly-owned subsidiary, Voyager Films, Inc.
You should only rely on the information contained in this
prospectus or any supplement. We have not authorized anyone to
provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely
on it. We are not making an offer of these securities in any
jurisdiction where the offer or sale is not permitted. You
should not assume that the information in this prospectus is
accurate as of any date other than the date on the front cover of
this prospectus or any supplement.
1
<PAGE>
PROSPECTUS SUMMARY
Description of Business.
PayForView, headquartered in New York with satellite offices
in Los Angeles, California and Vancouver, Canada, is an
integrated online and offline content company that creates and
acquires events and information-based programming and delivers
that content on a pay-for-view and free basis. We produce and
own programming and distribute it through new media (the
Internet) and old media (broadcast, DBS and cable television).
In this manner, we are able to generate revenues from traditional
sources while we build a strong brand in the Internet space in
preparation for an expanding broadband universe and the upcoming
convergence of old media with new media.
We continue to enter into alliances with entertainment and
technology companies that provide elements needed for the
completion of our plans. These companies include those providing
Internet-related technical support, filmed or live programming,
recorded music and sports related programming.
Our executive offices are located at 509 Madison Avenue,
Suite 1610, New York, New York 10022, and our telephone number is
(212) 605-0150.
PayForView.com Website.
Our website, hosted by SofTV, a leader in streaming media in
the emerging broadband E-Commerce market, provides users with a
unique and vibrant interface. The core of the site is an
embedded streaming media window, where the "primary" content,
consisting of live events, archival entertainment and promos will
be displayed. Surrounding the window is a selection of
"parallel" content areas, where dynamic and compelling
information coincides with and enhances the primary content. The
beta version of the website was launched on April 26, 2000, when
we offered our first boxing event.
Our leading-edge technology allows video to contain
"triggers" whereby text, photos and images are seen at specific
times when a trigger is released simultaneously to the streaming
video. This innovative development is both interesting to the
viewer and a benefit to sponsors.
Since the launch of our beta website in April 2000, we have
broadcast an International Woman's Boxing Championship event, two
Ultimate Fighting Championship events with a contract for at
least one more, a live stand-up comedy event and two
international soccer events including the USA Woman's soccer team
vs. Norway match, web-cast July 30, 2000.
We will also acquire, distribute and sell filmed
entertainment online and, through our Voyager Film Sales
subsidiary, in the traditional manner through existing
relationships with distributors and content providers.
Strategic Alliances.
We have entered the marketplace through alliances with
entertainment and technology companies that provide elements
needed for the completion of our plans. These companies include
those providing Internet related technical support, filmed or
live programming, recorded music and sports related footage.
This creates a vertical integration of entertainment-related
products and Internet expertise, which will establish our base of
operations and cash flow.
Technology Providers.
We have also aligned ourselves with various quality
technology providers to provide essential streaming video, web
casting and supporting services.
RECENT DEVELOPMENTS
THE SWARTZ TRANSACTION
On August 31, 2000, we entered into an investment agreement
with Swartz Private Equity, LLC (the "Investment Agreement").
Under the Investment Agreement, also referred to as an equity
line, we have the option to sell, or "Put," up to $40 million of
our common stock to Swartz, subject to a formula based on stock
price and trading volume, over a three year period beginning on
the effective date of the registration statement, of which this
prospectus is a part. In addition, we issued to Swartz a warrant
to purchase 2,000,000 shares of our common stock at a price of
$0.28 per share, subject to adjustment, and agreed to provide
additional warrants, on an ongoing basis, equal to 10% of each
Put amount at a price of 110% of the market price for the
applicable Put, subject to adjustment. We may issue additional
warrants to Swartz under the terms of the Investment Agreement.
We describe this transaction in more detail under the caption
"The Investment Agreement."
THE OFFERING
By means of this prospectus, the selling shareholders are
offering for sale up to 20,000,000 shares of our common stock.
We are required under our contract with Swartz to register
20,000,000 shares plus an indeterminate number of shares above
20,000,000. We have elected to register 20,000,000 shares. The
selling shareholders may sell the common stock at prices and on
terms determined by the market, in negotiated transactions and
through underwriters.
RISK FACTORS
You should carefully consider the following risk factors, as
well as the other information contained in this prospectus,
before purchasing shares of our common stock.
NO SIGNIFICANT OPERATING HISTORY
We do not have any significant operating history upon which
to evaluate our future performance. As there is no lengthy
history of operations, investors will be unable to assess future
operating performance or future financial results or condition by
comparing these criteria against their past or present
equivalents. Future revenues are expected to be derived from the
sale of media content on our websites and from commissions on
electronic commerce transactions between viewers and advertisers.
We will only be able to attract content providers or advertisers
to our websites if we can develop and maintain a viewer base of
sufficient size and economic means to offer prospective content
providers and advertisers meaningful marketing opportunities for
their products and services.
WE EXPECT TO INCUR CONTINUED LOSSES
We expect to incur losses on both a quarterly and an annual
basis for the foreseeable future and cannot assure investors that
we will ever achieve profitability.
WE RELY ON THE WIDESPREAD ACCEPTANCE OF THE INTERNET AS A VIABLE
ENTERTAINMENT ALTERNATIVE
Our success will depend upon market acceptance of streaming
technology as an alternative to broadcast television. Without
streaming technology, viewers looking for on-demand programming
would not be able to initiate playback until the programming was
downloaded in its entirety, resulting in significant waiting
times.
The acceptance of streaming technology will depend upon a
number of factors, including:
market acceptance of streaming players such as
Microsoft's Windows Media Player and RealNetworks'
RealPlayer
technological improvements to the Internet
infrastructure, such as an increase in generally available
bandwidth, to allow for improved video and audio quality and
a reduction in Internet usage congestion.
the ability of Internet users to acquire sufficient skill
and experience to download and operate streaming players.
reconfiguration of older Web browsers to handle the
inclusion of streaming players.
Acceptance of the Internet among content providers,
distributors, studios, television networks and independent
groups, such as sports programmers and advertising agencies, will
also depend to a large extent on the level of Internet use by
consumers and upon growth in the commercial use of the Internet.
Because global commerce and the online exchange of information
are new and evolving, we are unable to predict with any assurance
whether the Internet will prove to be a viable commercial
marketplace in the long term. Our future revenues would be
greatly reduced if widespread commercial use of the Internet does
not develop or is substantially delayed, or if the Internet does
not develop as an effective and measurable advertising medium.
WE RELY ON THE DELIVERY OF CONTENT PROVIDED BY THIRD PARTIES
We anticipate deriving revenues from the sale of various
types of content, generally created by third parties, over the
Internet. Internet product delivery, particularly utilizing
streaming video technology, is a new and rapidly evolving
industry whose demand and market acceptance has not as yet been
proven. Furthermore, standards have not yet been widely accepted
for the measurement of the effectiveness of Web-based media
services delivery.
Our ability to generate revenue will depend upon a number of
factors, including:
pricing of content delivered by other websites.
the amount of traffic on our proposed websites.
our ability to demonstrate user demographic
characteristics that are attractive to content providers.
the establishment of desirable production and programming
relationships.
WE RELY ON OUR ABILITY TO DESIGN A SUCCESSFUL E-COMMERCE
COMPONENT OF OUR BUSINESS
In addition to media content delivery and advertising,
another intended source of revenue is from electronic commerce
tie-ins. E-commerce has only recently begun to develop and is
rapidly evolving. As is typical in a new and rapidly evolving
industry, demand and market acceptance for recently introduced
services and products are subject to uncertainty. Consumer
satisfaction from shopping over the Internet has been mixed. We
cannot assure you that e-commerce will continue to grow. Our
ability to derive revenues from arrangements with e commerce
businesses and to deliver acceptable programming content will
depend upon a number of factors including:
acceptance by the general public of the Internet as a
convenient and safe shopping forum.
the offer of quality products at competitive prices.
our ability to attract viewers and direct such viewers to
our e-commerce business tie-ins.
STREAMING SOFTWARE MUST BE USED TO VIEW OUR CONTENT
At present, prospective viewers can download streaming
software off the Internet, in most instances, at no charge. We
can offer no assurance that streaming software will continue to
be made available to the public free of charge. If users are
charged to acquire streaming software, streaming technology may
not be widely accepted by Internet users.
INTERNET AND TELECOMMUNICATIONS INFRASTRUCTURE DISRUPTIONS COULD
ADVERSELY AFFECT OUR BUSINESS
Internet infrastructure failures or disruptions caused by
increased traffic on the Web, technical difficulties, vandalism
or acts of God, among other factors, may impede our ability to
transmit streaming video content to viewers. Repeated failures
or disruptions may result in viewer dissatisfaction with the
Internet as a viewing medium, which may lead to a diminution of
our viewer base and a resultant impairment of our ability to
generate advertising and e-commerce transaction revenues.
We will have to rely on local and long-distance
telecommunications companies to provide data communications
capacity. These providers may experience service disruptions or
have limited capacity, which could disrupt the provision of
streaming video content to viewers. We may not be able to
replace or supplement these services on a timely basis, if at
all. In addition, because we must rely on third-party
telecommunications services providers for connection to the
Internet, we may not be able to control decisions regarding the
availability of, or our access to, services at any given time.
OUR TECHNOLOGY IS LICENSED FROM A THIRD PARTY
We have licensed from a third party our streaming
technology, and we intend to continually improve upon the use of
this technology via relationships with other companies in the
marketplace. We intend to license technology and/or improvements
from technology companies in order to deliver our content over
the Internet. We cannot be assured that we will be able to do
so.
WE RELY ON OUR MANAGEMENT TEAM AND EMPLOYEES
Our success will depend to a large degree upon the efforts
of our management, technical and marketing personnel. Our success
will also depend on our ability to attract and retain additional
qualified management, technical and marketing personnel. Hiring
employees with the combination of skills and attributes required
to carry out the strategy is extremely competitive. We do not
have "key person" life insurance policies upon any of our of our
officers or other personnel. The loss of the services of key
personnel together with an inability to attract qualified
replacements could adversely affect prospective growth.
THE INTERNET STREAMING BUSINESS IS HIGHLY COMPETITIVE
We will compete for both viewers and advertisers with
numerous larger and well-financed companies. These include:
other websites, Internet access providers and Internet
broadcasters that provide content to attract users.
online services, other website operators and advertising
networks, as well as traditional media such as television,
radio and print for a share of available media content
suitable for distribution via the Internet, and for
advertisers' total advertising budgets.
traditional media such as broadcast television, cable
television, radio and print with international content.
To compete successfully, we will have to provide
sufficiently compelling and popular content to generate users and
support advertising intended to reach those users. We believe
that the principal competitive factors in attracting Internet
users are the quality of service and the relevance, timeliness,
depth and breadth of content and services offered.
We also expect to compete with on-line services, other
website operators and advertising networks, as well as
traditional media such as television, radio and print for a share
of advertisers' total advertising budgets.
The principal competitive factors for attracting advertisers
include:
the number of users accessing our websites.
the demographics of prospective users.
our ability to deliver focused programming and advertiser
interactivity through our websites.
the overall cost-effectiveness and value of advertising
on our network.
our ability to achieve recognition of the PayforView.com
name.
UNCERTAINTIES REGARDING INTERNATIONAL EXPANSION MAY ADVERSELY
AFFECT OUR GROWTH
Our intended establishment of operations in foreign
countries and hiring freelance media providers will entail
significant expenditures and some knowledge of each country's
national and local laws, including tax and labor laws.
Furthermore, there are certain risks inherent in conducting
business internationally, including regulatory requirements,
legal uncertainty regarding liability, difficulties in staffing
and managing foreign operations, longer payment cycles, different
accounting practices, currency exchange rate fluctuations,
tariffs and other trade barriers, political instability and
potentially adverse tax consequences, any of which could
adversely affect growth opportunities.
WE RELY ON COPYRIGHTS, TRADE SECRETS AND INTELLECTUAL PROPERTY
Copyrights, trade secrets and similar intellectual property
are significant to our growth and success. We rely upon a
combination of copyright and trademark laws, trade secret
protection, confidentiality and non-disclosure agreements and
contractual provisions with our employees and with third parties
to establish and protect proprietary rights. We have applied for
federal trademark protection for "PayForView.com" and intend to
apply for federal trademark protection for all domain names used
in the PayForView.com network. Legal standards relating to the
validity, enforceability and scope of protection of certain
proprietary rights in Internet-related industries are uncertain
and still evolving. We are unable to assure investors as to the
future viability or value of any of our proprietary rights or
those of other companies within the industry. We are also unable
to assure investors that the steps taken to protect proprietary
rights will be adequate. Furthermore, we can have no assurance
that our proposed business activities will not infringe upon the
proprietary rights of others, or that other parties will not
assert infringement claims against us.
WE WILL REQUIRE SUBSTANTIAL ADDITIONAL FUNDING TO CARRY OUT OUR
BUSINESS PLAN
We will require substantial additional financing in order to
expand our content and to become a meaningful competitor in the
Internet broadcast industry. There is no assurance that such
financing will be available. Moreover, if additional capital is
raised through borrowing or other debt financing, this would
incur interest expense.
WE ARE SUBJECT TO LAWS AND REGULATIONS REGARDING THE INTERNET
Although there are currently few laws and regulations
directly applicable to the Internet it is likely that new laws
and regulations will be adopted in the United States and
elsewhere covering issues such as music licensing, copyrights,
privacy, pricing, sales taxes and characteristics and quality of
Internet services. The adoption of restrictive laws and
regulations could slow Internet growth or its use as a commercial
or advertising medium.
OUR FINANCIAL STATEMENTS CONTAIN "GOING CONCERN" LANGUAGE
Our financial statements for the year ended December 31,
1999 state that because of our recurring operating losses and
negative cash flows from operations, there is substantial doubt
about our ability to continue as a going concern. Our financial
statements have been prepared assuming we will continue as a
going-concern and do not include any adjustments to reflect the
possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
WE MAY NOT BE ABLE TO DRAW FUNDS FROM THE EQUITY LINE
To continue to finance our operations, we must obtain
sufficient funds from the equity line agreement with Swartz.
However, the future market price and volume of trading of our
common stock limits the rate at which we can obtain money under
the equity line agreement with Swartz. Further, we may be unable
to satisfy the conditions contained in the equity line agreement,
which would result in our
inability to draw down money on a timely basis, or at all. If
the price of our common stock declines, or trading volume in our
common stock is low, we will be unable to obtain sufficient funds
to meet our liquidity needs.
EQUITY LINE DRAWS MAY RESULT IN SUBSTANTIAL DILUTION
We will issue shares to Swartz upon exercise of our Put
rights at a price equal to the lesser of:
the market price for each share of our common stock minus
$.10; or
93% of the market price for each share of our common
stock.
Accordingly, the exercise of our Put rights may result in
substantial dilution to the interests of the other holders of our
common stock. Depending on the price per share of our common
stock during the three-year period of the Investment Agreement,
we may need to register additional shares for resale or seek an
amendment to our articles of incorporation, to access the full
amount of financing available. Registering additional shares
could have a further dilutive effect on the value of our common
stock. If we are unable to register the additional shares of
common stock, we may experience delays in, or be unable to,
access some of the $40 million available under our Put rights.
OUR STOCK PRICE MAY DECREASE DUE TO ADDITIONAL SHARES IN THE
MARKET
If and when we exercise our Put rights and sell shares of
our common stock to Swartz, and if and to the extent that Swartz
sells the common stock, our common stock price may decrease due
to the additional shares in the market. If the price of our
common stock decreases, and if we decide to exercise our right
to Put additional shares to Swartz, we must issue more shares of
our common stock for any given dollar amount invested by Swartz,
subject to a designated minimum Put price that we specify. This
may encourage short sales, which could place further downward
pressure on the price of our common stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Statements
of our intentions, beliefs, expectations or predictions for the
future, denoted by the words "believes," "expects," "may,"
"will," "should," "seeks," "pro forma," "anticipates," "intends"
and similar expressions are forward-looking statements that
reflect our current views about future events and are subject to
risks, uncertainties and assumptions.
We wish to caution readers that these forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties. Actual events or results may differ
materially from those discussed in the forward-looking statements
as a result of various factors, including, without limitation,
the risk factors and other matters contained in this prospectus
generally. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the cautionary
statements included in this document. We undertake no obligation
to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares
of common stock by the selling shareholders; rather, the selling
shareholders will receive those proceeds directly. However, we
will receive cash infusions of capital if and when Swartz
purchases our common stock in accordance with the Investment
Agreement and upon the exercise of warrants held by Swartz, as
described below. We intend to use the proceeds from the sale of
common stock to Swartz and from the exercise of warrants for
working capital, strategic alliances (including potential joint
ventures, acquisitions and mergers) and general corporate
purposes.
THE INVESTMENT AGREEMENT
OVERVIEW
On August 31, 2000, we entered into an investment agreement
with Swartz Private Equity, LLC. The Investment Agreement
entitles us to issue and sell up to $40 million of our common
stock to Swartz, subject to a formula based upon average stock
price and average trading volume, from time to time over a three
year period following the effective date of this registration
statement. We refer to each election by us to sell stock to
Swartz as a "Put."
In addition, on August 31, 2000, we issued to Swartz a
warrant to purchase 2,000,000 shares of our common stock,
exercisable for a period of five years from August 31, 2000, with
an initial exercise price equal to $0.28 which was the closing
bid price for the day before the execution of the agreement. We
will adjust the exercise price of these warrants semi-annually on
February 28 and August 31 to equal the lesser of:
the initial exercise price; or
100% of the lowest closing bid price of our common stock
for the five trading days ending on any six-month
anniversary date of the date of issuance.
We may issue additional warrants under the terms of the
Investment Agreement, as described below.
PUT RIGHTS
We may begin exercising Puts upon effectiveness of this
Registration Statement and continue for a three-year period. To
exercise a Put, we must have an effective registration statement
on file with the Securities and Exchange Commission covering the
resale to the public by Swartz of any shares that it acquires
under the Investment Agreement. Also, we must give Swartz at
least 10, but not more than 20, business days' advance notice of
the date on which we intend to exercise a particular Put right.
The notice must indicate the date we intend to exercise the Put
and the maximum number of shares of common stock we intend to
sell to Swartz. At our option, we may also specify a maximum
dollar amount (not to exceed $4 million) of common stock that we
will sell under the Put. We may also specify a minimum purchase
price per share at which we will sell shares to Swartz. The
minimum purchase price, if we specify one, cannot exceed the
lesser of (i) 80% of the closing bid price of our common stock on
the business day prior to the date of our advance Put notice, or
(ii) the closing bid price of our common stock on the business
day prior to the date of our advance Put notice, minus $0.15.
The number of common shares we sell to Swartz may not exceed
15% of the aggregate daily reported trading volume of our common
shares during the 20 business days before or after the date we
exercise a Put. Further, we cannot issue additional shares to
Swartz that, when added to the shares Swartz previously acquired
under the Investment Agreement during the 31 days before the date
we exercise the Put, will result in Swartz holding over 9.99% of
our outstanding shares upon completion of the Put.
Swartz will pay us a percentage of the market price for each
share of common stock under the Put. The market price of the
shares of common stock during the 20 business days immediately
following the date we exercise a Put is used to determine the
purchase price Swartz will pay and the number of shares we will
issue in return. This 20 day period is the pricing period. For
each share of common stock, Swartz will pay us the lesser of:
the market price for each share, minus $.10; or
93% of the market price for each share.
The Investment Agreement defines market price as the lowest
closing bid price for our common stock during the 20 business day
pricing period. However, Swartz must pay at least the designated
minimum per share price, if any, that we specify in our notice.
If the price of our common stock is below the greater of the
designated minimum per share price plus $.10, or 93% of the
designated minimum per share price during any of the 20 days
during the pricing period, that day is excluded from the 15%
volume limitation described above. Therefore, the amount of cash
that we can receive for that Put may be reduced if our stock
price declines.
We must wait a minimum of five business days after the end
of the 20 business day pricing period for a prior Put before
exercising a subsequent Put. We may, however, give advance
notice of our subsequent Put during the pricing period for the
prior Put. We can only exercise one Put during each pricing
period.
WARRANTS
Within five business days after the end of each pricing
period, we are required to issue and deliver to Swartz a warrant
to purchase a number of shares of our common stock equal to 10%
of the common shares issued to Swartz in the applicable Put.
Each warrant will be exercisable at a price that will initially
equal 110% of the market price for the applicable Put. The
warrants will have semi-annual reset provisions similar to the
reset provisions for the warrants Swartz currently holds. Each
warrant will be immediately exercisable and have a term beginning
on the date of issuance and ending five years later.
SAMPLE EXERCISE OF A PUT
As soon as practicable after the effectiveness of the
registration statement, we plan to draw down the maximum initial
amount permitted under the Investment Agreement. Based on the 20
day lowest closing bid price of our common shares of $0.1875 and
our 20 day aggregate daily reported trading volume of 3,074,070
as of September 29, 2000, we would be entitled to draw down
approximately $40,355 in connection with our first draw down.
Based on these facts, we would issue 461,200 shares of our common
stock and a warrant to purchase 46,120 shares of our common stock
to Swartz.
In the period beginning January 1, 2000 through September
29, 2000, the 20-day aggregate trading volume ranged from
1,769,900 to 36,964,400 shares. Closing bid prices ranged from
$0.1875 to $1.64 per share. The table below illustrates the
dollar amounts that could have been available to us and the
corresponding number of shares that we would have issued per Put
had this agreement been in effect during that time:
<TABLE>
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES(1):
PRICE/SHARE 20 DAY VOLUME: 2,500,000 5,000,000 10,000,000 20,000,000
----------------------------------------------------------------------------------------------------------
$0.18 DOLLARS PER PUT $ 30,000 $ 60,000 $120,000 $240,000
SHARES PER PUT 375,000 750,000 1,500,000 3,000,000
----------------------------------------------------------------------------------------------------------
$0.25 DOLLARS PER PUT $ 56,250 $112,500 $225,000 $450,000
SHARES PER PUT 375,000 750,000 1,500,000 3,000,000
----------------------------------------------------------------------------------------------------------
$0.50 DOLLARS PER PUT $150,000 $300,000 $600,000 $1,200,000
SHARES PER PUT 375,000 750,000 1,500,000 3,000,000
----------------------------------------------------------------------------------------------------------
$0.75 DOLLARS PER PUT $243,750 $487,500 $975,000 $1,950,000
SHARES PER PUT 375,000 750,000 1,500,000 3,000,000
----------------------------------------------------------------------------------------------------------
$1.00 DOLLARS PER PUT $337,500 $675,000 $1,350,000 $2,700,000
SHARES PER PUT 375,000 750,000 1,500,000 3,000,000
----------------------------------------------------------------------------------------------------------
$1.25 DOLLARS PER PUT $431,250 $862,500 $1,725,000 $3,450,000
SHARES PER PUT 375,000 750,000 1,500,000 3,000,000
----------------------------------------------------------------------------------------------------------
$1.50 DOLLARS PER PUT $523,125 $1,046,250 $2,092,500 $4,000,000
SHARES PER PUT 375,000 750,000 1,500,000 2,867,384
----------------------------------------------------------------------------------------------------------
$1.64 DOLLARS PER PUT $571,875 $1,143,750 $2,287,500 $4,000,000
SHARES PER PUT 375,000 750,000 1,500,000 2,867,384
----------------------------------------------------------------------------------------------------------
(1) At no time may we Put a number of shares to Swartz that, when added to
the number of shares acquired by Swartz under the Investment Agreement
during the 31 days before the Put date, will result in Swartz holding
more than 9.99% of our outstanding common stock.
</TABLE>
We cannot assure you what the actual price of the shares
will be at any time we exercise our right to a Put. Our stock
price as of November 10, 2000 was $0.312.
We are registering 20,000,000 shares of common stock for
issuance to Swartz under the Investment Agreement. We believe,
based on the recent and anticipated market prices of our shares
of common stock and volume in our common stock, that 20,000,000
shares will be sufficient to allow us to issue stock and warrants
to Swartz in order to fully utilize the $40 million available to
us under the Investment Agreement. If 20,000,000 shares is not
sufficient, we will register additional shares for resale by
Swartz.
LIMITATIONS AND CONDITIONS TO OUR PUT RIGHTS
Our ability to Put shares of our common stock, and Swartz's
obligation to purchase the shares, is subject to the satisfaction
of certain conditions. These conditions include:
we have satisfied all obligations under the agreements
entered into between us and Swartz in connection with the
Investment Agreement;
our common stock is listed and traded on Nasdaq, the
O.T.C. Bulletin Board, or an exchange;
our representations and warranties in the Investment
Agreement are accurate as of the date of each Put;
we have reserved for issuance a sufficient number of
shares of our common stock to satisfy our obligations to
issue shares under any Put and upon exercise of warrants;
the registration statement for the shares we will be
issuing to Swartz must remain effective as of the Put date
and no stop order with respect to the registration statement
is in effect;
other than continuing losses described in an attachment
to the Investment Agreement, at the time of a Put, there can
be no material adverse change in our business prospects or
financial condition.
Swartz is not required to acquire and pay for any additional
shares of our common stock once it has acquired $40 million worth
of common stock. Additionally, Swartz is not required to acquire
and pay for any shares of common stock with respect to any
particular Put for which, between the date we give advance notice
of an intended Put and the date the particular Put closes:
we announced or implemented a stock split or combination
of our common stock;
we paid a dividend on our common stock;
we made a distribution of all or any portion of our
assets or evidences of indebtedness to the holders of our
common stock; or
we consummated a major transaction, such as a sale of all
or substantially all of our assets or a merger or tender or
exchange offer that results in a change in control.
We may not require Swartz to purchase any subsequent Put
shares if:
we, or any of our directors or executive officers, have
engaged in a transaction or conduct related to us that
resulted in:
a Securities and Exchange Commission enforcement
action, administrative proceeding or civil lawsuit; or
a civil judgment or criminal conviction or for any
other offense that, if prosecuted criminally, would
constitute a felony under applicable law;
the aggregate number of days which this registration
statement is not effective or our common stock is not listed
and traded on Nasdaq, the O.T.C. Bulletin Board, or an
exchange exceeds 120 days;
we file for bankruptcy or any other proceeding for the
relief of debtors; or
we breach covenants contained in the Investment
Agreement.
COMMITMENT AND TERMINATION FEES
If we do not Put at least $1,000,000 worth of common stock
to Swartz during each six-month period following the effective
date of the Investment Agreement, we must pay Swartz a semi-
annual non-usage fee. This fee equals the difference between
$100,000 and 10% of the value of the shares of common stock
we Put to Swartz during the six-month period.
We may terminate our right to initiate further Puts or
terminate the Investment Agreement at any time by providing
Swartz with notice of our intention to terminate. However, any
termination will not affect any other rights or obligations we
have concerning the Investment Agreement or any related
agreement.
If the Investment Agreement is terminated, we must pay
Swartz the greater of (i) the non-usage fee described above, or
(ii) the difference between $200,000 and 10% of the value of the
shares of common stock Put to Swartz during all Puts to date.
SHORT SALES
The Investment Agreement prohibits Swartz and its affiliates
from engaging in short sales of our common stock unless Swartz
has received a Put notice and the amount of shares involved in
the short sale does not exceed the number of shares we specify in
the Put notice.
CANCELLATION OF PUTS
We must cancel a particular Put if:
we discover an undisclosed material fact relevant to
Swartz's investment decision;
the registration statement registering resales of the
common shares becomes ineffective; or
our shares of common stock are delisted from Nasdaq, the
O.T.C. Bulletin Board, or an exchange.
If we cancel a Put, it will continue to be effective, but
the pricing period for the Put will terminate on the date we
notify Swartz that we are canceling the Put. Because the pricing
period will be shortened, the number of shares Swartz will be
required to purchase in the canceled Put may be smaller than it
would have been had we not cancelled the Put.
RESTRICTIVE COVENANTS
During the term of the Investment Agreement and for a period
of one year after termination of the Investment Agreement, we are
prohibited from engaging in certain transactions. These include
the issuance of any of our equity securities, or debt securities
convertible into equity securities, for cash in a private
transaction without obtaining the prior written approval of
Swartz. The Investment Agreement also prohibits us, during this
period, from entering into any private equity line agreements
similar to the Investment Agreement without obtaining Swartz's
prior written approval.
There are important exceptions to this limitation. We can
issue our shares without Swartz's prior approval in the following
transactions:
in connection with a merger, consolidation, acquisition
or sale of assets;
in connection with a strategic partnership or joint
venture, the primary purpose of which is not simply to raise
money;
in connection with our disposition or acquisition of a
business, product or license;
upon exercise of options by employees, consultants or
directors;
in an underwritten offering of our common stock;
upon conversion or exercise of currently outstanding
options, warrants or other convertible securities; or
under any option or restricted stock plan for the benefit
of employees, directors or consultants.
In addition, we may issue debt securities with no equity
feature for working capital purposes.
SWARTZ'S RIGHT OF INDEMNIFICATION
We have agreed to indemnify Swartz, including its
shareholders, officers, directors, employees, investors and
agents, from all liability and losses resulting from any
misrepresentations or breaches we make in connection with the
Investment Agreement, the registration rights agreement, other
related agreements, or the registration statement. We have also
agreed to indemnify these persons for any claims based on
violation of Section 5 of the Securities Act caused by the
integration of the private sale of our common stock to Swartz and
the public offering pursuant to the registration statement.
EFFECT ON OUTSTANDING COMMON STOCK
The issuance of common stock under the Investment Agreement
will not affect the rights or privileges of existing holders of
common stock except that the issuance of shares will dilute the
economic and voting interests of each shareholder. See "Risk
Factors."
As noted above, we cannot determine the exact number of
shares of our common stock issuable under the Investment
Agreement and the resulting dilution to our existing
shareholders, which will vary with the extent to which we utilize
the Investment Agreement, the market price of our common stock,
and exercise of the related warrants. The potential effects of
any dilution on our existing shareholders include the significant
dilution of the current shareholders' economic and voting
interests in us.
SELLING SECURITY HOLDERS
Assuming that we Put the entire 20,000,000 shares to Swartz
pursuant to the Investment Agreement, and assuming that Swartz
does not sell any of the shares, Swartz will then own
approximately 25.3% of our issued and outstanding common stock.
SWARTZ
This prospectus covers 20,000,000 shares of common stock
issuable to Swartz under the Investment Agreement and upon
exercise of the warrants we previously issued to Swartz. Swartz
is engaged in the business of investing in publicly-traded equity
securities for its own account.
Swartz does not beneficially own any of our common stock or
any other of our securities as of the date of this prospectus
other than 2,000,000 shares underlying the warrants we issued to
Swartz in connection with the negotiation and closing of the
Investment Agreement, which are not deemed to be beneficially
owned within the meaning of Sections 13(d) and 13(g) of the
Exchange Act to the extent that their acquisition by Swartz would
result in ownership of more than 4.99% of our outstanding common
stock. Other than its obligations to purchase common stock under
the Investment Agreement and the warrant, it has no other
commitments or arrangements to purchase or sell any of our
securities.
The table below includes information regarding ownership of
our common stock by the selling shareholders on September 30,
2000 and the number of shares that they may sell under this
prospectus. The actual number of shares of our common stock
issuable upon exercise of warrants to Swartz and our Put rights
is subject to adjustment and could be materially less or more
than the amount contained in the table below, depending on
factors which we cannot predict at this time, including, among
other factors, the future price of our common stock.
Other than as described above, none of the selling
shareholders has had within the past three years any material
relationship with our company or any of our predecessors or
affiliates. None of the selling shareholders is or was
affiliated with registered broker-dealers. The selling
shareholders have advised us that they possess sole voting and
investment power with respect to the shares being offered.
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Owned After Offering
----------------------- Shares ------------------------
Selling shareholders Number Percent Offered Number Percent
-------------------- ----------------------- ------- ------------------------
Swartz Private
Equity, LLC 2,000,000(1) 3.4% 18,000,000 20,000,000(2) 25.3%
----------
* Less than one percent.
(1) This number includes 2,000,000 shares of common stock issuable upon exercise of
outstanding warrants which are currently exercisable, which represents 3.4% of our issued
and outstanding common stock as of September 30, 2000. This number does not include
(solely for purposes of this prospectus) up to an aggregate of 18,000,000 shares of our
common stock that we may Put to Swartz under the Investment Agreement and warrants
issuable in connection with the Investment Agreement. These shares would not be deemed
beneficially owned within the meaning of Sections 13(d) and 13(g) of the Exchange Act
before their acquisition by Swartz. We anticipate that Swartz will not beneficially own
more than 9.9% of our outstanding common stock at any time. Eric S. Swartz holds
investment and voting control of the shares held by Swartz.
(2) Assumes that we will Put the entire 20,000,000 shares to Swartz pursuant to the
Investment Agreement, and that the selling shareholders will not sell any of the shares of
common stock offered by this prospectus. We cannot assure you that the selling
shareholders will not sell all or any of these shares.
</TABLE>
<PAGE>
This prospectus covers the resale by the selling
stockholders of these shares, plus, in accordance with Rule 416
under the Securities Act of 1933, such additional number of
shares of our common stock as may be issued on exercise of
the warrants resulting from stock splits, stock dividends or the
application of antidilution provisions in the warrants. The
number of shares shown in the preceding table as being offered by
the selling stockholders does not include such presently
indeterminate number of additional shares of our common stock.
Any and all of the shares of common stock may be offered for
sale pursuant to this prospectus by the selling stockholders from
time to time. Accordingly, no estimate can be given as to the
amounts of shares of our common stock that will be held by the
selling stockholders upon consummation of any such sales. In
addition, the selling stockholders may have sold, transferred or
otherwise disposed of all or a portion of their shares since the
date on which the information regarding their common stock was
provided in transactions exempt from the registration
requirements of the Securities Act of 1933.
PLAN OF DISTRIBUTION
The selling shareholders and their successors, which
includes their transferees, pledgees or donees or their
successors may sell the common stock directly to one or more
purchasers. They may also sell through brokers, dealers or
underwriters who may act solely as agents or may acquire common
stock as principals, at market prices prevailing at the time of
sale, at prices related to prevailing market prices, at
negotiated prices or at fixed prices, which may be changed. The
selling shareholders may effect the distribution of the common
stock by one or more of the following methods:
ordinary broker's transactions, which may include long or
short sales;
transactions involving cross or block trades or otherwise
on the Nasdaq National Market;
purchases by brokers, dealers or underwriters as
principals and resale by these purchasers for their own
accounts under this prospectus;
"at the market" to or through market makers or into an
existing market for the common stock;
in other ways not involving market makers or established
trading markets, including direct sales to purchasers or
sales effected through agents;
through transactions in options, swaps or other
derivatives (whether exchange listed or otherwise); or
any combination of the above, or by any other legally
available means.
In addition, the selling shareholders or successors in
interest may enter into hedging transactions with broker-dealers
who may engage in short sales of common stock in the course of
hedging the positions they assume with the selling shareholders.
The selling shareholders or successors in interest may also enter
into option or other transactions with broker-dealers that
require delivery by these broker-dealers of the common stock,
which may be subsequently resold under this prospectus.
Brokers, dealers, underwriters or agents participating in
the distribution of the common stock may receive compensation in
the form of discounts, concessions or commissions from the
selling shareholders and/or the purchasers of common stock for
whom such broker-dealers may act as agent or to whom they may
sell as principal, or both (which compensation as to a particular
broker-dealer may be in excess of customary commissions).
Swartz is, and any broker-dealers acting in connection with
the sale of the common stock by this prospectus may be deemed to
be, an underwriter within the meaning of Section 2(11) of the
Securities Act. Any commissions received by them and any profit
realized by them on the resale of common stock as principals may
be underwriting compensation under the Securities Act. Neither
we nor the selling shareholders can presently estimate the amount
of such compensation. We do not know of any existing
arrangements between the selling shareholders and any other
shareholder, broker, dealer, underwriter or agent relating to the
sale or distribution of the common stock.
The selling shareholders and any other persons participating
in a distribution of securities will be subject to applicable
provisions of the Securities Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation
M, which may restrict certain activities of, and limit the timing
of purchases and sales of securities by, the selling shareholders
and other persons participating in a distribution of securities.
Furthermore, under Regulation M, persons engaged in a
distribution of securities are prohibited from simultaneously
engaging in market making and certain other activities with
respect to such securities for a specified period of time prior
to the commencement of such distributions subject to specified
exceptions or exemptions. Swartz has, before any sales, agreed
not to effect any offers or sales of the common stock in any
manner other than as specified in this prospectus and not to
purchase or induce others to purchase common stock in violation
of Regulation M under the Exchange Act. All of the foregoing may
affect the marketability of the securities offered by this
prospectus.
Any securities covered by this prospectus that qualify for
sale under Rule 144 under the Securities Act may be sold under
that Rule rather than under this prospectus.
We cannot assure you that the selling shareholders will sell
any or all of the shares of common stock offered by the selling
shareholders.
In order to comply with the securities laws of certain
states, if applicable, the selling shareholders will sell the
common stock in jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states, the selling
shareholders may not sell the common stock unless the shares
of common stock have been registered or qualified for sale in the
applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
LEGAL PROCEEDINGS
We are subject to claims and suits arising in the ordinary
course of business. At this time, except as otherwise indicated,
it is not possible to estimate the final outcome of these legal
matters or the ultimate loss or gain, except as otherwise stated.
On November 8, 2000, the Company settled a previously-filed
lawsuit by Destiny Music (Los Angeles Superior Court Case
#BC225482), claiming that the Company owed a long-term lease
obligation, further financial support on certain projects and/or
group promotional efforts and a return of funds allegedly loaned
to Street Solid Records, a subsidiary of the Company at the time,
which have not been returned as promised. In addition to
PayForView, the suit also named Solid Disc Records; Solid Disc,
Inc.; Street Solid Records, Inc.; Jay Warsinske, Marc Pitcher
and Nic Meredith. The lawsuit has been settled for $325,000.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
(a) Directors and Executive Officers:
All directors are elected annually by the shareholders and
hold office until the next annual general meeting of shareholders
or until their successors are duly elected and qualified, unless
they sooner resign or cease to be directors in accordance with
the Articles of Incorporation of the Registrant. Executive
officers are appointed and serve at the pleasure of the Board of
Directors.
The following persons are the current directors and
executive officers of the Company:
MARC A. PITCHER - President, Chief Operating Officer and Director
Date Position Commenced: January 4, 1999
Term of Office: Expires December 31, 2000
Address: 219 East 69th Street, PHF, New York, New York 10021
Age: 32
Employment History: January 4, 1999 - Present, PayForView.com,
Internet Company, President; August 1998 - October 1999,
Professional Business Interiors, Interior Design/Construction
Project Manager; June 1992 - May 1998, Future Business Center,
Commercial Office Leasing, partner, operations manager.
DAN SCOTT - Chief Marketing Officer and Director
Date Position Commenced: April 2000
Term of Office: Expires March 31, 2001
Address: 289 Bilmar Place, Englewood, New Jersey 07631
Age: 35
Employment History: April 2000 - present, PayForView.com,
Internet Company, Chief Marketing Officer; March 1999 - April
2000, Self Employed, Internet Industry, Consultant; November 1996
- March 1999, 3BTV Productions, Multimedia Production Company,
Vice President Marketing; April 1986 - May 1994, QVC, Television
Shopping Channel, Multimedia Marketing Director.
GEORGE MELLIDES - Chief Financial Officer
Date Position Commenced: May 2000
Term of Office: Expires April 30, 2001
Address: 61 Green Way, Allendale, New Jersey 07401
Age: 59
Employment History: May 2000 - present, PayForView.com, Internet
Company, Chief Financial Officer; January 1999 - April 2000,
Dreman Value Management, Investment Advisors, Chief Financial
Officer; January 1997 - December 1998, Laidlaw Global Securities,
Money Managers, Chief Financial Officer; November 1995 - December
1996, George Davidson, Data Processing, Chief Financial Officer.
SCOTT SHULTZ - Director
Term of Directorship: One year
Address: 328 West 96th Street, #2B, New York, New York 10025
Age: 38
Employment History: June 2000 - present, Turn-Key Entertainment,
Internet Company, Vice President Business Development; March 1999
- June 2000, Prudential, Financial Services, Client
Representative; February 1998 - March 1999, Self Employed, Cable
and Satellite Industry, Consultant; January 1994 - February 1998,
Primetime 24, Satellite Broadcaster, Vice President Sales and
Marketing.
(b) There are no significant employees who are not described as
executives above, and there are no family relationships among
directors, executive officers or any nominees to these positions.
During the past five years, no present or former director,
executive officer or person nominated to become a director or an
executive officer of the Company:
(1) was a general partner or executive officer of any
business against which any bankruptcy petition was filed, either
at the time of the bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject
to a pending criminal proceeding (excluding traffic violations
and other minor offenses);
(3) was subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any
type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a
civil action), the Securities and Exchange Commission or the
Commodity Futures Trading Commission to have violated a federal
or state securities or commodities law, and the judgment has not
been reversed, suspended or vacated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
(a) Security ownership of certain beneficial owners. The table
below identifies any individual (including any "group") who is
known to the Company, as of the date of this filing, to be the
beneficial owner of more than five percent of any class of our
voting securities:
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership(1)
Common Argel Holdings, Ltd. 3,120,250 5.3%
55 Frederick Street (affiliate)
Nassau, Bahamas
(1) Unless otherwise indicated, the Company believes that
all persons named in the above table have sole voting
and investment power with respect to all shares of
common stock beneficially owned by them.
</TABLE>
(b) Security ownership of management. The table below sets for
the ownership, as of the date of this filing, by all directors
and nominees, and each of the named executive officers of the
Company, and directors and executive officers of the registrant
as a group.
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
owner ownership(1)
Common Marc A. Pitcher 765,833(2) 1.3%
219 East 69th St., PHF (affiliate)
New York, New York 10021
Common Dan Scott 36,458(3) 0.0%
289 Bilmar Place (affiliate)
Englewood, New Jersey 07631
Common Scott Shultz 29,167(4) 0.0%
328 West 96th St., 2B (affiliate)
New York, New York 10025
Common George Mellides 29,167(5) 0.0%
61 Green Way (affiliate)
Allendale, New Jersey 07401
Common All Officers and 860,625 1.5%
Directors as a
Group
(1) Unless otherwise indicated, the Company believes that
all persons named in the above table have sole voting
and investment power with respect to all shares of
common stock beneficially owned by them.
(2) Includes 145,833 options vested under the Company's
Stock Option Plan.
(3) Includes 36,458 options vested under the Company's
Stock Option Plan.
(4) Includes 29,167 options vested under the Company's
Stock Option Plan.
(5) Includes 29,167 options vested under the Company's
Stock Option Plan.
</TABLE>
There are no agreements between or among any of the
shareholders which would restrict the issuance of shares in a
manner that would cause any change of control of the registrant.
There are no voting trusts, pooling arrangements or similar
agreements in place between or among any of the shareholders, nor
do the shareholders anticipate the implementation of such an
agreement in the near term.
DESCRIPTION OF SECURITIES
Our Articles of Incorporation authorize capital stock
consisting of one class of stock, Common Stock. Each share has
equal and identical rights to every other share for purposes of
dividends, liquidation preferences, voting rights and any other
attributes of a company's common stock. No voting trusts or any
other arrangement for preferential voting exist among any of the
shareholders, and there are no restrictions in the bylaws or
articles of incorporation precluding issuance of further common
stock or requiring any liquidation preferences, voting rights or
dividend priorities with respect to this class of stock. As of
September 30, 2000, there were approximately 58,940,667 shares of
the Company's Common Stock issued and outstanding. Each share of
Common Stock entitles the holder thereof to one vote, either in
person or by proxy, at a meeting of shareholders. The holders
are not entitled to vote their shares cumulatively. Accordingly,
the holders of more than 50% of the issued and outstanding shares
of Common Stock can elect all of the directors of the Company.
All shares of Common Stock are entitled to participate
ratably in dividends when and as declared by our Board of
Directors out of the funds legally available therefor. Any such
dividends may be paid in cash, property or additional shares of
Common Stock.
Holders of Common Stock have no preemptive rights or other
subscription rights, conversion rights, redemption or sinking
fund provisions. If there is a dissolution, whether voluntary or
involuntary, of the Company, each share of Common Stock is
entitled to share ratably in any assets available for
distribution to holders of the equity securities of the Company
after satisfaction of all liabilities.
Dividend Policy
The Company has not declared or paid any dividends on its
outstanding Shares of Common Stock since its inception and we do
not anticipate that we will do so in the foreseeable future. The
declaration of dividends on the Shares is within the discretion
of our Board of Directors and will depend upon the assessment of,
among other factors, our earnings, capital requirements and
operating and financial condition. At the present time our
anticipated capital requirements are such that we intend to
follow a policy of retaining earnings in order to finance the
further development of our business.
We are further limited in our ability to pay dividends on
the Company's Shares by regulation under Nevada law relating to
the sufficiency of profits from which dividends may be paid.
LEGAL MATTERS
Dieterich & Associates, in Los Angeles, California, will
pass upon the validity of the shares of Common Stock offered by
this prospectus for us.
EXPERTS
Grant Thornton LLP, independent certified public
accountants, have audited our consolidated financial statements
for the year ended December 31, 1999, as set forth in their
report (which contains an explanatory paragraph describing
conditions that raise substantial doubt about our ability to
continue as a going concern as described in Note B to the
consolidated financial statements), which is included in this
prospectus. Our financial statements are included in reliance on
Grant Thornton LLP's report, based on their authority as experts
in accounting and auditing.
Davidson & Company, independent certified public
accountants, have audited our consolidated financial statements
for the period from April 6, 1998 (inception) to December 31,
1998, as set forth in their report (which contains an explanatory
paragraph describing conditions that raise substantial doubt
about our ability to continue as a going concern as described in
Note B to the consolidated financial statements), which is
included in this prospectus. Our financial statements are
included in reliance on Davidson & Company's report, based on
their authority as experts in accounting and auditing.
INTEREST OF NAMED EXPERTS AND COUNSEL
None of the experts named in this prospectus owns any of our
securities, nor were they hired on a contingent basis. These
experts will not receive any direct or indirect interest in our
Company and none were promoters, underwriters, voting trustees,
directors, officers, or employees.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
PayForView.com Corp. has no insurance or other instrument of
indemnity against liability under the Securities Act of 1933. We
have taken the general position that the United States Securities
and Exchange Commission considers such indemnification not to be
in the public interest.
ORGANIZATION WITHIN LAST FIVE YEARS
PayForView.com Corp. was organized on August 26, 1988, under
the name Sierra Gold Corporation and under the laws of the State
of Nevada. We had no operations at that time and as such were
considered a development stage company.
Our Company commenced trading on the National Association of
Securities Dealers (NASD) OTC Bulletin Board on December 21, 1998
under the trading symbol SIRG.
On January 4, 1999, the Company changed its name to
PayForView.com Corp. and its trading symbol to "PAYV".
DESCRIPTION OF BUSINESS
PayForView, headquartered in New York with satellite offices
in Los Angeles, California and Vancouver, Canada, is an
integrated online and offline content company that creates and
acquires event programming and delivers that content on a pay-
for-view and free basis. We intend to produce and own
programming and distribute it through new media (the Internet)
and old media (broadcast, DBS and cable television). In this
manner, we will be able to generate revenues from traditional
sources while we build a strong brand in the Internet space in
preparation for an expanding broadband universe and the upcoming
convergence of old media with new media.
We continue to enter into alliances with entertainment and
technology companies that provide elements needed for the
completion of our plans. These companies include those providing
Internet-related technical support, filmed or live programming,
recorded music and sports related programming.
Our executive offices are located at 509 Madison Avenue,
Suite 1610, New York, New York 10022, and our telephone number is
(212) 605-0150.
PayForView.com Website.
Our website, hosted by SofTV, a leader in streaming media in
the emerging broadband E-Commerce market, provides users with a
unique and vibrant interface. The core of the site is an
embedded streaming media window, where the "primary" content,
consisting of live events, archival entertainment and promos will
be displayed. Surrounding the window is a selection of
"parallel" content areas, where dynamic and compelling
information coincides with and enhances the primary content. The
beta version of the website was launched on April 26, 2000, when
we offered our first boxing event.
Our leading-edge technology allows video to contain
"triggers" whereby text, photos and images are seen at specific
times when a trigger is released simultaneously to the streaming
video. This innovative development is both interesting to the
viewer and a benefit to sponsors.
Since the launch of our beta website in April 2000, we have
broadcast an International Woman's Boxing Championship event, two
Ultimate Fighting Championship events with a contract for at
least one more, a live stand-up comedy event and two
international soccer events including the USA Woman's soccer team
vs. Norway match, web-cast July 30, 2000.
We will also acquire, distribute and sell filmed
entertainment online and, through our Voyager Film Sales
subsidiary, in the traditional manner through existing
relationships with distributors and content providers.
Strategic Alliances.
We have entered the marketplace through alliances with
entertainment and technology companies that provide elements
needed for the completion of our plans. These companies include
those providing Internet related technical support, filmed or
live programming, recorded music and sports related footage.
This creates a vertical integration of entertainment-related
products and Internet expertise, which will establish our base of
operations and cash flow.
Technology Providers.
We have aligned ourselves with various quality technology
providers to provide essential streaming video, web casting and
supporting services.
InterVu/Akamai
InterVu (which was purchased by Akami in early 2000) is a
streaming media service provider working to make the Internet a
viable broadcast medium for entertainment, business and
education.
Akami has the technical expertise and distributed server
network to allow us to reliably deliver programming via the
Internet. Akami has developed proprietary technology that allows
us to manage broadcast streams in real time and gives us access
to critical information about its video database and streaming
files.
Through its own distributed broadcast network, Akami can
provide us with reliable and efficient connectivity to the
Internet, using a premier Internet infrastructure built on a
high-speed backbone and high-speed links to the Internet.
SofTV
SofTV is a leading-edge Canadian-based Internet developer
specializing in video streaming and interactive content based on
broadcast applications. SofTV's patent pending technology allows
website publishers to combine the emotional impact of video with
the power of images, text and graphics. SofTV has created and
also hosts our website.
Bandwidth Growth.
In order to view good quality film and video files over the
Internet, subscribers will require a cable modem, DSL or
comparable high-bandwidth connection. Research indicates that
cable companies will be the leading provider of residential
broadband service. By 2004, the industry expects a total of 31.8
million North American subscribers with high-bandwidth access.
The following table identifies current and expected trends
in the adoption of high bandwidth Internet access. These high-
end bandwidth users represent computer users with the capacity to
use services provided by us (Source: Paul Kagen and Associates)
Year Cable Modem DSL Subscriber Total High
Users Users Bandwidth Users
1999 1,460,000 420,000 1.880,000
2000 3,600,000 2,400,000 6,000,000
2001 7,590,000 4,170,000 11,760,000
2002 12,950,000 7,090,000 20,040,000
2003 15,840,000 10,590,000 26,430,000
2004 18,980,000 12,910,000 31,890,000
A quickening pace of development in both technology and
content available to users of the World Wide Web parallels this
increase in Internet access speed. New technologies such as
video and audio streaming enable the creation of new forms of
content, combining aspects of traditional, narrowband web design
(including text, graphics, and hyper-links) with the video-based
production concepts of television. While this market is growing
rapidly, it presently accounts for a small percentage of the
Internet users online today. Accordingly, most companies
involved in the development of technology and content for the Web
are focusing on solutions that are intended to provide an
acceptable experience for the predominant narrowband customer,
while offering an improved version of the same experience to
broadband users.
Bandwidth Islands.
In the marketplace, we have identified companies which we
describe as "Bandwidth Islands". These are organizations whose
primary business is the sale and service of bandwidth and related
services to end users, both residential and commercial. Each of
these Islands has a built in subscriber base, and instant access
through their database to the high bandwidth users which we are
targeting.
In selling high bandwidth services to homes, one of the
challenges faced by the Islands is content. Consumers, while
attracted to the extra speed in Internet surfing possible with
higher bandwidth, generally question the value of upgrading to
higher bandwidth at higher cost when, to date, there is not
enough content on the net for which high bandwidth is required.
By collecting content and creating and perfecting a delivery and
tracking mechanism, we will be able to offer the Islands the
content with which they will be able to attract additional high
band width customers, and keep the ones they have on line and on
our subscriber list. Additionally, by retaining control of the
content and delivery system, we intend to sell advertising during
our programming to the end users, thus offering the Island an
additional source of revenue.
Growth of Online Commerce.
The Internet is dramatically affecting the methods by which
consumers and businesses are buying and selling goods and
services. The Web provides the ability to reach a global
audience and to operate with minimal infrastructure, reduced
overhead and greater economies of scale, while providing
consumers with a broad selection, increased pricing power and
unparalleled convenience. As a result, a growing number of
consumers are transacting business on the Web, including buying
consumer goods, trading securities, paying bills and purchasing
airline tickets. International Data Corporation estimates that
approximately 28% of Web users purchased goods or services over
the Web in 1998 and that approximately 40% of Web users will make
online purchases in 2002. Jupiter Communications estimates that
retail consumer purchases of goods and services over the Internet
will increase from $5.0 billion in 1998 to $29.4 billion in 2002.
We believe that as electronic commerce expands, advertisers and
direct marketers will increasingly use the Web to advertise
products, drive traffic to their websites, attract customers and
facilitate transactions.
Growth of Internet Advertising.
The Web is evolving into an important medium for advertisers
due to its interactive nature, global reach, rapidly growing
audience and the expected increase in online commerce. Unlike
more traditional advertising methods, the Web gives advertisers
the potential to target advertisements to broad audiences or to
selected groups of users with specific interests and
characteristics. The Web also allows advertisers and direct
marketers to measure the effectiveness and response rates of
advertisements and to track the demographic characteristics of
Web users. The interactive nature of Web advertising enables
advertisers to better understand potential customers, and to
change messages rapidly and cost effectively in response to
customer behavior and product availability.
We anticipate an increase in online advertising. Forrester
Research estimates that the dollar value of Internet advertising
in the U.S. will increase from $1.3 billion in 1998 to $10.4
billion in 2003, representing a 52% compounded annual growth
rate. International online ad spending is expected to grow from
$0.2 billion in 1998 to $4.7 billion in 2003, representing an 87%
compounded growth rate. By comparison, Broadcasting & Cable
estimates that $130 billion was spent in 1998 on traditional
media advertising in the U.S., including television, radio,
outdoor and print. Until recently, the leading Internet
advertisers have been technology companies, search engines and
Web publishers. However, many of the largest advertisers
utilizing traditional media, including consumer products
companies and automobile manufacturers, are expanding their use
of online advertising. We believe that online advertising will
continue to capture an increasing share of available advertising
dollars and that this trend will drive demand for online ad
inventory and for sophisticated Internet advertising solutions.
Driven by the growing online population, the rise in time
spent online and increasing digital commerce adoption, online
advertising revenues have surpassed outdoor advertising and will
exceed spending for cable advertising.
Revenue Streams.
Although we have a transaction/advertising revenue model it
is unlike traditional websites that offer only one or two of
these revenue streams. We have numerous methods to capitalize on
our exclusive branding, image and content. We will derive our
revenue streams from the following sources:
-Live Events
Users pay an online fee for a one-time viewing of select
live event programming. Users pay a fee of $1.99 to $4.95
depending on the exclusivity of the event. For example, the
Ultimate Fighting Championship event that PayForView offered on
June 9, 2000 was only seen on the our website and on Direct
Broadcast Satellite (DBS). It was not on either network or cable
television.
-Archival Events
In the future, users will be charged an online transactional
fee for a one-time viewing of an archived event program. The
archival programming will consist of classic sports events, major
boxing matches, films, comedy performances, etc. The charge for
these events will range from $.49 to $1.99. These events are at
the convenience of the viewers, at the time they wish to view
them.
-Advertising
Since PayForView.com is a very "sticky" site, one where a
user resides for a lengthy period of time, advertisers will pay
to have their advertising served and tracked on our website.
These advertisers will be on the website the length of time users
view either the free entertainment information, which might be
upwards of a half hour, or a live event, which they will watch
for several hours.
-E-Commerce
Users may purchase merchandise specifically related to event
programs, both live or archived from our e-commerce shop.
Merchandise pertaining to our free entertainment and sports
information will also be offered. We are in discussions to
partner with several retailers that offer event related
merchandise.
-On-line Syndication
We will capitalize on the lack of quality entertainment
produced specifically for on-line viewing. At this time, there
are a number of Internet companies who are streaming video who
are in need of the type of programming we are creating and
acquiring. Our executive team, with experience and contacts in
event production, sees an excellent opportunity to become an on-
line provider of video based events to emerging Internet based
streaming media companies. We are well positioned as a one-stop,
turnkey provider of compelling, entertaining content.
-Sales to Traditional Media
During the rollout of the Broadband universe, some of our
acquired programming will be sold to traditional media such as
DBS and cable television. This allows for revenue generation of
a magnitude greater than the present Broadband universe allows.
-VHS/DVD Sales
Since we acquire programming, we will negotiate with
international VHS/DVD distributors to release the product in
brick-and-mortar and electronic commerce distribution avenues to
gain additional revenue.
Competition.
Perhaps closest to our business model is www.centerseat.com.
Similar in design and concept, Center Seat offers a wide variety
of online entertainment, but does not charge for online
programming. Center Seat also does not deliver live events nor
does it offer chat room functionality. Moreover, Center Seat
does not presently offer rich media advertising as does
PayForView.
Kanakaris Wireless Inc., (OTC BB: KKRS) www.kanakaris.com,
offers online pay-per-view movies, downloadable books and related
e-commerce.
House of Blues, www.hob.com, offers live and archival music
events that appear at the House of Blues venues and also offers
related e-commerce.
Our approach differs from the above through diversification.
By having both online and offline sports and event alliances and
a film production and sales division, PayForView is in a position
to create revenue from non-Internet sources while also creating
the content it intends to broadcast on the Internet. By
including music, sports, comedy and other live events, and
utilizing an embedded video window, triggered parallel content
and rich media advertising, we are attempting to differentiate
ourselves from our competitors.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
General.
We are an integrated online and offline content company that
creates and acquires events and information-based content and
delivers such content on a pay-for-view and free basis. We
produce and own programming and distribute it through new media
(the Internet) and old media (broadcast, DBS and cable
television.) We have entered into alliances with entertainment
and technology companies that provide elements needed for the
completion of our plans. These companies include those providing
Internet related technical support, filmed or live programming,
recorded music and sports related footage. This creates a
vertical integration of entertainment-related products and
Internet expertise, which will establish a base of operations and
cash flow for us. We have not had any significant revenues since
purchasing Voyager Entertainment in 1999. We have incurred a
cumulative net loss in our development stage of approximately
$17.9 million as of September 30, 2000. We expect to continue to
incur substantial and increasing losses during our development
stage due to continued and increased spending on our web site,
hiring of employees, research and the costs of marketing, sales,
video streaming and administrative activities.
We anticipate that future revenues and results of operations
may continue to fluctuate significantly depending on, among other
factors, the number of available subscribers who have access to
high speed Internet connections, the costs associated with the
streaming of video based content over the Internet, our ability
to recruit and retain advertising clients, and our ability to
successfully provide viewers with compelling and entertaining
events. We anticipate our operating activities will result in
substantial net losses while in our development stage and expect
losses to continue for a period of time once in our operational
stage.
Results of Operations.
Year ended December 31, 1999 as compared to the period from
April 6, 1998 (inception) through December 31, 1998 and nine
months ended September 30, 2000 as compared to the nine months
ended September 30, 1999.
Revenues.
We had no revenues from operations from our inception on
April 6, 1998 to date.
Selling, general and administrative expenses:
Selling, general and administrative expenses for the year
ended December 31, 1999 increased to $2,240,097 from $275,528, a
net increase of $1,964,569 as compared to the period from April
6, 1998 (inception) to December 31, 1998. Prior to January of
1999, the company was in its very early development stage, and
was not carrying on any significant business, which resulted in
low operating costs. As a result of venture capital funding from
a private investor beginning in January 1999,we began to build
and execute our business plan, hire staff, build our web site and
create awareness of our business through public relations and
marketing. These four areas saw the greatest increase in
spending in 1999 as compared to 1998. Management compensation
for the year ended December 31, 1999 increased to $241,750 from
$9000, an increase of $232,750 as compared to 1998. Web site
development, Public Relations and Marketing costs increased to
$565,608 for the year ended December 31, 1999 from $44,608 for
the period from April 6, 1998 (inception) to December 31, 1998.
The remaining selling, general and administrative expenses of
$1,432,739 for the twelve months ended December 31, 1999
increased from $221,920 for the period from April 6, 1998
(inception) to December 31, 1998, and consisted primarily of
$936,000 in consulting fees of which $653,000 was non cash based,
equity compensation, and $183,000 in travel and entertainment
expenses.
Selling, general and administrative expenses for the nine
months ended September 30, 2000 increased to $5,858,101 from
$1,271,851 a net increase of $4,586,250 as compared to the nine
months ended September 30, 1999. The increase was primarily due
to increases in personnel costs and consulting fees of $3,860,630
(of which $3,025,357 was non-cash equity based compensation),
transaction costs relating to the MAS Acquisition of $475,000 (of
which $375,000 was non-cash, equity based compensation), and
$186,000 increase in professional fees offset by a decrease in
advertising and promotion of $379,000. The increases in
personnel costs, consulting and professional fees resulted from
our web-design, marketing and content acquisition efforts.
Advertising and promotion decreased during the nine months ended
September 30, 2000 due to our efforts being focused on the
development of a new version of our web site which was in its
beta test phase and therefore we spent less time and effort on
advertising and marketing. Advertising and marketing costs
incurred during the nine months ended September 1999 included
$103,000 paid for the marketing of a live web cast from the
Cannes film festival. The remaining increase is due to higher
overhead costs relating to our move from Vancouver British
Columbia to New York City.
Loss From Impairment:
We had losses from impairment during the nine months ended
September 30, 1999 and the twelve months ended December 31, 1999
of $4,208,376 and $4,247,022, respectively, due to the fact that
we issued shares of our common stock in payment for certain
deliverables that we subsequently became aware did not exist.
There were no losses from impairment for the nine months
ended September 30, 2000.
Loss From Discontinued Operations:
We disposed of 81% of our interest in Street Solid, a record
label that we acquired on January 5, 1999, in October 1999,
resulting in a loss from disposal of $1,225,193 for the year
ended December 31, 1999. The results of operations of Street
Solid during the nine months ended September 30, 1999 and the
year ended December 31, 1999 have been accounted for as
discontinued operations and amounted to $1,031,200 and
$1,056,167, respectively. During the nine months ended September
30, 2000 we charged an additional $127,000 to discontinued
operations to record settlement of litigation that arose as a
result of Street Solid.
Investment Expense:
Investment expense during the nine months ended September
30, 2000 represents a write-down of the Company's investment in
Turn-Key Entertainment LLC.
Interest Income:
Interest income for the nine months ended September 30, 2000
was $96,540, as compared to zero for the nine months ended
September, 1999. This is due to larger cash and cash equivalents
balances during the nine months ended September 30, 2000
resulting from the net proceeds received by us from our private
placements of shares of our common stock.
Interest Expense:
Interest expense for the year ended December 31, 1999 was
$348,631 as compared to zero for the period from April 6, 1998
(inception) to December 31, 1998. This is as a result of a non-
cash interest charge relating to a convertible debenture
agreement whereby such debentures would be convertible into
shares of our common stock at a 25% discount to the market price.
Interest expense for the nine months ended September 30,
1999 was $340,806, of which $333,333 was a result of a non-cash
interest charge related to a convertible debenture agreement,
whereby such debentures would be convertible into shares of our
common stock at a 25% discount to the market price. Interest
expense for the nine months ended September 30, 2000 was zero.
Extraordinary Item.
During the nine months ended September 30, 2000, we recorded
a gain on extinguishment of debt of $200,151. This was due to a
May 2000 settlement of $850,000 for a $1,050,151 debt. The
Settlement was during the second quarter of 2000.
Liquidity and Capital Resources.
Since inception through September 30, 2000, we had a deficit
accumulated during the development stage of approximately $17.9
million and expect to continue to incur substantial operating
losses for the next several years. We have financed our
operations primarily through private placements of our common
stock. From inception to September 30, 2000 we received proceeds
from the sale of equity securities, net of share issuance
expenses, of approximately $6 million. Cash proceeds from the
sale of our securities during the nine months ended September
30,2000 were approximately $5.6 million, including the $222,500
received in December 1999.
We used net cash in operating activities of $2,388,379 for
the nine months ended September 30, 2000. Net cash and cash
equivalents used in operations for the nine months ended
September 30, 2000 consisted of the net loss from continuing
operations of $8,238,662 less non cash items of $6,013,764,
decrease in prepaid expenses of $7,102, increases in other assets
of $127,840 (which represented primarily of a security deposit on
our new premises), and a decrease in accounts payable of $35,641.
Net cash used in investing activities was $1,991,415 for the
nine months ended September 30, 2000. Investing activities
included payments for website costs of $306,072, a settlement
payment to the purchaser of Street Solid of $58,000, fixed assets
additions of $146,000 and a strategic equity investment of $1.4
million in Turn-Key Entertainment LLC, and payments for licenses
and rights of $81,517.
Net cash provided by financing activities was $5,208,602 for
the nine months ended September 30, 2000. Cash provided by
financing activities consisted of proceeds from the sale of our
common stock of $5,208,602.
Our capital funding requirements will depend on numerous
factors, including the progress and magnitude of our website
development, marketing plans, technological advances, competitive
and market conditions, our ability to establish and maintain
collaborative arrangements, the cost of streaming video content
on the Internet and effectiveness of commercialization activities
and arrangements.
We are likely to require substantial funding to continue our
website development, marketing, sales, and administrative
activities. We have raised funds in the past through the sale of
securities, and may raise funds in the future through public
offerings or private placements of securities, collaborative
arrangements or from other sources. We have an agreement with
Swartz Private Equity, LLC for an equity line of up to
$40,000,000. We continue to explore and, as appropriate, will
enter into discussions with other companies regarding the
potential for collaborative arrangements, license agreements or
development or other funding programs with us in exchange for
marketing, distribution or other rights to our products and
services. However, there can be no assurance that discussions
will result in any investments, collaborative arrangements,
agreements or funding, or that future additional financing
through debt or equity financing will be available to us on
acceptable terms, if at all. Further, there can be no assurance
that any arrangements resulting from these discussions will
successfully reduce our funding requirements. If additional
funding is not available to us when needed, we will be required
to scale back our website development, marketing and
administrative activities and our business and financial results
and condition would be materially and adversely affected. We
believe that the line of credit available from Swartz will be
sufficient for at least the next twelve months.
CHANGES IN SECURITIES
1. During the first quarter of 2000 we entered into two
separate subscription agreements for the private
placement of shares of our Common Stock at a price of
$1.50 per share. We received $1,215,000 from the sale
of 810,000 shares under the terms of the first
agreement on January 15, 2000, and $4,200,000 from the
sale of 2,800,000 shares under the terms of the second
agreement dated January 21, 2000, for a total proceeds
of $5,381,000, which is net of $34,000 of offering
costs.
2. During the first quarter of 2000, holders of $172,500
of convertible debentures exchanged such debentures for
6,900,000 shares of common stock pursuant to a
Debenture Agreement dated June 25, 1999.
3. In February 2000, we granted an aggregate of 3,000,000
shares to officers and consultants as equity based
compensation. The shares were distributed and vested
on that date.
4. In March of 2000, we acquired MAS Acquisition
Corporation, an inactive public shell corporation in
exchange for an aggregate of 670,000 shares of its
common stock (including a commission of 335,000 shares)
and $100,000.
5. In May of 2000, we made a strategic investment in
Turn-key Entertainment LLC, a private development stage
Delaware Corporation that intends to develop an online
streaming media product that is synergistic with our
core business. We issued 2,000,000 shares of our
restricted common stock and paid $1,400,000 in cash in
exchange for 25% of the outstanding stock of Turn-key
Entertainment LLC.
6. On July 13, 2000, our Board of Directors approved a
stock option plan ("the Plan") and reserved 4 million
shares of our common stock to attract, motivate and
retain individuals upon whose continued efforts the
success of the company in large measure depends. On
July 25, 2000, we issued 1,675,000 options pursuant to
the Plan to certain employees, officers, directors and
consultants. The exercise price of such options were
$0.25 per share, based, as per the terms of the plan,
on the closing price on the day immediately preceding
the issue date. These options vest over a three-year
period and expire in July 2003.
7. On August 31, 2000 the Company entered into an
agreement with an investment bank to register and
underwrite shares of its common stock with an aggregate
market value not to exceed $40,000,000 to the general
public. The company is obligated to issue warrants to
purchase 2,000,000 shares of common stock to the
investment bank, whether or not the registration and
proposed sale of shares to the public is completed.
The Company is also obligated to issue additional
warrants to the investment bank upon achieving certain
milestones in the registration process. The company
recorded such warrants at $600,000 which is included in
deferred offering costs.
DESCRIPTION OF PROPERTY
The Company presently maintains offices at two locations, in
Vancouver, British Columbia and New York, New York. The business
office in Vancouver is located at the Guinness Business Centre,
Suite 300, Guinness Tower, 1055 West Hastings Street, Vancouver,
British Columbia V6E 2E9. The Vancouver office consists of
approximately 1,000 square feet, leased at $3,300 per month, with
a six-month lease and an option to renew for additional six-month
intervals. The main office in New York, is located at 509
Madison Avenue, 16th Floor, New York, New York 10022, consists of
approximately 4,000 square feet, leased at $14,000 per month,
with a 60-month lease.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 10, 2000, we made a strategic investment of
$1,400,000 plus 2,000,000 shares of our restricted common stock
to purchase a 25% interest in Turn-Key Entertainment, LLC, a
company controlled by one of our consultants, whose plan is to
develop an online streaming media product that is synergistic
with our core business. Turn-Key had no operations through
September 30, 2000 other than our investment. As part of our
investment, we secured the right to participate in future
financings by Turn-Key. As discussed in Note N-3 to the
financial statements included in this Prospectus, Sid Amira, one
of our consultants, owns the remaining 75% of Turn-Key. The
decision to invest in Turn-Key was ratified by our Board of
Directors in May, 2000.
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
A. Market Information
Our common stock is presently listed and traded on the
National Association of Securities Dealers' Over-The-Counter
Bulletin Board under the symbol "PAYV." However, there is
currently no "established trading market" for the Company's
common stock, and no assurance can be given that any current
market for the Company's common stock will continue to develop or
be maintained. For any market that develops for the Company's
common stock, the sale of "restricted securities" (common stock)
pursuant to Rule 144 of the Securities and Exchange Commission by
members of management, or any other person to whom any such
securities may be issued in the future may have a substantial
adverse impact on any such public market. A minimum holding
period of one year is required for resales under Rule 144, along
with other pertinent provisions, including publicly available
information concerning the Company (this requirement will be
satisfied by the filing and effectiveness of this Registration
Statement, the passage of 90 days and the continued timely filing
by the Company of all reports required to be filed by it with the
Securities and Exchange Commission); limitations on the volume of
"restricted securities" which can be sold in any 90 day period;
the requirement of unsolicited broker's transactions; and the
filing of a Notice of Sale of Form 144. There are approximately
17,018,972 restricted shares of the Company eligible for trading
as of the date of this filing.
The following quotations were provided by the National
Quotation Bureau, LLC, and do not represent actual transactions;
these quotations do not reflect dealer markups, markdowns or
commissions.
STOCK QUOTATIONS*
<TABLE>
<S> <C> <C>
CLOSING BID
-----------------------
Quarter ended: High Low
-------------- ---- ---
September 30, 2000 0.375 0.187
June 30, 2000 1.12 0.25
March 31, 2000 1.64 0.53
December 31, 1999 0.63 0.12
September 30, 1999 1.75 0.375
June 30, 1999 (2) 7.25 1.25
March 31, 1999 (1) 3.9375 1.0625
(1) Effective January 15, 1999, the Company instituted a 2-
for-1 forward stock split of its Common Stock.
(2) Effective April 9, 1999, the Company instituted a 3-for-
2 forward stock split of its common stock.
</TABLE>
(i) With the exception of the 2,000,000 warrants held by
Swartz Private Equity and the Option rights set forth in the
Company's Employee Option Plan, there is currently no Common
Stock of the Company which is subject to outstanding options or
warrants to purchase.
(ii) There are currently approximately 17,018,972 shares of
the Company's Common Stock which are eligible to be sold under
Rule 144 of the Securities Act of 1933 as amended.
(iii) There is currently no common equity that is being or
is proposed to be publicly offered by the Company, the offering
of which could have a material effect on the market price of the
issuer's common equity.
B. Holders
As of September 30, 2000, the Company had approximately
9,600 shareholders of record.
Applicability of Low-Priced Stock Risk Disclosure
Requirements.
Our securities will be considered low-priced or "designated"
securities under rules promulgated under the Exchange Act. Penny
Stock Regulation Broker-dealer practices in connection with
transactions in "Penny Stocks" are regulated by certain rules
adopted by the Securities and Exchange Commission. Penny stocks
generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny
stocks and the risk associated with the penny stock market. The
broker-dealer must also provide the customer with current bid and
offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock
held in the customer's account. In addition, the penny stock
rules generally require that prior to a transaction in a penny
stock, the broker-dealer must make a written determination that
the penny stock is a suitable investment for the purchaser and
receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. When the
Registration Statement becomes effective and the Company's
securities become registered, the stock will likely have a
trading price of less than $5.00 per share and will not be traded
on any national exchanges. Therefore, the Company's stock will
become subject to the penny stock rules and investors may find it
more difficult to sell their securities, should they desire to do
so.
C. Dividend Policy
We have not paid any dividends to date. In addition, we do
not anticipate paying dividends in the immediately foreseeable
future. The Board of Directors of the Company will review this
dividend policy from time to time to determine the desirability
and feasibility of paying dividends after giving consideration to
the our earnings, financial condition, capital requirements and
such other factors as the board may deem relevant.
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other
periodic reports as the Company may determine to be appropriate
or as may be required by law. We are required to comply with
periodic reporting, proxy solicitation and certain other
requirements by the Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent and Registrar for our Common Stock is
Transfer Online, Inc. at 227 SW Pine Street, Suite 300, Portland,
Oregon 97204.
EXECUTIVE COMPENSATION
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
Long Term Compensation
Annual Compensation Awards Payouts
------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Name and Year Salary($) Bonus($) Other Restricted Securities All other
Principal annual stock awards underlying compensation
position compensation options/SARs ($)
(#)
----------------------------------------------------------------------------------------------
Marc A. 2000 120,000 0 6,000 700,000 500,000 0
Pitcher 1999 60,000 20,000 6,000 0 0 0
(President,
COO & Director)
Dan Scott 2000 125,000 25,000 0 0 125,000 0
(Chief Marketing
Officer & Director)
Scott Shultz 2000 0 0 0 0 100,000 0
(Director)
George 2000 120,000 20,000 0 100,000 0 0
Mellides
(Chief Financial
Officer)
</TABLE>
<PAGE>
No cash compensation, deferred compensation or long-term
incentive plan awards were issued or granted to the Company's
management during the period ended December 31, 1999, except as
set forth in the Summary Compensation Table.
Long-Term Compensation
As at September 30, 2000, being a date within 135 days of
this Registration Statement, we have implemented an Employee
Option Plan for our officers, directors and certain key
consultants.
On July 13, 2000, our Board of Directors approved a stock
option plan ("the Plan") and reserved 4 million shares of our
common stock to attract, motivate and retain individuals upon
whose continued efforts the success of the company in large
measure depends. On July 25, 2000, we issued 1,675,000 options
pursuant to the Plan to certain employees, officers, directors
and consultants. The exercise price of such options were $0.25
per share, based, as per the terms of the plan, on the closing
price on the day immediately preceding the issue date. These
options vest over a three-year period and expire in July 2003.
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company,
with respect to any director or executive officer of the Company
which would in any way result in payments to any such person
because of his or her resignation, retirement or other
termination of employment with the Company or its subsidiaries,
any change in control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
Employment Contracts
Between January 2000 and March 2000 we extended an existing
contract, with certain amendments, for our President, Marc
Pitcher, and we entered into two new employment contacts with two
key management employees, Dan Scott, Chief Marketing Officer and
George Mellides, Chief Financial Officer. The remuneration for
each is as follows:
Marc Pitcher - Term of contract one year. Annual salary
$120,000. Monthly Vehicle allowance of $500. Bonus of $20,000
upon receipt by the Company of financing not introduced by an
outside third party of between $2 Million and $10 Million. Bonus
of $50,000 based upon individual's successful effort to find and
secure financing for the company of more than $10 Million.
Dan Scott - Term of contract one year. Annual salary $125,000.
Bonus of $25,000 based upon certain performance. Issuance of
125,000 stock options exercisable over three years.
George Mellides - Term of contract one year. Annual salary
$120,000. Issuance of 100,000 stock options exercisable over
three years.
FINANCIAL STATEMENTS
C O N T E N T S
INTERIM FINANCIAL STATEMENTS
Page
Condensed Consolidated Balance Sheets F-2
Condensed Consolidated Statements of Operations F-3
Condensed Consolidated Statement of Changes
in Stockholders' Equity F-4 - F-5
Condensed Consolidated Statements of
Cash Flows F-6
Notes to Condensed Consolidated
Financial Statements F-7 - F-11
ANNUAL FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants
- Grant Thornton LLP F-12
Independent Auditors' Report - Davidson & Company F-13
Financial Statements
Consolidated Balance Sheets F-14
Consolidated Statements of Operations F-15
Consolidated Statement of Changes
in Stockholders' Equity F-16
Consolidated Statements of Cash Flows F-17
Notes to Consolidated Financial Statements F-18 -
F-38
<PAGE> F-1
<PAGE>
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
December 31, September 30,
ASSETS 1999* 2000
(unaudited)
Current assets
Cash and cash equivalents $ 342,004 $ 1,170,812
Prepaid expenses 63,602 6,500
----------- ------------
405,606 1,177,312
Fixed assets, net 351,780 452,231
Investment in Street Solid Records 10,000 10,000
Deferred offering costs - 600,000
Intangible assets, net 39,169 100,276
Capitalized website development costs 282,783
Other assets - 177,840
----------- ------------
$ 806,555 $ 2,800,442
=========== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current liabilities
Accounts payable $ 261,368 $ 225,727
Liabilities from discontinued
operations 256,000 325,000
Loan payable 1,050,151 -
----------- ------------
1,567,519 550,727
----------- ------------
Other Liabilities 222,500 -
2% Series A Senior Convertible
Redeemable Debentures 172,500 -
Stockholders' equity (deficiency)
Common stock
Authorized, 100,000,000 common
shares with a par value of $0.0001;
issued and outstanding,
43,397,727 and 58,940,667
shares, respectively 4,340 5,894
Additional paid-in capital 8,594,637 20,164,273
Deficit, accumulated during the
development stage (9,754,941) (17,920,452)
----------- ------------
Stockholders' equity (deficiency) (1,155,964) 2,249,715
----------- ------------
$ 806,555 $ 2,800,442
=========== ============
*Derived from audited financial statements.
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-2
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<S> <C> <C> <C>
Cumulative
amounts from
Nine months Ended April 6, 1998
September 30, (inception) to
--------------------------- September 30,
1999 2000 2000
------------ ------------ -------------
(As Restated)
Costs and expenses
Selling, general and administrative
Expenses $ 1,271,851 $ 5,858,101 $ 8,373,726
Amortization of licenses and
Goodwill 320,584 77,101 439,404
Loss on impairment 4,208,376 4,247,022
Investment expense 2,400,000 2,400,000
Interest expense 340,806 348,631
Interest income (96,540) (96,540)
----------- ----------- ------------
6,141,617 8,238,662 15,712,243
----------- ----------- ------------
Loss from continuing operations (6,141,617) (8,238,662) (15,712,243)
----------- ----------- ------------
Discontinued operations (Street
Solid Records)
Loss from operations 1,031,200 - 1,056,167
Loss on disposal - 127,000 1,352,193
----------- ----------- ------------
Loss from discontinued operations (1,031,200) (127,000) (2,408,360)
----------- ----------- ------------
Loss before extraordinary item (7,172,817) (8,365,662) (18,120,603)
Extraordinary item - gain on
extinguishment of debt (Note E) - (200,151) (200,151)
----------- ----------- ------------
Net Loss $(7,172,817) $(8,165,511) $(17,920,452)
=========== =========== ============
Basic and diluted loss per share:
Continuing operations $ (.38) $ (.18) $ (.63)
Discontinued operations (.07) - (.10)
Extraordinary item - .01 .01
----------- ----------- ------------
Basic and diluted loss per share $ (.45) $ (.17) $ (.72)
=========== =========== ============
Weighted-average shares outstanding 15,784,137 47,507,480 25,023,527
=========== =========== ============
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-3
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Period from April 6, 1998 (inception) through September 30, 2000
<S> <C> <C> <C> <C> <C>
Deficit,
accumulated
Common Stock issued Additional during the
--------------------- paid-in development
Number Amount capital stage Total
---------- ------ ---------- ----------- -----------
Balance,
April 6, 1998 - $ - $ - $ - $ -
Capital stock of Voyager
International
Entertainment Inc.
issued for services 3,800,000 380 37,620 - 38,000
Capital stock of Voyager
International
Entertainment Inc.
issued for acquisition
of Voyager Film
Sales Inc. 200,000 20 180 - 200
Capital stock of Voyager
International Entertainment
Inc. issued for cash 327,131 33 112,459 - 112,492
Net loss (275,528) (275,528)
---------- ------ ---------- ----------- -----------
Balance,
December 31, 1998 4,327,131 433 150,259 (275,528) (124,836)
Capital stock of
Payforview.com Corp.
at January 5, 1999 3,750,000 375 625 - 1,000
Issuance of shares for
acquisition of
Voyager International
Entertainment Inc. 7,788,840 779 781 1,560
Issuance of shares for
acquisition of
Voyager International
Entertainment, Inc. for
potential commission 1,500,000 150 (150) -
Cancellation of
Voyager shares (4,327,131) (433) 433 -
Issuance of shares for
acquisition of Squadron
One Records and creation
of Street Solid
Records, Inc. 1,173,509 117 1,598,163 1,598,280
Issuance of shares for
acquisition of
licenses and rights 1,102,500 110 3,067,290 3,067,400
Issuance of shares for
services 122,000 12 77,824 77,836
Issuance of shares for
consulting services 1,800,000 180 652,320 652,500
Issuance of shares for
consulting services 333,333 33 49,967 50,000
Issuance of shares for
financial advisor
services 1,800,000 180 1,386,696 1,386,876
Issuance of shares for
acquisition of Software 200,000 20 291,980 292,000
Issuance of shares for
advertising 200,000 20 59,980 60,000
Issuance of shares upon
conversion of debt 22,837,005 2,284 825,216 827,500
Allocation of proceeds
of convertible debt to
additional paid-in capital 333,333 333,333
Issuance of shares
for cash 540,540 55 99,945 100,000
Shares held in escrow
with attorney relating
to debentures 250,000 25 (25)
Net loss (9,479,413) (9,479,413)
---------- ------ ---------- ----------- -----------
Balance,
December 31, 1999 43,397,727 4,340 8,594,637 (9,754,941) (1,155,964)
---------- ------ ---------- ----------- -----------
</TABLE>
<PAGE> F-4
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (continued)
Period from April 6, 1998 (inception) to September 30, 2000 (unaudited)
<S> <C> <C> <C> <C> <C>
Deficit,
accumulated
Common Stock issued Additional during the
--------------------- paid-in development
Number Amount capital stage Total
---------- ------ ---------- ----------- -----------
Issuance of shares for
cash, net of share
issuance costs
(unaudited) 3,610,000 $ 361 $5,381,139 $ - $ 5,381,500
Issuance of shares for
convertible debt
(unaudited) 6,900,000 690 171,810 - 172,500
Shares issued to
officers and consultants
for services (unaudited) 3,000,000 300 2,933,700 - 2,934,000
Shares issued for
acquisition of MAS
Acquisition Corporation
(unaudited) 335,000 33 (2) - 31
Shares issued for
transaction costs for MAS
Acquisition Corporation
(unaudited) 335,000 34 375,166 - 375,200
Shares issued for
investment in Turn-Key
Entertainment
(unaudited) 2,000,000 200 999,800 1,000,000
Proceeds from sale of
1,280,000 shares of the
1,500,000 shares held in
escrow (unaudited) - - 899,602 899,602
Cancellation of remaining
escrow shares(unaudited) (220,000) (22) 22 - -
Additional compensation
for services performed
(unaudited) - - 117,000 - 117,000
Warrants issued for commitment
Fees (unaudited) 600,000 600,000
Stock options issued for
Services (unaudited) 91,357 91,357
Cancellation of partial shares
Related to Bacchus (417,060) (42) 42
Net loss for the nine
months ended September 30, 2000
(unaudited) - - - (8,165,511) (8,165,511)
---------- ------ ---------- ----------- -----------
Balance,
September 30, 2000
(unaudited) 58,940,667 $5,894 $20,164,273 $(17,920,452) $ 2,249,715
========== ====== ========== =========== ===========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE> F-5
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<S> <C> <C> <C>
Cumulative
amounts from
Nine months ended April 6, 1998
September 30, (inception) to
--------------------------- September 30,
1999 2000 2000
------------ ------------ -------------
(As Restated)
Cash flows from operating activities
Loss from continuing operations $(6,141,617) $(8,238,662) $(15,712,243)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation 1,319 68,664 75,099
Amortization of licenses
and goodwill 320,584 20,410 382,713
Issuance of common stock
for services and
transaction costs 4,351,204 3,517,588 8,421,288
Noncash investment expense 2,400,000 2,400,000
Noncash interest expense 333,333 - 333,333
Changes in other operating
assets and liabilities
Prepaid expenses (22,535) 7,102 (56,500)
Due from related party 7,648 - -
Other assets - (127,840) (127,640)
Accounts payable 479,678 (35,641) 175,727
----------- ----------- ------------
Net cash used in operating
activities of continuing
operations (670,386) (2,388,379) (4,108,223)
----------- ----------- ------------
Net cash used in operating
activities of discontinued
operations (606,764) - (657,080)
----------- ----------- ------------
Cash flows from investing activities
Payments for website costs - (306,072) (306,072)
Payment of settlement costs relating
to sale of discontinued operations - (58,000) (58,000)
Payment for licenses and rights (81,517) (81,517)
Proceeds from sale of discontinued
operations - - 250,000
Investment in Turn-Key Entertainment LLC - (1,400,000) (1,400,000)
Acquisition of fixed assets (10,195) (145,826) (162,041)
----------- ----------- ------------
Net cash used in investing
activities (10,195) (1,991,415) (1,757,630)
----------- ----------- ------------
Cash flows from financing activities
Issuance of common stock 100,000 5,208,602 5,643,594
Proceeds from loan payable 1,046,463 - 1,050,151
Repayment of loan payable (59,418) - -
Proceeds from convertible debenture 200,000 - 1,000,000
----------- ----------- ------------
Net cash provided by
financing activities 1,287,345 5,208,602 7,693,745
----------- ----------- ------------
Net change in cash and
cash equivalents
during the period - 828,808 1,170,812
Cash and cash equivalents,
beginning of period - 342,004 -
----------- ----------- ------------
Cash and cash equivalents,
end of period $ - $ 1,170,812 $ 1,170,812
=========== =========== ============
Supplemental disclosures of cash
flow information:
Cash paid during the period for
interest $ 1,462 $ - $ 15,298
=========== =========== ============
Supplemental disclosures of noncash financing and investing activities (Note L)
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-6
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 1999 and 2000 (unaudited)
NOTE A - ORGANIZATION OF THE COMPANY AND
NATURE OF BUSINESS
Sierra Gold Corporation was incorporated on August 26, 1988. On
January 4, 1999, Sierra Gold Corporation changed its name to
Payforview.com Corp. (the "Company"). On January 5, 1999, the
Company issued 7,788,840 common shares (plus 1,500,000 shares
held in trust as commission), in exchange for the issued and
outstanding shares of Voyager International Entertainment Inc.
("Voyager"). Voyager was incorporated on April 6, 1998 in
Nevada. As a result of the share exchange, control of the
combined companies passed to the former shareholders of Voyager.
This type of share exchange has been accounted for as a capital
transaction accompanied by a recapitalization of Voyager.
Recapitalization accounting results in consolidated financial
statements of Voyager being issued under the name of
Payforview.com Corp. and Subsidiaries, but are considered a
continuation of Voyager. No goodwill or other intangible assets
were recognized in connection with such recapitalization.
On January 15, 1999, the Company implemented a two-for-one
forward stock split. On April 9, 1999, the Company implemented a
three-for-two forward stock split. All share and per share
amounts in the financial statements have been retroactively
restated to give effect to the above splits. Loss per share
information reflects the recapitalization.
The Company is considered a development stage company as its
planned principal operations have not yet commenced. Presently,
the Company is developing an Internet-based website to distribute
movies, music, live events and sports events direct to consumers
on a pay-for-view basis. The company is also developing certain
offline business opportunities.
NOTE B - BASIS OF PRESENTATION
Information in the accompanying condensed consolidated financial
statements as of September 30, 2000 and for the nine months ended
September 30, 1999 and 2000 and the cumulative amounts from April
6, 1998 (inception) through September 30, 2000 is unaudited and
has been prepared in accordance with accounting principles
generally acceptable in the United States of America applicable
to interim financial information and the rules and regulations
<PAGE> F-7
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Nine months ended September 30, 1999 and 2000 (unaudited)
NOTE B (continued)
promulgated by the Securities and Exchange Commission. These
financial statements should be read in conjunction with the
Company's annual financial statements included in its Form 8/KA,
as amended, filed with the Securities and Exchange Commission on
or about October 25, 2000. In the opinion of the Company's
management, the September 30, 1999 and 2000 unaudited condensed
consolidated interim financial statements include all
adjustments, consisting solely of normal recurring adjustments,
necessary for a fair presentation of such financial statements
(See Note C). The results of operations for the nine months
ended September 30, 1999 and 2000 are not necessarily indicative
of the results to be expected for any other interim period or the
entire year.
Note C - RESTATEMENT OF SEPTEMBER 30, 1999 INTERIM FINANCIAL
STATEMENTS(UNAUDITED)
The previously reported financial information for the nine months
ended September 30, 1999 have been restated to reflect the effect
of adjustments that were recorded as of December 31, 1999.
NOTE D - LOSS FROM IMPAIRMENT
In March 1999, the Company issued 1,012,500 common shares to
Bacchus Entertainment Ltd. at a value of $2,821,500, as
determined by the market price of shares of the Company's common
stock, as consideration for the purchase of various rights and
interests in feature films and motion picture productions.
Management determined that the rights it purchased did not exist,
and believes that the seller misrepresented the items available
and breached the contract. Therefore, the full value of the
consideration issued to Bacchus has been recorded as an
impairment loss as of March 31, 1999. (see note H-7)
In August 1999, the Company issued an aggregate of 1,800,000
shares to an investment banker in exchange for financial
advisory services. The shares were issued in anticipation of
services which were never received. The Company and the
investment banker signed mutual release of liabilities and
obligations in March 2000. The value of these shares which has
been determined to be $1,386,876 has been charged to operations
as a loss from impairment during the three months ended September
30, 1999.
NOTE E - EXTRAORDINARY GAIN ON DEBT EXTINGUISHMENT
As of December 31, 1999, the Company had notes outstanding
aggregating $1,050,151 which were payable on demand. In May
2000, the Company settled this obligation through liquidation of
approximately 1,280,000 shares of the 1,500,000 shares held by
the trustee in connection with the Voyager acquisition (Note A).
Such shares were sold to unrelated third parties for aggregate
proceeds of $899,602, of which $850,000 were distributed to the
holders of the loan payable and in payment of transaction costs.
The remaining proceeds from the sale of the above shares, which
was $49,602 were recorded as additional paid-in-capital during
the nine months ended September 30, 2000.
In May 2000, the Company recorded a gain on extinguishment of
debt of $200,151, which has been reflected as an extraordinary
gain. The remaining 220,000 shares held in trust are the
property of the Company and are not reflected as shares
outstanding at September 30, 2000.
<PAGE> F-8
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Nine months ended September 30, 1999 and 2000 (unaudited)
NOTE F - SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING AND
INVESTING ACTIVITIES
The significant noncash transactions for the nine months ended
September 30, 1999 and 2000 were as follows:
1. In January 1999, in order to complete the acquisition
of Voyager, the Company issued 7,788,840 common shares,
(and a commission of 1,500,000 shares). (See Note A.)
2. In January 1999, the Company issued 1,173,509 common
shares to acquire Street Solid. The value of the
shares issued was estimated to be $1,598,280.
In connection with such acquisition, liabilities
assumed were $198,000. (see note I)
3. In March 1999, the Company issued 1,102,500 common
shares valued at $3,067,400 towards the acquisition of
licenses and rights.
4. In April 1999, the Company issued 83,500 shares of
common stock valued at $63,410 in exchange for
services.
5. In January 2000, holders of $172,500 of convertible
debentures exchanged such debentures into 6,900,000
shares of the Company's common stock. (See Note F-2.)
6. In February 2000, the Company issued an aggregate of
3,000,000 shares of common stock valued at $2,934,000
to officers and consultants. (See Note F-3.)
7. In February 2000, the Company issued 335,000 shares in
payment of transaction costs related to the MAS
acquisition. (See Note F-4.)
8. In May 2000, the Company invested 2,000,000 shares
which were valued at $1,000,000, as part of its
investment in Turn-Key Entertainment LLC.
This investment was subsequently written down to zero
as of June 30, 2000 (See Note H-5)
9. As of June 30, 2000, the Company recognized an
aggregate of $117,000 of additional compensation
relating to stock awards granted in 1999, for which
services were still being performed through June 30,
2000. No additional compensation was required to be
recorded during the three months ended September 30,
2000.
10. In August 2000, the Company issued 2,000,000 warrants
as a commitment fee which the Company has valued at
$600,000 and has been recorded as deferred offering
costs as of September 30, 2000.
<PAGE> F-9
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Nine months ended September 30, 1999 and 2000 (unaudited)
NOTE G - LOSS PER SHARE
For the nine month period ended September 30, 2000, an
aggregate of 2,275,000 stock options and warrants were
excluded from the calculation of loss per share since their
effect would be antidilutive. During the nine month period
ended September 30, 1999, no potential common shares were
outstanding.
NOTE H - CERTAIN TRANSACTIONS
1. Sale of Common Stock - On January 15, 2000, the Company
entered into a stock subscription and option agreement
with three unrelated third-party shareholders.
Pursuant to this agreement, the Company sold 120,000
shares of stock to these investors at a price of $1.50
per share and provided the investors with an option to
purchase up to a maximum of an additional 690,000
shares. The investors purchased an aggregate of
810,000 shares during January 2000, for proceeds of
$1,215,000, of which $222,500 was collected in December
1999.
On January 21, 2000, the Company entered into a stock
subscription and option agreement with certain
unrelated third-party shareholders. Pursuant to this
agreement, the Company sold 1,000,000 shares of stock
to these investors at a price of $1.50 per share.
Additionally, the agreement provided the investors with
an option to purchase up to a maximum of an additional
2,000,000 shares. The investors purchased an aggregate
of 2,800,000 shares for net proceeds of approximately
$4,166,000 (net of $34,000 of transaction costs).
2. Conversion of Debentures - During January and February
2000, holders of $172,500 of convertible debentures
exchanged such debentures for 6,900,000 shares of
common stock pursuant to the debenture agreement dated
June 25, 1999.
3. Stock Issuance - In February 2000, the Company granted
an aggregate of 3,000,000 shares to officers and
consultants. No additional services were required to
be performed, and, therefore, the Company recorded a
charge to operations for $2,934,000, which represented
the market value of such shares on the date of grant.
4. Acquisition - In February 2000, the Company acquired
MAS Acquisition Corporation, an inactive public shell
corporation in exchange for an aggregate of 335,000
shares of its common stock. Additionally, the Company
incurred transaction costs relating to this
acquisition, and settled such cost by issuing 335,000
shares and paying cash of $100,000, which resulted in
an aggregate charge to expense of $475,000 in the first
quarter of 2000. This acquisition was accounted for at
the historical basis of the assets of MAS (which were
$31) since there was no business acquired. No goodwill
or other intangibles were acquired.
<PAGE> F-10
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Nine months ended September 30, 1999 and 2000 (Unaudited)
NOTE H (continued)
5. Investment in Turn-Key Entertainment - On May 10, 2000,
the Company made a strategic investment of $1,400,000
plus 2,000,000 shares of restricted common stock, which
were valued at $1,000,000 based on the market price of
the Company's common stock, to purchase a 25% interest
in a company (controlled by a consultant of the
Company), that is developing an on-line streaming media
product that is synergistic with its core business.
The Company has the right to participate in future
financing by the investee. A consultant of the Company
owns the remaining 75% interest. The investee had no
operations through September 30, 2000 other than the
Company's investment and had cash available of
$1,345,263.
Since the Company neither manages nor controls the
investee, which remains in the development stage and
has no significant operations to date, the investment
was charged to expense in accordance with generally
accepted accounting principles.
6. On July 13, 2000, the Company's Board of Directors
approved a stock option plan (the "Plan") and reserved
4 million shares of the Company's common stock to
attract, motivate and retain individuals upon whose
continued efforts the success of the Company in large
measure depends. On July 25, 2000, the Company issued
1,675,000 options pursuant to the Plan to certain
employees, officers, directors and consultants. The
exercise price of such options were $.25 per share,
based, as per the terms of the Plan, on the closing
price on the day immediately preceding the issue date.
These options vest at a rate of 25% immediately with
the remainder vesting over a three-year period and
expire in July 2003.
These individuals have been determined to be
non-employees under APB-25. Therefore, the Company
estimated the fair value as of September 30, 2000 using
the Black-Scholes pricing model and recorded the fair
value compensation of $91,367 during the three and nine
months ended September 30, 2000. The remaining
compensation will be measured as of each reporting
period and recognized over the vesting period.
7. On August 3, 2000, the Company and Bacchus (and related
entities) signed an agreement whereby on August 17,
2000, 417,060 of the aggregate of 1,012,500 shares of
common stock originally issued were returned to the
Company for cancellation and are not included in shares
outstanding.
8. On August 31,2000 the Company entered into an agreement
with an investment bank to register and underwrite
shares of its common stock with an aggregate market
value not to exceed 40,000,000 which will be offered
sale to the public. In connection with such agreement,
the Company was obligated to issue warrants to purchase
2,000,000 shares of common stock to such investment
bank, at an exercise price of $.28 per share, subject
to adjustment under certain conditions. These warrants
remain the property of the investment bank, whether or
not the registration and proposed sale of shares to the
public is completed. The agreement also provides for
additional warrants to be issued to the investment bank
upon achieving certain milestones in the registration
process. The company issued such warrants on August 31,
2000 and valued such warrants at $600,000 based on a
Black-Scholes pricing model, and included these
warrants in deferred offering costs.
NOTE I - SUBSEQUENT EVENTS
On November 8, 2000 the Company settled an outstanding lawsuit
with Destiny Music for $325,000 subject to adjustment to
$350,000. Amounts are payable in cash and the Company's stock.
A liability of $198,000 had been assumed by the Company in
connection with its purchase of Street Solid. Accordingly, an
additional $127,000 was recorded as additional loss from disposal
of discontinued operations during the three months ended
September 30, 2000.
F-11
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Payforview.com Corp. and Subsidiaries
We have audited the accompanying consolidated balance sheet of
Payforview.com Corp. and Subsidiaries (formerly Sierra Gold
Corporation) (a development stage company) as of December 31,
1999, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended and
the cumulative consolidated statement of operations and cash
flows for the period April 6, 1998 (inception) through December
31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. We did
not audit the financial statements of the Company for the period
from April 6, 1998 (inception) through December 31, 1998 which
represents 2.8% of the cumulative net loss for the period from
April 6, 1998 (inception) through December 31, 1999. These
statements were audited by other auditors whose report thereon
has been furnished to us, and in our opinion, insofar as it
related to the 1998 results, is based solely on the report of the
other auditors.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, based on our audit and the report of the other
auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of Payforview.com Corp. and Subsidiaries as of December
31, 1999, and the consolidated results of their operations and
their consolidated cash flows for the year then ended and the
cumulative results of operations and cash flows for the period
from April 6, 1998 through December 31, 1999, in conformity with
accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note B, the Company has experienced recurring net losses, has
an accumulated deficit and is experiencing difficulty in
generating sufficient cash flow to meet its obligations and
sustain its operations, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note B. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
GRANT THORNTON LLP
New York, New York
July 7, 2000
<PAGE> F-12
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of Payforview.com Corp. and
Subsidiaries
(formerly Voyager International Entertainment Inc.)
(A Development Stage Company)
We have audited the accompanying consolidated balance sheet of
Payforview.com Corp. and Subsidiaries (formerly Voyager
International Entertainment Inc.) as of December 31, 1998 and the
related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the period from
incorporation on April 6, 1998 to December 31, 1998. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Payforview.com Corp. and Subsidiaries
(formerly Voyager International Entertainment Inc.) as of
December 31, 1998, and the consolidated results of its
operations, its consolidated changes in stockholders' equity and
its consolidated cash flows for the period from incorporation on
April 6, 1998 to December 31, 1998 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been
prepared assuming that Payforview.com Corp. and Subsidiaries
(formerly Voyager International Entertainment Inc.) will continue
as a going concern. As discussed in Note B to the consolidated
financial statements, unless the Company attains future
profitable operations and/or obtains additional financing, there
is substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are
discussed in Note B. The consolidated financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Davidson & Company
Vancouver, Canada
July 21, 1999
<PAGE> F-13
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
December 31,
ASSETS 1998 1999
--------- -----------
Current assets
Cash and cash equivalents $ - $ 342,004
Prepaid expenses 2,802 63,602
Due from related parties 7,648 -
--------- -----------
10,450 405,606
Fixed assets, net 7,025 351,780
Investment in Street Solid Records - 10,000
Intangible assets, net - 39,169
Capitalized website development costs
Other assets - -
--------- -----------
$ 17,475 $ 806,555
========= ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current liabilities
Accounts payable $ 82,893 $ 261,368
Liabilities from discontinued
operations - 256,000
Loan payable 59,418 1,050,151
--------- -----------
142,311 1,567,519
--------- -----------
Other Liabilities - 222,500
2% Series a Senior Convertible
Redeemable Debentures - 172,500
Stockholders' equity (deficiency)
Common stock
Authorized, 100,000,000 common
shares with a par value of $0.0001;
issued and outstanding, 4,327,131
and 43,397,727 Shares, respectively 433 4,340
Additional paid-in capital 150,259 8,594,637
Deficit, accumulated during the
development stage (275,528) (9,754,941)
--------- -----------
(124,836) (1,155,964)
--------- -----------
$ 17,475 $ 806,555
========= ===========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-14
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
Period from Cumulative
incorporation amounts from
on April 6, April 6, 1998
1998 to Year ended (inception) to
December 31, December 31, December 31,
1998 1999 1999
------------ ------------ -------------
Costs and expenses
Selling, general and administrative
Expenses $ 275,528 $ 2,240,097 $ 2,515,625
Amortization of licenses and
Goodwill - 362,303 362,303
Loss on impairment - 4,247,022 4,247,022
Interest expense - 348,631 348,631
Interest income - - -
----------- ----------- -----------
Total costs and expenses 275,528 7,198,053 7,473,581
----------- ----------- -----------
Loss from continuing
operations (275,528) (7,198,053) (7,473,581)
----------- ----------- -----------
Discontinued operations (Street
Solid Records)
Loss from operations (1,056,167) (1,056,167)
Loss on disposal - (1,225,193) (1,225,193)
----------- ----------- -----------
Net Loss $ (275,528) $(9,479,413) $(9,754,941)
=========== =========== ===========
Basic and diluted loss per share:
Continuing operations $ (.03) $ (.39) $ (.49)
Discontinued operations - (.13) (.15)
----------- ----------- -----------
Basic and diluted loss per share $ (.03) $ (.52) $ (.64)
=========== =========== ===========
Weighted-average shares outstanding 8,424,087 18,284,185 15,321,804
=========== =========== ===========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-15
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1999 and 1998
<S> <C> <C> <C> <C>
<C>
Deficit,
accumulated
Common Stock issued Additional during the
--------------------- paid-in development
Number Amount capital stage
Total
---------- ------ ---------- ----------- -----------
Balance,
April 6, 1998 - $ - $ - $ - $ -
Capital stock of Voyager
International
Entertainment Inc.
issued for services 3,800,000 380 37,620 - 38,000
Capital stock of Voyager
International
Entertainment Inc.
issued for acquisition
of Voyager Film
Sales Inc. 200,000 20 180 - 200
Capital stock of Voyager
International Entertainment
Inc. issued for cash 327,131 33 112,459 - 112,492
Net loss (275,528) (275,528)
---------- ------ ---------- ----------- -----------
Balance,
December 31, 1998 4,327,131 433 150,259 (275,528) (124,836)
Capital stock of
Payforview.com Corp.
at January 5, 1999 3,750,000 375 625 - 1,000
Issuance of shares for
acquisition of
Voyager International
Entertainment Inc. 7,788,840 779 781 1,560
Issuance of shares for
acquisition of
Voyager International
Entertainment, Inc. for
potential commission 1,500,000 150 (150) -
Cancellation of
Voyager shares (4,327,131) (433) 433 -
Issuance of shares for
acquisition of Squadron
One Records and creation
of Street Solid
Records, Inc. 1,173,509 117 1,598,163 1,598,280
Issuance of shares for
acquisition of
licenses and rights 1,102,500 110 3,067,290 3,067,400
Issuance of shares for
services 122,000 12 77,824 77,836
Issuance of shares for
consulting services 1,800,000 180 652,320 652,500
Issuance of shares for
consulting services 333,333 33 49,967 50,000
Issuance of shares for
financial advisor
services 1,800,000 180 1,386,696 1,386,876
Issuance of shares for
acquisition of Software 200,000 20 291,980 292,000
Issuance of shares for
advertising 200,000 20 59,980 60,000
Issuance of shares upon
conversion of debt 22,837,005 2,284 825,216 827,500
Allocation of proceeds
of convertible debt to
additional paid-in capital 333,333 333,333
Issuance of shares
for cash 540,540 55 99,945 100,000
Shares held in escrow
with attorney relating
to debentures 250,000 25 (25)
Net loss (9,479,413) (9,479,413)
---------- ------ ---------- ----------- -----------
Balance,
December 31, 1999 43,397,727 $4,340 $8,594,637 $(9,754,941)
$(1,155,964)
========== ====== ========== =========== ===========
</TABLE>
<PAGE> F-16
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
Period from Cumulative
incorporation amounts from
on April 6, April 6, 1998
1998 to Year ended (inception) to
December 31, December 31, December 31,
1998 1999 1999
------------ ------------ -------------
Cash flows from operating activities
Loss from continuing operations $ (275,528) $(7,198,053) $(7,473,581)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation 1,899 4,536 6,435
Amortization of licenses and goodwill - 362,303 362,303
Issuance of common stock for services 38,000 4,865,700 4,903,700
Noncash interest expense - 333,333 333,333
Changes in other operating assets
and liabilities
Prepaid expenses (2,802) (60,800) (63,602)
Due from related party (7,648) 7,648
Other assets 200 200
Increase in accounts payable 82,893 128,475 211,368
----------- ----------- -----------
Net cash used in operating
activities of continuing
operations (162,986) (1,556,858) (1,719,844)
----------- ----------- -----------
Net cash used in operating
activities of discontinued
operations - (657,080) (657,080)
----------- ----------- -----------
Cash flows from investing activities
Payments for website costs - - -
Payment of settlement costs
relating to discontinued operations - - -
Proceeds from sale of discontinued
operations - 250,000 250,000
Acquisition of fixed assets (8,924) (7,291) (16,215)
----------- ----------- -----------
Net cash (used in) provided
by investing activities (8,924) 242,709 233,785
----------- ----------- -----------
Cash flows from financing activities
Issuance of common stock 112,492 100,000 212,492
Advances for common stock - 222,500 222,500
Proceeds from loan payable 59,418 1,050,151 1,050,151
Repayment of loan payable - (59,418) -
Proceeds from convertible debenture - 1,000,000 1,000,000
----------- ----------- -----------
Net cash provided by
financing activities 171,910 2,313,233 2,485,143
----------- ----------- -----------
Net change in cash and
cash equivalents
during the period - 342,004 342,004
Cash and cash equivalents,
beginning of period - - -
----------- ----------- -----------
Cash and cash equivalents,
end of period $ - $ 342,004 $ 342,004
=========== =========== ===========
Supplemental disclosures
of cash flow information:
Cash paid during the period for
Interest $ - $ 15,298 $ 15,298
Supplemental disclosures of noncash,
financing and investing activities (Note L)
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-17
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE A - ORGANIZATION OF THE COMPANY AND
NATURE OF BUSINESS
Sierra Gold Corporation was incorporated on August 26, 1988. On
January 4, 1999, Sierra Gold Corporation changed its name to
Payforview.com Corp. (the "Company"). On January 5, 1999, the
Company issued 7,788,840 common shares (plus 1,500,000 shares
held in trust as commission) (see Note H), in exchange for the
issued and outstanding shares of Voyager International
Entertainment Inc. ("Voyager"). Voyager was incorporated on
April 6, 1998 in Nevada. As a result of the share exchange,
control of the combined companies passed to the former
shareholders of Voyager. This type of share exchange has been
accounted for as a capital transaction accompanied by a
recapitalization of Voyager. Recapitalization accounting results
in consolidated financial statements of Voyager being issued
under the name of Payforview.com Corp. and Subsidiaries, but are
considered a continuation of Voyager. No goodwill or other
intangible assets were recognized in connection with such
recapitalization. (See Note D.)
On January 15, 1999, the Company implemented a two-for-one
forward stock split. On April 9, 1999, the Company implemented a
three-for-two forward stock split. All share and per share
amounts in the financial statements have been retroactively
restated to give effect to the above splits. Loss per share
information reflects the recapitalization.
The Company is considered a development stage company as its
planned principal operations have not yet commenced. Presently,
the Company is developing an internet-based website to distribute
movies, music, live events and sports events direct to consumers
on a pay-for-view basis. The Company is also developing certain
offline business opportunities.
NOTE B - BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of
business. The Company has not generated any revenue from its
planned businesses and has generated losses from continuing
operations, net losses and an accumulated deficit for all periods
presented. As shown in the financial statements during the
period from April 6, 1998 (inception) to December 31, 1998 and
the year ended December 31, 1999, the Company incurred losses of
<PAGE> F-18
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE B (continued)
$275,528 and $9,479,413, respectively. As of December 31, 1999
and 1998, the Company had deficits accumulated in the development
stage of $9,754,941 and $275,528, respectively. These factors,
among others, raise substantial doubt about the Company's ability
to continue as a going concern for a reasonable period of time.
These financial statements do not include any adjustments that
might result from this uncertainty.
Management has obtained additional equity financing in the amount
of $5,415,000 (Note O.1) in the first quarter of 2000 and the
Company intends to file a shelf registration in the future
through private placements of shares. As of September 30, 2000,
the Company had approximately $1.1 million in cash. Management
believes this will be adequate for at least the next twelve
months.
NOTE C - SIGNIFICANT ACCOUNTING POLICIES
1. Principles of Consolidation
These consolidated financial statements include the accounts
of Payforview.com Corp. and Subsidiaries (formerly Sierra
Gold Corporation) and its wholly-owned subsidiaries, from
their respective dates of acquisition (see Notes A and D).
All significant intercompany balances and transactions have
been eliminated.
As discussed more thoroughly in Note D, Street Solid is
presented as discontinued operations.
2. Cash Equivalents
Cash equivalents consist of highly liquid investments with a
maturity of three months or less when purchased.
<PAGE> F-19
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE C (continued)
3. Stock-based Compensation
The Company has adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"). As permitted under SFAS No. 123, the
Company has elected to follow Accounting Principles Board
Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued
to Employees," and related interpretations in accounting for
its employee stock options. Under APB No. 25, when the
exercise price of employee stock options equals or exceeds
the market price of the underlying stock on the date of
grant, no compensation expense is recorded. However, with
respect to common stock and options granted to nonemployees,
the Company records expense equal to the fair value of the
common stock or option on the measurement date, which
generally is the date of completion of services. Expenses
relating to such options or stock are estimated based upon
fair value as of the end of each reporting period prior to
the measurement date.
4. Income Taxes
Income taxes are provided in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes." A deferred tax asset or liability is
recorded for temporary differences between financial and tax
reporting and net operating loss carryforwards.
Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will
not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on
the date of enactment.
5. Use of Estimates
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at
<PAGE> F-20
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE C (continued)
the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
6. Financial Instruments
The Company's financial instruments consist of cash and cash
equivalents, accounts payable, loans payable and convertible
debentures. The fair values of these financial instruments
approximate their carrying values, due to the short-term
maturities of such items.
7. Reporting on Costs of Start-up Activities
Effective January 1, 1999, the Company adopted Statement of
Position 98-5 ("SOP 98-5"), "Reporting on the Costs of
Start-Up Activities," which requires costs of start-up
activities and organization costs to be expensed as
incurred. The cumulative effect of adopting this principle
was immaterial.
8. Foreign Currency Transactions
Transaction amounts denominated in foreign currencies are
converted into United States currency at exchange rates
prevailing at transaction dates. Gains and losses from
foreign currency transactions are recorded as operating
expenses and are immaterial.
9. Revenue Recognition
The Company is currently in the development stage and
therefore has no revenues. Revenues from services will be
recognized at the time the services are provided to the
customer.
<PAGE> F-21
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE C (continued)
10. Fixed Assets
Fixed assets are stated at cost. Depreciation is based on
the estimated useful lives of the assets and is computed
using the straight-line method as follows:
Computer equipment 3 years
Furniture and office equipment 5 years
Software 3 years
11. Intangible Assets
Intangible assets consist of goodwill, licenses and rights.
Goodwill represents the excess of acquisition costs over the
fair market value of the net assets of businesses acquired
and is being amortized on a straight-line basis over its
estimated useful life of five years. Costs of licenses and
rights are deferred and amortized on a straight-line basis
over their estimated useful lives, which are generally one
to five years.
12. Long-lived Assets and Impairment of Long-lived Assets
The Company's policy is to review all long-lived assets,
including goodwill, for impairment whenever events or
changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. In such circumstances,
the Company will estimate the future cash flows expected to
result from the use of the asset and its eventual
disposition. Future cash flows are the future cash inflows
expected to be generated by an asset less the future cash
outflows expected to be necessary to obtain those inflows.
If the sum of the expected future cash flows (undiscounted
and without interest charges) is less than the carrying
amount of the asset, the Company would recognize an
impairment loss to adjust to the fair value of the asset.
<PAGE> F-22
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE C (continued)
13. Loss per Share
The Company computes net loss per share in accordance with
Statement of Financial Accounting Standards No. 128 ("SFAS
No. 128"), "Earnings Per Share." Under the provisions of
SFAS No. 128, basic net loss per share is computed by
dividing the net loss for the period by the weighted-average
number of common shares outstanding during the period.
Diluted net loss per share is computed by dividing the net
loss for the period by the weighted-average number of common
and common equivalent shares outstanding during the period.
However, as the Company generated net losses in all periods
presented, common equivalent shares, composed of incremental
common shares issuable upon the conversion of debentures,
are not reflected in diluted net loss per share because such
shares are antidilutive. As of December 31, 1999, $172,500
of debentures were not yet converted. Such debentures were
converted into 6,900,000 shares of common stock in January
and February 2000. There were no outstanding options or
warrants as of December 31, 1998 or 1999.
All per share amounts are calculated to reflect the
Company's change in capital structure for all periods
presented.
14. Comprehensive Income
The Company has adopted Statement of Financial Accounting
Standards No. 130 ("SFAS No. 130"), "Reporting Comprehensive
Income." This statement establishes rules for the reporting
of comprehensive income and its components. The Company has
no transactions that are required to be reported as other
comprehensive income.
15. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
No. 133 ("SFAS No. 133"), "Accounting for Derivative
<PAGE> F-23
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE C (continued)
Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative
instruments and for hedging activities. SFAS No. 133, as
amended by SFAS No. 137, is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. The
Company does not anticipate that the adoption of the
statement will have a material impact on its financial
statements.
16. Reclassifications
Certain 1998 information has been reclassified to conform
with the current year's presentation.
<PAGE> F-24
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE D - ACQUISITIONS
1. Voyager Acquisition (Note A)
On January 5, 1999, Payforview acquired all the issued and
outstanding shares of Voyager in exchange for 7,788,840 of
its shares (plus 1,500,000 shares held in trust as a
commission, see Note H). This transaction has been
accounted for as a capital transaction accompanied by a
recapitalization of Voyager rather than a business
combination. Therefore, the total cost of the acquisition
represents the net book value of the acquired liabilities.
No goodwill or other intangibles have been recognized in
connection with this transaction. The consolidated
financial statements include the assets, liabilities and
operations of Voyager for all periods presented.
Liabilities acquired were $1,450, which pertained to
accounts payable and accrued expenses.
2. Street Solid Acquisition and Disposition
On January 6, 1999, Payforview acquired all the issued and
outstanding shares of Street Solid Records Inc. ("Street
Solid"), a Nevada corporation. As consideration, Payforview
issued 1,173,509 common shares. The acquisition was
accounted for using the purchase method. The operations of
Street Solid are included in the consolidated financial
statements subsequent to the date of acquisition and through
the date of disposition. The purchase price was determined
based on the fair market value of the Company's common
stock.
The total purchase price was allocated as follows:
Total purchase price $1,598,280
Liabilities assumed in business combination 198,000
----------
Excess purchase price $1,796,280
==========
The Company has allocated excess purchase price to
intangible assets, including record contracts and goodwill.
Intangible assets and goodwill are being amortized over five
years.
Pro forma information has not been provided as the
acquisition is not significant.
<PAGE> F-25
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE D (continued)
On October 29, 1999, the Company sold an aggregate of 81% of
Street Solid in two separate transactions. In the first
transaction, the Company sold 70% of Street Solid for
aggregate consideration of $192,000 (net of an additional
$58,000 paid by the Company to them in 2000). In the second
transaction, the Company sold 11% of Street Solid, in
exchange for a note receivable of $39,000. Since there was
doubt about the collectibility of such note, the Company
wrote-off such note at December 31, 1999. The operations of
Street Solid have been reported as a discontinued operation
for the period from January 6, 1999 through October 29,
1999, which was the date of disposal. Additionally, a loss
on disposal of operations, which included the write-off of
intangible assets and goodwill of $1,225,193, was recognized
in connection with the disposal of Street Solid.
Summarized financial information for Street Solid was as
follows:
Period from
January 6, 1999
through
October 29, 1999
----------------
Net revenues $ 169,000
============
Net loss $ (1,056,167)
============
As of December 31, 1999, the following liabilities relating
to Street Solid remained on the books of the Company.
Amounts due to Destiny Music pursuant to
contract assumed by Payforview $ 198,000
Settlement amounts paid to purchaser of
Street Solid in 2000 58,000
----------
$ 256,000
==========
The liability for $198,000 arises from a transaction
occurring prior to Payforview's acquisition of Street Solid.
The Company is currently a defendant in a lawsuit from
Destiny seeking to recover the full $198,000. (See Note P).
<PAGE> F-26
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE D (continued)
The $58,000 arose from a settlement agreement signed in
March 2000 between Payforview and the purchaser of Street
Solid. In March 2000, the Company remitted $58,000 to the
purchaser of Street Solid.
As of October 29, 1999, the Company began accounting for its
investment in Street Solid under the cost method of
accounting.
NOTE E - LICENSES AND RIGHTS
1. Reel Media - In February 1999, the Company entered into an
agreement with Reel Media International to acquire the
license and internet broadcast rights to a 750-film library.
As consideration for the license rights, the Company issued
52,500 common shares at a value of $101,150, determined
based on the market price of the common stock of the
Company. The term of the agreement is for four years. As
of December 31, 1999, the Company's website was not
completed. At the same time, it became apparent to the
Company that the technology for showing such movies on the
internet is not yet widely available in the mass market.
Therefore, management determined that an event has occurred
that indicates that such asset may be impaired. Management
determined that the expected future cash flows from the
license agreement, on an undiscounted basis, will not exceed
the carrying value of the license. The Company reviewed the
expected future cash flows on a discounted basis and
determined that the fair value of the licenses was
approximately $40,000. Accordingly, the Company recorded an
impairment loss of approximately $40,000 as of December 31,
1999.
2. Bacchus - In March 1999, the Company issued 1,012,500 common
shares to Bacchus Entertainment Ltd. at a value of
$2,821,500, as determined by the market price of shares of
the Company's common stock, as consideration for the
purchase of various rights and interests in feature films
and motion picture productions. Management determined that
the rights it purchased did not exist, and believes that the
seller misrepresented the items available and breached the
contract. Therefore, the full value of the consideration
issued to Bacchus has been recorded as an impairment loss as
of December 31, 1999. (See Note P.)
<PAGE> F-27
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE E (continued)
3. Sportsworld - In April 1999, the Company entered into an
agreement with Sportsworld Network (Australia) Pty. Limited
to acquire the nonexclusive, worldwide license rights to
broadcast various sports-related filmclips and highlights.
As consideration for the license rights, the Company issued
37,500 common shares at a value of $144,750, as determined
by the market price of shares of the Company's common stock.
The agreement also provides for a royalty of 8% of gross
revenues to be paid by the Company. As of December 31,
1999, the Company's website was not yet ready for use.
Because of the delay in completion of the website and the
short-term nature of the agreement, the Company believes
that an event has occurred that would indicate impairment.
The license agreement expired July 1, 2000. The Company
charged the unamortized balance at December 31, 1999 of
$72,375 to selling, general and administrative expenses
since the Company was not able to broadcast these programs
prior to expiration of the licenses.
NOTE F - FIXED ASSETS
Fixed assets consist of the following:
December 31,
1998 1999
Computer equipment $ 856 $ 856
Furniture and office equipment 8,068 13,460
Software licenses (websites) - 342,000
-------- --------
8,924 356,316
Accumulated depreciation
and amortization 1,899 4,536
-------- --------
$ 7,025 $351,780
======== ========
<PAGE> F-28
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998
and year ended December 31, 1999
NOTE G - INTANGIBLE ASSETS
Intangible assets consist of the following at
December 31, 1999:
Licenses $134,052
Accumulated amortization (94,883)
--------
$ 39,169
========
NOTE H - LOAN PAYABLE
Amounts due under the loans payable represent advances
during 1999 from a third party to cover certain operating
expenses. The advances are noninterest-bearing and payable
on demand.
In May 2000, the Company settled this obligation through
liquidation of approximately 1,280,000 shares of the
1,500,000 shares held by the trustee in connection with the
Voyager acquisition (Note D). Such shares were sold to
unrelated third-parties for aggregate proceeds of $899,602,
of which $850,000 were distributed to the holders of the
loan payable and in payment of transaction costs. On the
date of the transaction, the Company recorded a gain on
extinguishment of debt of approximately $200,000 which will
be reflected as an extraordinary item during the second
quarter of 2000. The remaining 220,000 shares held in trust
are the property of the Company and the remaining proceeds
from the sale of the shares of $49,602 became property of
the Company.
NOTE I - CONVERTIBLE DEBENTURES
In June 1999, the Company entered into a Debenture Agreement
and Securities Subscription Agreement with BSD Holdings
L.L.C. ("BSD").
Under the agreement, the Company can issue up to $1,000,000
of 2% Series A senior subordinated convertible redeemable
debentures. The principal sum outstanding plus accrued
interest calculated at a rate of 2% per annum is due at
maturity on June 25, 2001.
<PAGE> F-29
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE I (continued)
Each $10,000 debenture is convertible immediately upon
issuance into common shares of the Company at the option of
the holder at a conversion price equal to 75% of the closing
bid price of the Company's common stock on the OTC Bulletin
Board for the day immediately preceding the date of the
notice of conversion.
Payforview has the option to redeem the debentures at 125%
of the principal amount to the extent conversion has not
occurred.
Under the agreement, Payforview has issued $1,000,000 of
debentures to BSD at various dates during 1999. An
aggregate of $827,500 of the outstanding debentures were
converted during 1999, resulting in the issuance of
22,837,005 common shares of Payforview. As of December 31,
1999, $172,500 of debentures remained outstanding which were
converted into 6,900,000 shares of common stock in January
2000.
Because the debentures contained a beneficial conversion
feature, the Company recorded a charge to interest expense
(with a credit to additional paid-in capital) for $333,333
during 1999. Since the debt was convertible immediately
upon issuance, a charge to operations for the entire
beneficial conversion feature was recorded in 1999.
NOTE J - CAPITAL STOCK
1. Common Stock
The Company has one series of common shares with a par value
of $.0001 per share. Each share is entitled to one vote.
2. Cash Received in Advance of Stock Issuance
In December 1999, the Company received $222,500 in advance
of a subscription agreement dated January 15, 2000 (see Note
O.1). These advance payments have been reflected as other
liabilities as of December 31, 1999.
<PAGE> F-30
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE J (continued)
3. Other Common Share Issuances
a. The Company issued an aggregate of 200,000 shares in
payments for the license and rights for website software.
The value of these shares was determined to be $292,000
based on the market price of the Company's common stock on
the date of issuance. These software license costs are
included in fixed assets as of December 31, 1999.
b. The Company issued an aggregate of 1,800,000 shares to an
investment banker in exchange for financial advisory
services. This investment banker is the owner of the
company that purchased the 70% share of Street Solid Records
(see Note D). The shares were issued in anticipation of
services which were never received. The Company and the
investment banker signed a mutual release of liabilities and
obligations in March 2000. These shares were valued at
$1,386,876, based on the market value on the date of grant.
The value of these shares has been charged to expense as a
loss from impairment.
c. The Company issued an aggregate of 333,333 shares of common
stock to a consultant in exchange for services pursuant to a
contract which extends from July 1, 1999 through June 30,
2000. The value of the shares will not be determinable
until completion of the service period. These shares were
valued at $100,000, based on the market price as of December
31, 1999. One-half of the expense relating to such stock,
or $50,000, has been charged to operations and reflected in
selling, general and administrative expenses in 1999.
d. The Company on behalf of Street Solid issued 200,000 shares
to a Company in exchange for eight ads in their magazine.
These shares were valued at $60,000, based on the market
price on October 29, 1999, which is the date the services
had been completed. Upon the sale of Street Solid, the
Company forfeited future rights to these ads.
e. The Company issued an additional 122,000 shares to various
parties in exchange for services. These shares were valued
at $77,836, based on the market price of the Company's
common stock when services had been completed, or when
services had not yet been completed, as of December 31,
1999. The value of these shares has been charged to
selling, general and administrative expenses.
<PAGE> F-31
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE J (continued)
f. The Company issued 1,800,000 shares to a consultant pursuant
to a consulting agreement. Since the shares are not
contingent on future performance, the value of the shares is
determinable on the date of grant. The value of these
shares was calculated based upon the market value of the
Company's common stock on the date of the agreement. An
aggregate charge of $652,500 has been charged to selling,
general and administrative expenses. (See Note N-3.)
NOTE K - RELATED PARTY TRANSACTIONS
During the period from April 6, 1998 to December 31, 1998, the
Company (Voyager) issued 3,800,000 shares of common stock at a
value of $38,000 to the founders of the Company in order to
reimburse them for a like amount of incorporation costs. In
addition, the Company (Voyager) issued 200,000 shares of common
stock at a value of $200 to companies controlled by directors for
the acquisition of Voyager Film Sales Inc. (See Note A).
During 1999, the Company sold 11% of Street Solid to a related
party. (See Note D).
NOTE L - SUPPLEMENTAL DISCLOSURES OF NONCASH
FINANCING AND INVESTING ACTIVITIES
The significant noncash transactions for the year ended December
31, 1999 were as follows:
1. In order to complete the acquisition of Voyager, the Company
issued 7,788,840 common shares (and a commission of
1,500,000 shares) (see Note D).
2. The Company issued 1,173,509 common shares to acquire Street
Solid. The value of the shares issued was estimated to be
$1,598,280 (see Note H-2).
<PAGE> F-32
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE L (continued)
In connection with such acquisition, liabilities assumed
were $198,000.
3. The Company issued 1,102,500 common shares valued at
$3,067,400 towards the acquisition of licenses and rights
(see Note E-1 -3).
4. The Company issued 4,055,333 common shares valued at
$2,167,212 for services rendered. (See Note J-3b. - e.)
5. The Company issued 200,000 shares valued at $292,000 towards
the acquisition of software. (See Note J-3a.)
6. The Company issued 200,000 shares valued at $60,000 for fees
incurred for advertising. (See Note J-3d.)
7. The Company issued 22,837,005 common shares upon the
conversion of $827,500 of convertible debentures. In
connection with such financing, the Company placed 250,000
shares in escrow. (Note I.)
The significant noncash transactions for the period from April 6,
1998 to December 31, 1998 were as follows:
1. The Company issued 3,800,000 shares of common stock valued
at $38,000 for reimbursement of incorporation costs.
2. The Company issued 200,000 shares of common stock valued at
$200 to acquire all of the issued and outstanding common
stock of Voyager Film Sales Inc.
<PAGE> F-33
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE M - INCOME TAXES
The Company had net losses for tax purposes during the period
from April 6, 1998 (inception) to December 31, 1998 and the years
ended December 31, 1999 and 1998. Accordingly, no income tax
provision has been recorded in the financial statements.
The Company's total deferred tax asset is as follows:
December 31,
1999 1998
---------- ---------
Prepaid expenses $ 47,000 $ -
Net operating loss
carryforwards 2,008,000 104,701
Valuation allowance (2,055,000) (104,701)
---------- ---------
$ - $ -
========== =========
The Company has net operating loss carryforwards of approximately
$5,423,000. Pursuant to United States Federal income tax
regulations, the Company's ability to utilize this NOL may be
limited due to changes in ownership, as defined in the Internal
Revenue Code. The valuation allowance against the deferred tax
assets increased to $2,055,000 from $104,701 during the year
ended December 31, 1999, since the Company does not believe that
evidence is more likely than not that these benefits will be
realized.
The net operating loss carryforwards expire as follows:
2018 $ 275,000
2019 5,148,000
-----------
$ 5,423,000
===========
A reconciliation of income taxes computed at the Federal
statutory rate to the income taxes recorded in the Company's
financial statements is as follows:
<PAGE> F-34
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE M (continued)
<TABLE>
<S> <C> <C> <C>
Cumulative
amounts for
Period the period
April 6, 1998 April 6, 1998
(inception) to Year ended (inception) to
December 31, December 31, December 31,
1998 1999 1999
------------ ------------ -------------
Federal tax benefit
at statutory rate $(94,000) $(3,223,000) $(3,317,000)
State and local taxes (10,701) (263,000) (273,701)
Loss from Street Solid 359,000 359,000
Bacchus impairment loss 959,000 959,000
Interest charge for
beneficial conversion
feature in convertible debt 113,000 113,000
------------ ------------ -------------
Change in valuation
allowance 104,701 2,055,000 2,159,701
Income taxes per
financial statements $ - $ - $ -
============ ============ =============
</TABLE>
NOTE N - COMMITMENTS AND CONTINGENCIES
1. Leases
The Company leases office space in New York and Vancouver,
B.C. under noncancellable operating leases which expire
through 2000. Rent expense for the years ended December 31,
1999 and 1998 was $71,967 and $29,015, respectively. The
remaining commitment under such lease at December 31, 1999
was $17,480.
In March 2000, the Company entered into a new lease in New
York City, which began on June 1, 2000. The lease has a
term of five years. The Company provided a security deposit
equal to $177,480 in connection with such lease.
<PAGE> F-35
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE N (continued)
Future minimum rent commitments under the above lease are as
follows:
Year ending December 31,
2000 $ 88,920
2001 180,354
2002 185,457
2003 190,713
2004 196,126
Thereafter 99,437
---------
$ 941,005
=========
2. Agreements With Officers
The Company signed one-year agreements dated January 5, 1999
with three of its officers, providing aggregate annual
compensation of $180,000. These agreements were renewed on
January 3, 2000 for a period of one year, increasing the
aggregate annual compensation to $330,000. The agreements
contain other customary provisions.
3. Consulting Agreement
On October 1, 1999, the Company entered into a consulting
agreement with an individual, which expires on December 31,
2002, which provides to such consultant aggregate annual
consulting fees (including minimum bonuses) of $375,000,
$437,500 and $500,000 and provides for additional bonuses if
certain targets are met. Additionally, the agreement
granted 1,800,000 shares of common stock to such consultant,
which were issued on October 1, 1999. The consultant is
required to act on a "best-efforts" basis to pursue certain
goals for the Company. (See Note J-3f.)
<PAGE> F-36
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE O - SUBSEQUENT EVENTS
1. Sale of Common Stock - On January 15, 2000, the Company
entered into a stock subscription and option agreement with
three unrelated third-party shareholders. Pursuant to this
agreement, the Company sold 120,000 shares of stock to these
investors at a price of $1.50 per share and provided the
investors with an option to purchase up to a maximum of an
additional 690,000 shares. The investors purchased an
aggregate of 810,000 shares during 2000, for proceeds of
$1,215,000, of which $222,500 was paid in 1999. The shares
were issued in July 2000.
On January 21, 2000, the Company entered into a stock
subscription and option agreement with certain unrelated
third-party shareholders. Pursuant to this agreement, the
Company sold 1,000,000 shares of stock to these investors at
a price of $1.50 per share. Additionally, the agreement
provided the investors with an option to purchase up to a
maximum of an additional 2,000,000 shares. The investors
purchased an aggregate of 2,800,000 shares for net proceeds
of approximately $4,166,000 (net of $34,000 of transaction
costs). Such shares were issued during the first quarter of
2000.
2. Conversion to Debentures - During January and February 2000,
holders of $172,500 of convertible debentures exchanged such
debentures for 6,900,000 shares of common stock pursuant to
the debenture agreement dated June 25, 1999.
3. Stock Issuance - In February 2000, the Company granted an
aggregate of 3,000,000 shares to officers and consultants.
No additional services were required to be performed, and,
therefore, the Company recorded a charge to operations for
$2,934,000, which represented the market value of such
shares on the date of grant.
<PAGE> F-37
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Period from April 6, 1998 (inception) to December 31, 1998 and
year ended December 31, 1999
NOTE O (continued)
4. Acquisition - In February 2000, the Company acquired MAS
Acquisition Corporation, an inactive public shell
corporation in exchange for an aggregate of 335,000 shares
of its common stock. Additionally, the Company incurred
transaction costs relating to this acquisition, and settled
such cost by issuing 335,000 shares and paying cash of
$100,000, which resulted in an aggregate charge to expense
of $475,000 in the first quarter of 2000. This acquisition
was accounted for at the historical basis of the assets of
MAS (which were $31) since there was no business acquired.
No goodwill or other intangibles were acquired.
NOTE P - SUBSEQUENT EVENTS (UNAUDITED)
1. On May 10, 2000, the Company made a strategic investment of
$1,400,000 plus 2,000,000 shares of restricted common stock
to purchase a 25% interest in a company controlled by a
consultant of the Company, Turn-Key Entertainment LLC ("the
investee), whose plan is to develop an on-line streaming
media product that is synergistic with its core business.
The investee had no operations through September 30, 2000
other than the Company's investment and had cash available
of $1,345,263. The company has the right to participate in
future financings by the investee. The consultant discussed
in Note N-3 owns the remaining 75% of the investee.
Since the Company neither manages nor controls the investee,
which remains in the development stage and has no
significant operations to date, the investment was charged
to expense in accordance with generally accepted accounting
principles.
2. In May 2000, the Company recognized a gain on extinguishment
of debt of $200,151 relating to the settlement of the loan
discussed in Note H. The remaining 220,000 shares held in
trust became the property of the Company.
3. On July 13, 2000, the Company's Board of Directors approved
a stock option plan ("the Plan") and reserved 4 million
shares of the Company's common stock to attract, motivate
and retain individuals upon whose continued efforts the
success of the Company in large measure depends. On July
25, 2000, the Company issued 1,675,000 options pursuant to
the Plan to certain employees, officers, directors and
consultants. The exercise price of such options was $0.25
per share, based, as per the terms of the plan, on the
closing price on the day immediately preceding the issue
date. These options vest at a rate of 25% immediately, with
the remainder vesting at a rate of 25% per year over a
three-year period and expire in July 2003.
4. On August 3, 2000, the Company and Bacchus (and related
entities) signed an agreement whereby on August 17, 2000,
417,060 (of the aggregate of 1,012,500 shares originally
issued) were returned to the Company for cancellation.
5. On August 31, 2000, the Company entered into an agreement
with an investment bank, to register and underwrite shares
of its common stock with an aggregate market value not to
exceed $40,000,000, which will be offered for sale to the
public. In connection with such agreement, the Company is
obligated to issue warrants to purchase 2,000,000 shares of
common stock to such investment bank, at an exercise price
of $0.28 per share, subject to adjustment under certain
conditions. These warrants remain the property of the
investment bank, whether or not the registration and
proposed sale of shares to the public is completed. The
agreement also provides for additional warrants to be issued
to the investment bank upon achieving certain milestones in
the registration process. The Company issued such warrants
on August 31, 2000 and valued them at $600,000 based upon a
Black-Scholes pricing model. These warrants have been
included in deferred offering costs.
6. On November 8, 2000 the Company settled an outstanding
lawsuit with Destiny Music for $325,000 subject to
adjustment to $350,000. Amounts are payable in cash and the
Company's stock. A liability of $198,000 had been assumed
by the Company in connection with its purchase of Street
Solid. Accordingly, an additional $127,000 was recorded as
additional loss on disposal of discontinued operations
during the three months ended September 30, 2000.
<PAGE> F-38
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On May 26, 2000, we confirmed with our previous auditors,
Davidson & Company, that the firm would no longer be representing
the Company as our accountants. Davidson & Company have not
previously reported on the consolidated financial statements for
the Company. The change of independent accountants was ratified
by the Board of Directors of the Company on May 26, 2000. There
have been no disagreements with Davidson & Company on any matter
of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements
if not resolved to the satisfaction of Davidson & Company would
have caused them to make reference thereto in their report on the
consolidated financial statements for any years for which an
audit was undertaken.
We engaged Grant Thornton LLP as our new independent
accountants as of May 26, 2000. (See 8-K filed on May 30, 2000).
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other
information with the Securities and Exchange Commission. You may
read our SEC filings over the Internet at the Commission's
website at http://www.sec.gov. You may also read and copy
documents at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549 or at its regional offices located
at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call the Commission at 1-800-SEC-0330
for further information on the public reference rooms.
Our common stock is listed on the National Association of
Securities Dealers' Over-The-Counter Bulletin Board and reports,
proxy statements and other information concerning us also can be
inspected at the offices of The Nasdaq-Amex Stock Market, Inc. at
1735 K Street, N.W., Washington, D.C. 20006-1500.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to provide information about our
business and other important information to you by "incorporating
by reference" the information we file with the Commission, which
means that we can disclose the information to you by referring in
this prospectus to the documents we file with the Commission.
We incorporate by reference into this prospectus the
following documents that we have filed with the Commission. You
should consider each document incorporated by reference an
important part of this prospectus:
SEC FILING (FILE NO. 000-27161) PERIOD COVERED OR DATE OF FILING
------------------------------- --------------------------------
Quarterly Report on Form 10-Q....... Quarter ended March 31, 2000
Quarterly Report on Form 10-Q........ Quarter ended June 30, 2000
Quarterly Report on Form 10-Q... Quarter ended September 30, 2000
Current Report on Form 8-K..................... February 25, 2000
Current Report on Form 8-K.......................... May 30, 2000
Current Report on Form 8-K/A...................... August 8, 2000
Current Report on Form 8-K/A..................... October 4, 2000
Current Report on Form 8-K/A.................... October 12, 2000
Current Report on Form 8-K/A.................... October 25, 2000
We are delivering along with this prospectus a copy of our
most recent Quarterly Report on Form 10-Q. You may request a
copy of the other filings that we are incorporating by reference
in this prospectus, but are not delivering with this prospectus,
at no cost, by writing or telephoning us at the following
address, telephone or facsimile number:
PayForView.com Corp.
509 Madison Avenue
16th Floor
New York, New York 10022
Phone: (212) 605-0150
Fax: (212) 605-0151
Attention: George Mellides, CFO
We will not provide exhibits to a document unless they are
specifically incorporated by reference in that document.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Eleventh of the Restated Articles of Incorporation
of the Company provides that no director of the Company shall
have personal liability to the corporation or to its shareholders
for damages for any breach of duty in such capacity, provided,
however, that the provisions shall not eliminate or limit:
(a) acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or
(b) the payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes.
Section 78.751(1) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director,
officer, employee, or corporate agent "who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the
right of the corporation" due to his or her corporate role.
Section 78.751(1) extends this protection "against expenses,
including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in
connection with the action, suit or proceeding if he or she acted
in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification
of the reasonable defense or settlement expenses of a corporate
director, officer, employee or agent who is sued, or is
threatened with a suit, by or in the right of the corporation.
The party must have been acting in good faith and with the
reasonable belief that his or her actions were not opposed to the
corporation's best interests. Unless the court rules that the
party is reasonably entitled to indemnification, the party
seeking indemnification must not have been found liable to the
corporation.
To the extent that a corporate director, officer, employee,
or agent is successful on the merits or otherwise in defending
any action or proceeding referred to in Section 78.751(1) or
78.751(2), Section 78.751(3) of the NRS requires that he be
indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him or her in connection with
the defense."
Section 78.751 (4) of the NRS limits indemnification under
Sections 78.751 (1) and 78.751(2) to situations in which either
(1) the stockholders, (2) the majority of a disinterested quorum
of directors, or (3) independent legal counsel determine that
indemnification is proper under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation
may advance an officer's or director's expenses incurred in
defending any action or proceeding upon receipt of an
undertaking. Section 78.751(6)(a) provides that the rights to
indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement,
stockholder vote or vote of disinterested directors. Section
78.751(6)(b) extends the rights to indemnification and
advancement of expenses to former directors, officers, employees
and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent
has the right to indemnity, Section 78.752 allows the corporation
to purchase and maintain insurance on his behalf against
liability resulting from his or her corporate role.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We will incur no expenses in connection with any sale or
other distribution by the selling shareholders of the common
stock being registered other than the expenses of preparation and
distribution of this Registration Statement and the Prospectus
included in this Registration Statement, which are set forth in
the following table. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fee.
SEC registration fee................... $ 1,484
Legal fees and expenses................ $25,000
Accounting fees and expenses........... $______
Miscellaneous expenses................. $______
-------
Total......................... $26,484
RECENT SALES OF UNREGISTERED SECURITIES
On January 5, 1999, the Company issued 7,788,840 shares of
its Common Stock in exchange for 100% of the issued and
outstanding shares of Voyager International Entertainment, Inc.
The shares were issued such that Voyager shareholders received
0.6 shares of the registrant's Common Stock for each share of
Voyager held. As a result of the transaction, Voyager became a
wholly-owned subsidiary of the registrant.
In January of 1999, we purchased 100% of the issued and
outstanding shares of Street Solid Records through the issuance
of 1,173,509 shares of the Company's Common Stock to Mr. Jay
Warsinske, the sole owner of Street Solid. This acquisition was
accomplished under Rule 4(2) of the Securities Act of 1933 and
Rule 145 of the Securities and Exchange Act of 1934.
On February 19, 1999, we entered into an agreement with
Dallas-based Reel Media for the exclusive Internet broadcast
rights to a motion picture library. The terms of the deal
included issuance by the registrant of 35,000 restricted shares
and payment of a license fee equal to 3% of gross revenue
received from Pay-For-View and advertising purchases. This
issuance was accomplished under Rule 4(2) of the Securities Act
of 1933.
On March 11, 1999, we entered into a service agreement with
ITV.Net for the provision of Web Casting, production and
Streaming Media services for a live Internet event from the
Cannes Film Festival. The value of the contract was $85,000, and
was payable $40,000 up front and the balance, including
incidentals, after the production. The registrant paid the down
payment in cash, and after the event, negotiated with ITV.Net to
pay the $58,000 balance with 82,000 restricted shares. This
issuance was accomplished under the exemption provided by Rule
506 of Regulation D.
On March 23, 1999, we concluded an agreement, negotiated in
January, for the purchase of certain assets of the Vancouver-
based film development company, Bacchus Entertainment. In
exchange for 675,000 restricted shares of the Company's Common
Stock and an agreement by the registrant to continue to invest in
current projects, we received the exclusive rights to a motion
picture in development and the expertise and services of the
Principals of Bacchus. The restricted shares were issued,
subject to completion of due diligence by the Company. This
issuance was completed under the auspices of Regulation S of the
Securities Act of 1933.
On March 29, 1999, we contracted the motion picture and
programming consulting services of Sage Entertainment of New
York. The value of Sage's services was set at $1,000 per month
for ongoing consulting and $2,000 in advance as a retainer. For
payment of the retainer, we issued 1,000 restricted shares. This
issuance was accomplished under Rule 4(2) of the Securities Act
of 1933. No monthly payments have been made at this time.
On April 14, 1999, we concluded an agreement, negotiated in
January, with Australian media company Sportsworld Network PTY
Limited for the Internet broadcast rights to a library of sports-
related shorts and highlights and rights to future content as it
is produced by Sportsworld. The terms of the agreement included
the issuance by the Company of 25,000 restricted shares of our
common stock and payment of a license fee equal to 8% of gross
revenue received by the Company from distribution and advertising
purchases. To date, we have paid to Sportsworld 25,000 shares of
the Company's restricted Common Stock. This issuance was
completed under the auspices of Regulation S of the Securities
Act of 1933.
On April 15, 1999, we entered into an Investment Agreement
with Swartz Private Equity, LLC, to allow for the sale of up to
$40,000,000 of our common stock in a registered offering to be
conducted by Swartz. The Investment Agreement dated on or about
August 31, 2000, and the related Commitment Warrant and other
related documents, supercede the April 15, 1999 Investment
Agreement and other related agreements.
On May 31, 1999, we signed a consulting agreement with
William Stuart of Los Angeles for the provision of advice and
expertise related to the Motion Picture Industry. The registrant
issued 333,333 restricted shares to William Stuart in exchange
for ongoing consulting services. The share issuance was
accomplished under Rule 4(2) of the Securities Act of 1933.
In June 1999, we entered into a 2% series A senior
subordinated convertible redeemable debenture and a separate
securities subscription agreement for the purchase of the
Debenture with BSD Holdings Ltd., a Texas-based investor. The
debenture was valued at $1,000,000, and had a conversion price
equal to 75% of the closing bid price of the Common Stock of the
registrant on the day immediately preceding the date of a notice
of conversion to the registrant from BSD. The subscription
agreement was executed under Rule 504 of Regulation D, and gave
BSD the option to purchase some or the entire debenture up to a
maximum of $1,000,000. During 1999, the full $1,000,000 was
subscribed, and an aggregate of $827,500 of debentures was
converted into 22,837,005 shares of common stock.
On August 17, 1999, we entered into a license and
development agreement with Ottawa, Canada-based InGenius
Multimedia. The initial stage of development called for the
payment of fees for services to InGenius, with $100,000 payable
in cash and the remainder payable in restricted stock. To date,
the registrant has paid InGenius $100,000 in cash as a retainer
and issued 200,000 shares of the Company's Common Stock. This
issuance was conducted under the Regulation S exemption.
In August 1999, we signed a consulting agreement with
William Mutual of Vancouver, Canada for the provision of ongoing
advice and expertise related to Streaming Media technology. For
ongoing consulting services. We issued 25,000 restricted shares
to William Mutual. This placement was conducted under the
exemption provided by Regulation S, as Mr. Mutual is a Canadian
citizen.
During the first quarter of 2000 we entered into two
separate subscription agreements for the private placement of
shares of our Common Stock at a price of $1.50 per share. We
received $1,215,000 from the sale of 810,000 shares under the
terms of the first agreement on January 15, 2000, and $4,200,000
from the sale of 2,800,000 shares under the terms of the second
agreement dated January 21, 2000, for total proceeds of
$5,381,000, which is net of $34,000 of offering costs.
During the first quarter of 2000, holders of the remaining
$172,500 of convertible debentures exchanged such debentures for
6,900,000 shares of common stock pursuant to a Debenture
Agreement dated June 25, 1999.
In February 2000, we granted an aggregate of 3,000,000
shares to officers and consultants as equity-based compensation.
The shares were distributed and vested on that date.
In March of 2000, we acquired MAS Acquisition Corporation,
an inactive public shell corporation in exchange for an aggregate
of 670,000 shares of its common stock (including a commission of
335,000 shares) and $100,000.
In May of 2000, we made a strategic investment in Turn-key
Entertainment LLC, a private development stage Delaware
Corporation that intends to develop an online streaming media
product that is synergistic with our core business. We issued
2,000,000 shares of our restricted common stock and paid
$1,400,000 in cash in exchange for 25% of the outstanding stock
of Turn-key Entertainment LLC.
On July 13, 2000, our Board of Directors approved a stock
option plan ("the Plan") and reserved 4 million shares of our
common stock to attract, motivate and retain individuals upon
whose continued efforts the success of the company in large
measure depends. On July 25, 2000, we issued 1,675,000 options
pursuant to the Plan to certain employees, officers, directors
and consultants. The exercise price of such options were $0.25
per share, based, as per the terms of the plan, on the closing
price on the day immediately preceding the issue date. These
options vest at a rate of 25% immediately with the remainder over
a three year period and expire July 2003.
On August 31, 2000 the Company entered into an agreement
with an investment bank to register and underwrite shares of its
common stock with an aggregate market value not to exceed
$40,000,000 to the general public. The company is obligated to
issue warrants to purchase 2,000,000 shares of common stock to
the investment bank, whether or not the registration and proposed
sale of shares to the public is completed. The Company is also
obligated to issue additional warrants to the investment bank
upon achieving certain milestones in the registration process.
EXHIBITS
<TABLE>
<CAPTION>
The following is a list of exhibits filed and/or
incorporated by reference as part of this Registration Statement:
<S> <C>
Exhibit
Number Exhibit Description
-------- -------------------
3.1 Restated Articles of Incorporation.
3.2 Articles of Incorporation of Sierra Gold
Corporation, dated August 26, 1988.
3.3 Certificate of Amendment of Articles of
Incorporation, dated September 16, 1998,
increasing the number of shares of the registrant
to twenty-five million at $0.0001 par value and a
resolution declaring a 500-for-1 forward stock
split.
3.4 Certificate of Amendment of Articles of
Incorporation, dated December 29, 1998, changing
the name of the registrant from SIERRA GOLD
CORPORATION to PAYFORVIEW.COM CORP., and
authorizing a 2-for-1 forward stock split to be
effective January 15, 1999.
3.5 Board Resolution authorizing 3-for-2 forward stock
split to be effective April 9, 1999.
3.6 Bylaws, adopted on August 26, 1988.
4.1 Commitment Warrant Agreement to purchase 2,000,000
shares between the Company and Swartz Private
Equity, LLC, dated August 31, 2000.
4.2 Commitment Warrant Side Agreement between the
Company and Swartz Private Equity, LLC, dated
August 31, 2000.
4.3 Registration Rights Agreement between the Company
and Swartz Private Equity, LLC, dated August 31,
2000.
5.1 Opinion of Dieterich & Associates regarding the
validity of the common stock.
10.1 Employment Agreement between the registrant and
Marc Pitcher for Employment as President, dated
January 3, 1999.
10.2 Long Form Agreement completing purchase of Voyager
assets by the registrant, dated January 5, 1999.
10.3 Letter of Intent respecting plans to purchase or
merge with Bacchus Entertainment ("Bacchus"), and
fund Bacchus acquisition plans, dated January 29,
1999.
10.4 Service Agreement between ITV.Net and the
registrant for the provision of Internet
broadcasting services and technology by ITV.Net to
The registrant for a fixed rate and term, dated
March 11, 1999.
10.5 Internet Broadcast Agreement between the
registrant and Sportsworld Network (Australia) Pty
Limited for several Sports related clips and
highlights dated March 25, 1999.
10.6 Reel Media License for Internet broadcast to 750
film library.
10.7 Contract between Sage Entertainment Inc. and the
registrant for professional, entertainment
industry consulting services, dated March 29,
1999.
10.8 Turn-key Entertainment Investment Agreement
10.9 Investment Agreement between the Company and
Swartz Private Equity, LLC, dated August 31, 2000.
10.10 Acknowledgment and Agreement with Swartz Private
Equity, LLC, dated August 31, 2000
23.1 Consent of Dieterich & Associates (Included in
their opinion filed as Exhibit 5.1 hereto).
23.2 Consent of Grant Thornton LLP.
23.3 Consent of Davidson & Company.
24.1 Power of Attorney (included on signature page to
this Registration Statement on Form SB-2).
27 Financial Data Schedule
</TABLE>
UNDERTAKINGS
A. Rule 415 Offering
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement; and
(iii)To include any material information with respect
to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
B. Request for Indemnification
(1) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, the Registrant
has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of our counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-2 and
has duly caused this Registration Statement on Form SB-2 to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the
17th day of November, 2000.
PayForView.com Corp.
By: /s/ Marc Pitcher
--------------------------
Marc Pitcher
President, COO & Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Marc Pitcher and George Mellides, either one acting
alone, as his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for him and in his
name, place and stead in any and all capacities to execute in
the name of each such person who is then an officer or director
of the Registrant any and all amendments (including
post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents and each of them
full power and authority to do and perform each and every act and
thing required or necessary to be done in and about the premises
as fully as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either
of them, or their or his substitutes, may lawfully do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the date indicated
Signature Title Date
--------- ----- ----
/s/ Marc Pitcher President, COO & November 17, 2000
Marc Pitcher Director
/s/ George Mellides Chief Financial November 17, 2000
George Mellides Officer
/s/ Dan Scott Chief Marketing November 17, 2000
Dan Scott Officer & Director
/s/ Scott Shultz Director November 17, 2000
Scott Shultz
<PAGE>
<PAGE>
EXHIBIT 3.1 RESTATED ARTICLES OF INCORPORATION
RESTATED ARTICLES OF INCORPORATION
OF
PAYFORVIEW.COM, INC.
FIRST: The name of this Corporation is:
PAYFORVIEW.COM, INC.
SECOND: Its principal office in the State of Nevada is
located at 202 South Minnesota Street, Carson City, Nevada,
89703. The name and address of its resident agent is Capitol
Document Services, Inc., at the above address.
THIRD: The nature of the business and the object and
purposes to be transacted, promoted and carried on by the
corporation are and shall continue to be:
To engage in any lawful business authorized and permitted by
the laws of the State of Nevada, United States, and any and
all counties, states or cities wherein this said corporation
may undertake to engage in business.
FOURTH: The total number of authorized capital stock of
the corporation is One Hundred Million (100,000,000) shares at
$.0001 par value per share. Said shares at $.0001 per value may
be issued by the corporation from time to time for such
consideration as may be fixed by the Board of Directors.
FIFTH: The governing board of this corporation shall be
known as directors, and the number of directors may from time to
time be increased or decreased in such manner as shall be
provided in the by-laws of this corporation, provided that the
number of directors shall not be reduced to less than one unless
there is less than one stockholder.
The Board of Directors shall consist of three (3) members
whose names and addresses are as follows:
NAME ADDRESS
Marc Pitcher 305-1188 Richards Street
Vancouver, BC V6B 3E6
Canada
Nicholas R. M. Meredith Rosemount, Grange Road
Winchester, Hants
SO23 9RT
United Kingdom
Warren Wayne 7480 Reeder Road
Richmond, BC
Canada
SIXTH: The capital stock, after the amount of the
subscription price, or par value, has been paid in, shall not be
subject to assessment to pay the debts of the corporation.
SEVENTH: The name and post office address of each officer
signing these restated articles of incorporation is as follows:
NAME ADDRESS
Marc Pitcher 305-1188 Richards Street
(President) Vancouver, BC V6B 3E6
Canada
Warren Wayne 7480 Reeder Road
(Secretary) Richmond, BC
Canada
EIGHTH: This corporation is to have perpetual existence.
NINTH: In furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly
authorized, subject to the by-laws, if any, adopted by the
shareholders, to make, alter or amend the by-laws of the
corporation.
TENTH: Meetings of stockholders may be held outside of
the State of Nevada at such place or places as may be designated
from time to time by the board of directors or in the by-laws of
the corporation.
ELEVENTH: To the fullest extent permitted by Chapter 78 of
the Nevada Revised Statutes, as the same exists or may hereafter
be amended, an officer or director of the corporation who was or
is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by
or in the right of the corporation, or is or was serving at the
request of the corporation as an officer, director, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise, shall be indemnified by the corporation
against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding.
TWELFTH: This corporation reserves the right to amend,
alter, change or repeal any provision contained in the articles
of incorporation, in the manner now or hereafter prescribed, and
all rights conferred upon stockholders herein are granted subject
to this reservation.
WE, THE UNDERSIGNED, being the officers herein before named
for the purpose of filing these restated articles of
incorporation pursuant to the General Corporation Law of the
State of Nevada, do make and file these restated articles of
incorporation, hereby declaring and certifying that the facts
herein stated are true, and accordingly have hereunto set our
hands this twenty-ninth day of October, 1999.
/s/ Marc Pitcher /s/ Warren Wayne
Marc Pitcher, Warren Wayne,
President Secretary
<PAGE>
EXHIBIT 3.2 ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
OF
SIERRA GOLD CORPORATION
KNOW ALL MEN BY THESE PRESENTS;
I, the undersigned, do this day voluntarily acknowledge the
forming of a corporation under and pursuant to the laws of the
State of Nevada, and I HEREBY CERTIFY:
FIRST: The name of the corporation is
SIERRA GOLD CORPORATION
SECOND: The principal office of this corporation is to be
at 777 East Williams Box 2849
in the city of Carson 89702 State of Nevada.
FIRST CARTEL, INC. is hereby named as Resident
Agent of this corporation and in charge of it's said office in
Nevada.
THIRD: The nature of the business, object and purpose to
be transacted, promoted, or carried on by the corporation are:
A. To conduct any lawful business, to promote any lawful
purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law
of the State of Nevada and to and in every kind of fiduciary
capacity and generally to do all that is necessary or convenient
which are incident to or which a natural person might or could
do.
B. To purchase, receive, take by grant, gift, devise
bequest or otherwise lease, or otherwise acquire, own, hold,
improve, employ, use and otherwise deal in and with real or
personal property, on any interest therein, wherever situated,
and to sell, convey, lease, exchange, transfer or otherwise
dispose of, or mortgage or pledge, all or any of it's property
and assets, or any interests therein, whatever situated.
C. To engage generally in the real estate business as
principal, and in any lawful capacity, and generally to take,
lease, purchase, or otherwise acquire, and to own, use, hold,
sell, convey, exchange, lease, mortgage, work, clear, improve,
develop, divide, and otherwise handle, manage operate, deal in
and dispose of mining claims, oil leases, oil and gas wells, real
estate, real property, lands, multiple-dwelling structures,
houses, buildings and other works and any interest or right
therein; to take lease, purchase or otherwise handle or acquire
and to own, use, hold, sell, convey, exchange, hire, lease
pledge, mortgage, and otherwise handle, and deal in and dispose
of, as principal rent or in any lawful capacity, such personal
property, chattels, chattels real, rights, easements, privileges,
chooses in actions, notes, bonds, mortgages, and securities as
may lawfully be acquired, held or disposed of and to acquire,
purchase, sell, assign, transfer, dispose of and generally deal
in and with as principal, agent, broker, and in any lawful
capacity, mortgages and other interests in real, personal, and
mixed properties; to carry on a general oil exploration, mining
exploration and management business as principal, agent,
representative, contractor, sub-contractor, and in any other
lawful capacity. To manufacture, purchase or acquire in any
lawful manner and to hold, own, mortgage, pledge, sell, transfer,
or in any manner dispose of, and to deal and trade in goods,
wares, merchandise, and property of any and every class and
description, and in any part of the world.
D. To apply for, register, obtain, purchase, lease, take
licenses in respect of or otherwise acquire, and to hold, own,
use, operate, develop, enjoy, turn to account, grant licenses and
immunities in respect of, manufacture under and to introduce,
sell, assign, mortgage, pledge or otherwise dispose of and, in
any manner deal with and contact with reference to:
1. Inventions, devices, formulae, processes,
improvements and modifications thereof:
2. Letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-
marks, trade names, trade symbols and other
indications or and ownership granted by
or recognized under the laws of the United States
of America, any state or subdivision thereof, and
any commonwealth, territory, possession,
dependency, colony, possession agency or
instrumentality of the United States of America
and of any foreign country, and all rights
connected therewith or appertaining thereunto.
3. Franchises, licenses, grants and concessions.
E. To make, enter into, perform and carry out contracts of
every kind and description with any person, firm, association,
corporation or government or agency or instrumentality thereof.
F. To lend money in furtherance of its corporate purposes
and to invest and reinvest it's funds from time to time to such
extent, to such persons, firms, associations, corporations,
governments or agencies or instrumentalities thereof, and on such
terms and on such security, if any, as the Board of Directors of
the corporation may determine and direct any officer to complete.
G. To borrow money without limit as to amount and at such
rates of interest as it may determine; from time to time to issue
and sell it's own securities, including it's shares of stock,
notes, bonds, debentures, and other obligations, in such amounts,
on such terms and conditions, for such purposes and for such
prices, now or hereafter permitted by the laws of the State of
Nevada and by the Board of Directors of the corporation as they
may determine; and to secure any of its obligations by mortgage,
pledge or other encumbrance of any or all of it's property,
franchises and income.
H. To be a promoter or manager of other corporations of
any type or kind; and to participate with others in any
corporation, partnership, limited partnership, joint venture, or
other association of any kind, or in any transaction, undertaking
or arrangement which the corporation would have power to conduct
by itself, whether or not such participation involves sharing or
delegation of control with or to others.
I. To promote and exercise all or any part of the
foregoing purposes and powers in and all parts of the world, and
to conduct it's business in all or any branches in any lawful
capacity.
The foregoing enumeration of specific purposes and powers
shall not be held to limit or restrict in any manner the purposes
and powers of the corporation by references to or inference from
the terms or provisions of any other clause, but, shall be
regarded as independent purposes.
FOURTH: The amount of the total capital stock of the
corporation is twenty five hundred (2,500) shares of common stock
with no par value.
FIFTH: The number of the governing board shall be styled
DIRECTORS and the number of such directors shall be no less than
one (1), or more than five (5). The first board of directors
shall be One Member whose name and post office address is as
follows:
Mr. James Barry Somervail
28708 North Mill Lane
Bowling Green, Kentucky, 42101
SIXTH: The initial number of stockholders will be one
(1). Additional stockholders may be obtained. The number of
directors may be charged as provided in N.R.S. 78.330.
SEVENTH: The capital stock of this corporation after the
amount of the subscription price or par value has been paid in,
shall not be subject to assessment to pay debts of this
corporation and no stock issued as fully paid up shall ever be
assessable or assessed and the Articles of Incorporation shall
not be amended in the particular.
EIGHTH: This corporation is to have perpetual existence.
I, the undersigned, being the original incorporator for the
purpose of forming a corporation to do business both within and
without the State of Nevada, and in pursuance of the General
Corporation Law of the State of Nevada, effective March 31, 1925
and as subsequently amended to make and file this certificate,
hereby declaring and certifying that the facts herein above
stated are true.
This 26th day of August, 1988.
/s/
Address: P. O. Box 2849
Carson City, NV. 89702
<PAGE>
EXHIBIT 3.3 CERTIFICATE OF AMENDMENT OF ARTICLES OF
INCORPORATION
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
SIERRA GOLD CORPORATION
The undersigned being the Secretary of Sierra Gold
Corporation, a Nevada Corporation, hereby certify that by
majority vote of the Board of Directors and majority vote of the
stockholders at a meeting held on the 26 August 1993, it was
agreed by unanimous vote that this CERTIFICATE AMENDING ARTICLES
OF INCORPORATION be filed.
The undersigned further certify that ARTICLES FOURTH of the
original Articles of Incorporation filed on the 25 day of August
1993 herein is amended to read as follows:
RESOLVED that Article Fourth is hereby amended to read as
follows:
The total number of authorized capital stock is increased to
Twenty Five million (25,000,000) shares at $000.1 par value per
share shall be authorized. Said shares at $.0001 par value may
be issued by the corporation from time to time for such
consideration as may be fixed from time to time by the Board of
Directors.
RESOLVED that the Corporation declare a 500 to 1 forward
stock split to be effective September 10, 1993.
The undersigned hereby certify that they have on the 26
August 1993 executed this Certificate Amending that original
Articles of Incorporation heretofore filed with the Secretary of
State of Nevada.
Barry Somervail, President
<PAGE>
EXHIBIT 3.4 CERTIFICATE OF AMENDMENT OF ARTICLES OF
INCORPORATION
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
SIERRA GOLD CORPORATION
The undersigned, being the President and the Secretary of Sierra
Gold Corporation, a Nevada Corporation, hereby certify that by
majority vote of the Board of Directors and majority vote of the
stockholders at a meeting held on 18 December, 1998, it was voted
and adopted a resolution to amend the original Articles of
Incorporation as follows:
The undersigned further certify that ARTICLES ONE and FOUR of the
original Articles of Incorporation filed on the 26th day of
August, 1988 herein is amended to read as follows:
ARTICLE ONE, NAME is amended to read:
The name of the Corporation shall be:
"PAYFORVIEW.COM CORP".
ARTICLE FOUR, CAPITAL STOCK is amended to read:
The total number of authorized capital stock is increased to One
Hundred Million (100,000,000) shares at $.0001 par value per
shares shall be authorized. Said share at $.0001 per value may
be issued by the corporation from time to time for such
consideration as may be fixed by the Board of Directors.
The Corporation declare a 2 shares for each 1 share forward stock
split to be effective January 15, 1999.
The undersigned hereby certify that they have on this 18th
December 1998 executed this Certificate Amending that original
Articles of Incorporation heretofore is file with the Secretary
of State of Nevada.
Barry Somervail, President
M. Zapara, Secretary
<PAGE>
EXHIBIT 3.5 RESOLUTION OF THE BOARD OF DIRECTORS AUTHORIZING
3-FOR-2 FORWARD STOCK SPLIT EFFECTIVE APRIL 9, 1999
RESOLUTION OF THE BOARD OF DIRECTORS
of
PAYFORVIEW.COM
WHEREAS, the corporation is attempting to lower the effective
trading price of its securities in the marketplace, and desires
to accomplish this by increasing the number of shares being
traded;
NOW, THEREFORE, BE IT RESOLVED, that the officers of the
corporation are hereby directed to file an amendment to the
Articles to effect a split of the securities on a 3-for-2 basis,
to be filed with and implemented on or before April 9, 1999.
Approved:
/s/ Marc Pitcher
Marc Pitcher, Director
/s/ Warren Wayne
Warren Wayne, Director
<PAGE>
EXHIBIT 3.6 BYLAWS, ADOPTED ON AUGUST 26, 1988
BYLAWS
OF
SIERRA GOLD CORPORATION
(the "Corporation")
Article I.
Office
The Board of Directors she designate and the Corporation shall
maintain a principal office, The location of the principal office
may be changed by the Board of Directors. The Corporation also
may have offices in such other places as the; Board may from time
to time designate. The location of the initial principal office
of the Corporation shall be designated by resolution.
Article II.
Shareholders Meetings
1. Annual Meetings
The annual meeting of the shareholders of the Corporation shall
be held at such place within or without the State of Nevada as
shall be set forth in compliance with these Bylaws. The meeting
shall be held on the 3 1" of December of each year. If such day
is a legal holiday, the meeting shall be on the next business
day. This meeting shall be for the election of Directors and for
the transaction of such other business as may properly come
before it.
2. Special Meetings
Special meetings of shareholders, other than those regulated by
statute, may be called by the President upon written request of
the holders of 50% or more of the outstanding shares entitled to
vote at such special meeting. Written notice of such meeting
stating the place, the date and hour of the meeting, the purpose
or purposes for which it is called, and the name of the person by
whom or at whose direction the meeting is called shall be given.
3. Notice of Shareholders Meetings
The Secretary shall give written notice stating the place, day,
and hour of the meeting, and in the case of a special meeting,
the purpose or purposes for which the meeting is called, which
shall be delivered not less than ten or more than fifty days
before the date of the meeting, either personally or by mail to
each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the shareholder
at his address as it appears on the books of the Corporation,
with postage thereon prepaid. Attendance at the meeting shall
constitute a waiver of notice thereof.
4. Place of Meeting
The Board of Directors may designate any place, either within or
without the State of Nevada as the place of meeting for any
annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place, either
within or without the State of Nevada, as the place for the
holding of such meeting. If no designation is made, or if a
special meeting is otherwise called, the place of meeting shall
be the principal office of the Corporation.
5. Record Date
The Board of Directors may fix a date not less than ten nor more
than sixty days prior to any meeting as the record date for the
purpose of determining shareholders entitled to notice of and to
vote at such meetings of the shareholders. The transfer books
may be closed by the Board of Directors for a stated period not
to exceed fifty days for the purpose of determining shareholders
entitled to receive payment of any dividend, or in order to make
a determination of shareholders for any other purpose.
6. Quorum
A majority of the outstanding shares of the Corporation entitled
to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. If less than a majority of
the outstanding shares are represented at a meeting, a majority
of the shares so represented may adjourn the meeting from time to
time without further notice. At a meeting resumed after any such
adjournment at which a quorum shall be present or represented,
any business may be transacted, which might have been transacted
at the meeting as originally noticed.
7. Voting
A holder of an outstanding share, entitled to vote at a meeting,
may vote at such meeting in person or by proxy. Except as may
otherwise be provided in the currently filed Articles of
incorporation, every shareholder shall be entitled to one vote
for each share standing in his name on the record of
shareholders. Except as herein or in the currently filed
Articles of Incorporation otherwise provided, all corporate
action shall be determined by a majority of the vote's cast at a
meeting of shareholders by the holders of shares entitled to vote
thereon.
8. Proxies
At all meetings of shareholders, a shareholder may vote in person
or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after six months from the date
of its execution.
9. Informal Action by Shareholders
Any action required to be taken at a meeting of the shareholders,
may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by a majority of the,
shareholders entitled to vote with respect to the subject matter
thereof.
Article III
Board Of Directors
1. General Powers
The business and affairs of the Corporation shall be managed by
its Board of Directors. The Board of Directors may adopt such
rules and regulations for he conduct of their meetings and the
management of the Corporation as they appropriate under the
circumstances. The Board shall have authority to authorize
changes in the Corporation's capital structure.
2. Number, Tenure and Qualification
The number of Directors of the Corporation shall be a number
between one and five, as the Directors may by resolution
determine from time to time. Each of the Directors shall hold
office until the next annual meeting of shareholders and until
his successor shall have been elected and qualified.
3. Regular Meetings
A regular meeting of the Board of Directors shall be held without
other notice than by this Bylaw, immediately after and, at the
same place as the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place for the
holding of additional regular meetings without other notice than
this resolution.
4. Special Meetings
Special meetings of the Board of Directors may be called by order
of the Chairman of the Board or the President. The Secretary
shall give notice of the time, place and purpose or purposes of
each special meeting by mailing the same at least two days before
the meeting or by telephone, telegraphing or telecopying the same
at least one day, before the meeting to each Director. Meeting
of the Board of Directors may be held by telephone conference
call.
5. Quorum
A majority of the members of the Board of Directors shall
constitute a quorum for the transaction of business, but less
than a quorum may adjourn any meeting from time to time until a
quorum shall be present, whereupon the meeting may be held, as
adjourned, without further notice. At any meeting at which every
Director shall be present, even though without any formal notice,
any business may be transacted.
6. Manner of Acting
At all meetings of the Board of Directors, each Director shall
have one vote, The act of a majority of Directors present at a
meeting shall be the act of the full Board of Directors, provided
that a quorum is present.
7. Vacancies
A vacancy in the Board of Directors shall be deemed to exist in
the case of death, resignation, or removal of any Director, or if
the authorized number of Directors is increased, or if the
shareholders fail, at any meeting of the shareholders, at which
any Director is to be elected, to elect the full authorized
number of Director to be elected at that meeting.
8. Removals
Directors may be removed, at any time, by a vote of the
shareholders holding a majority of the shares outstanding and
entitled to vote, Such vacancy shall be filled by the Directors
then in office, though less than a quorum, to hold office until
the next annual meeting or until his successor is duly elected
and qualified, except that any directorship to be filled by
election by the shareholders at the meeting at which the Director
is removed. No reduction of the authorized number of Directors
shall have the effect of removing any Director prior to the
expiration of his term of office.
9. Resignation
A Director may resign at any time by delivering written
notification thereof to the President or Secretary of the
Corporation. -A resignation shall become effective upon its
acceptance by the Board of Directors; provided, however, that if
the Board of Directors has not acted thereon within ten days from
the date of its delivery, the resignation shall be deemed
accepted.
10. Presumption of Assent
A Director of the Corporation who is present at a meeting of the
Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action(s) taken
unless his dissent shall be placed in the minutes of the meeting
or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered
mail to the Secretary of the Corporation immediately after the
adjournment of the meeting, Such right to dissent shall not apply
to a Director who voted in favor of such action.
11. Compensation
By resolution of the Board of Directors, the Directors may be
paid their expenses, if any, of attendance at each meeting of the
Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the Corporation
in any other capacity and receiving compensation therefor.
12. Emergency Power
When, due to a national disaster or death, a majority of the
Directors are incapacitated or otherwise unable to attend the
meetings and function as Directors, the remaining members of the
Board of Directors shall have all the powers necessary to
function as a complete Board, and for the purpose of doing
business and filling vacancies shall constitute a quorum until
such time as all Directors can attend or vacancies can be. filled
pursuant to these Bylaws.
13. Chairman
The Board of Directors may elect from its own number a Chairman
of the Board, who shall preside at all meetings of the Board of
Directors, and shall perform such other duties as may be
prescribed from time to time by the Board of Directors, The
Chairman may by appointment fill any vacancies on the Board of
Directors.
Article IV.
Officers
1. Number
The Officers of the Corporation shall be a President., one or
more Vice Presidents, and a Secretary Treasurer, each of whom
shall be elected by a majority of the Board of Directors, Such
other Officers and assistant Officers as may be deemed necessary
may be elected or appointed by the Board of Directors. In its
discretion, the Board of Directors may leave unfilled for any
such period as it may determine any office except those of
President and Secretary. Any two or more offices may be held by
the same person, Officers may or may not be Directors or
shareholders of the Corporation.
2. Election and Term of Office
The Officers of the Corporation to be elected by the Board of
Directors shall be elected annually by the Board of Directors at
the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of Officers
shall not be held at such meeting, such election shall be held as
soon thereafter as convenient, Each Officer shall hold office
until his successor shall have been duly elected and shall have
qualified OF until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
3. Resignations
Any Officer may resign at any time by delivering a written
resignation either to the President or to the Secretary. Unless
otherwise specified therein, such resignation shall take effect
upon delivery.
4. Removal
Any Officer or agent may be removed by the Board of Directors
whenever in its judgment the best interests of the Corporation
will be served thereby, but such removal shall be without,
prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an Officer or agent shall not
of itself create contract rights. Any such removal shall require
a majority vote of the Board of Directors, exclusive of the
Officer in question if he is also a Director.
5. Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, or if a new office shall be
created, may be filled by the Board of Directors for the un-
expired portion of the term.
6 President
The President shall be the chief executive and administrative
Officer of the Corporation. He shall preside at all meetings of
the stockholders and, in the absence of the Chairman of the
Board, at meetings of the Board of Directors, He shall exercise
such duties as customarily pertain to the office of President and
shall have general and active supervision over the property,
business, and affairs of the Corporation and over its several
Officers, agents, or employees other than those appointed by the
Board of Directors, He may sign, execute and deliver in the name
of the Corporation powers of attorney., contracts, bonds and
other obligations, and shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the
Bylaws.
7. Vice President
The Vice President shall have such powers and perform such duties
as may be assigned to him by the Board of Directors or the
President. In the absence or disability of the President, the
Vice President designated by the Board or the President shall
perform the duties and exercise the powers of the President, A
Vice President may sign and execute contracts and other
obligations pertaining to the regular course of his duties.
8. Secretary
The Secretary shall keep the minutes of all meetings of the
stockholders and of the Board of Directors and, to the extent
ordered by the Board of Directors or the President, the minutes
of meetings of all committees, He shall cause notice to be given
of meetings of stockholders, of the Board of Directors, and of
any committee appointed by the Board. He shall have custody of
the corporate seal and general charge of the records, documents
and papers of the Corporation not pertaining to the performance
of the duties vested in other Officers, which shall at all
reasonable times be open to the examination of any Directors, He
may sign or execute contracts with the President or a Vice
President thereunto authorized in the name of the Corporation and
affix the seal of the Corporation thereto. He shall perform such
other duties as may be prescribed from time to time by the Board
of Directors or by the Bylaws.
9. Treasurer
The Treasurer shall have general custody of the collection and
disbursement of funds of the Corporation. He shall endorse on
behalf of the Corporation for collection checks, notes and other
obligations, and shall deposit the same to the credit accounts to
any Director of the Corporation upon application at the office of
the Corporation during business hours; and, whenever required by
the Board of Directors or the President, shall render a statement
of his accounts. He shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the
Bylaws.
10. Other Officers
Other Officers shall perform such duties and shall have such.
powers as may be assigned to them by the Board of Directors.
11. Salaries
The salaries or other compensation of the Officers of the
Corporation shall be fixed from time to time by the Board of
Directors, except that the Board of Directors may delegate to any
person or group of persons the power to fix the salaries or other
compensation of any subordinate Officers or agents, No Officer
shall be prevented from receiving any such salary or compensation
by reason of the fact that he is also a Director of the
Corporation.
12. Surety Bonds
In case the Board of Directors shall so require, any Officer or
agent of the Corporation shall execute to the Corporation a bond
in such sums and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful performance
of his duties to the Corporation, including responsibility for
negligence and for the accounting for all property, moneys or
securities of the Corporation, which may come into his hands.
Article V.
Contracts, Loans, Checks And Deposits
1. Contracts
The Board of Directors may authorize any Officer or Officers,
agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the
Corporation and such authority may be general or confined to
specific instances.
2. Loans
No loan or advance shall be contracted on behalf of the
Corporation, no negotiable paper or other evidence of its
obligation under any loan or advance shall be issued in its name,
and no property of the Corporation shall be mortgaged, pledged,
hypothecated or transferred as security for the payment of any
loan, advance, indebtedness or liability of the Corporation
unless and except as authorized by the Board of Directors. Any
such authorization may be general or confined to specific
instances.
3. Deposits
All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in
such banks, trust companies or other depositories as the Board of
Directors may select, or as may be selected by an Officer or
agent of the Corporation authorized to do so by the Board of
Directors.
4. Checks and Drafts
All notes, drafts, acceptances, checks, endorsements and evidence
of indebtedness of the Corporation shall be signed by such
Officer or Officers or such agent or agents of the Corporation
and in such manner as the Board of Directors from time to time
may determine. Endorsements for deposits to the credit of the
Corporation in any of its duly authorized depositories shall be
made in such manner as the Board of Directors may from time to
time determine.
5. Bonds and Debentures
Every bond or debenture issued by the Corporation shall be in the
form of an appropriate legal writing, which shall be signed by
the President or Vice President and by the Treasurer or by the
Secretary, and sealed with the seat of the Corporation. The seal
may be facsimile, engraved or printed. Where such bond or
debenture is authenticated with the manual signature of an
authorized Officer of the Corporation or other trustee designated
by the indenture of trust or other agreement under which such
security is issued, the signature of any of the Corporation's
Officers named thereon may be facsimile. In case any Officer who
signed, or whose facsimile signature has been used on any such
bond or debenture, shall cease to be an Officer of the
Corporation for any reason before the same has been delivered by
the Corporation, such bond or debenture may nevertheless be
adopted by the Corporation and issued and delivered as though the
person who signed it or whose facsimile signature has been used
thereon had not ceased to be such Officer.
Article VI
Capital Stock
1. Certificate of Share
The shares of the Corporation shall be represented by
certificates prepared by the Board of Directors and signed by the
President. The signatures of such Officers upon a certificate may
be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation
itself or one of its employees, All certificates for shares shall
be consecutively numbered or otherwise identified, The name' and
address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of. the Corporation, All
certificates surrendered to the Corporation for transfer shall be
canceled except that in case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may
prescribe.
2. Transfer of Shares
Transfer of shares of the Corporation shall be made only on the
stock transfer books of the Corporation by the holder of record
thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the
Secretary of -.the Corporation, and on surrender for cancellation
of the certificate for such shares. The person in whose name
shares stand on the books of the Corporation shall be deemed by
the Corporation to be the owner thereof for all purposes.
3. Transfer Agent and Registrar
The Board of Directors of shall have the power to appoint one or
more transfer agents and registrars for the transfer and
registration of certificates of stock of any class, and may
require that stock certificates shall be countersigned and
registered by one or more of such transfer agents and registrars.
4. Lost or Destroyed Certificates
The Corporation may issue a new certificate to replace any
certificate theretofore issued by it alleged to have been lost or
destroyed. The Board of Directors may require the owner of such a
certificate or his legal representative to give the Corporation a
bond in such sum and with such sureties as the Board of Directors
may direct to indemnify the Corporation as transfer agents and
registrars, if any, against claims that may be made on account of
the issuance of such new certificates. A new certificate may be
issued without requiring any bond.
5. Consideration for Shares
The capital stock of the Corporation shall be issued for such
consideration as shall be fixed from time to time by the Board of
Directors. In the absence of fraud, the determination of the
Board of Directors as to the value of any property or services
received in full or partial payment of shares shall be
conclusive.
6. Registered Shareholders
The Corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder thereof, in fact.,
and shall not be bound to recognize any equitable or other claim
to or on behalf of this Corporation to any and all of the rights
and powers incident to the ownership of such stock at any such
meeting, and shall have power and authority to execute and
deliver proxies and consents on behalf of this Corporation in
connection with the exercise by this Corporation of the rights
and powers incident to the ownership of such stock, The Board of
Directors, from time to time, may confer like powers upon any
other person or persons.
Article VII
Indemnification
No Officer or Director shall be personally liable for any
obligations of the Corporation or for any duties or obligations
arising out of any acts or conduct of said Officer or Director
performed for or on behalf of the Corporation. The Corporation
shall and does hereby indemnify and hold harmless each person and
his heirs and administrators who shall serve at any time
hereafter as a Director or Officer of the Corporation from and
against any and all claims, judgments and liabilities to which
such persons shall become subject by reason of his having
heretofore or hereafter been a Director or Officer of the
Corporation, or by reason of any action alleged to have
heretofore or hereafter taken or omitted to have been taken by
him as such Director or Officer, and shall reimburse each such
person for all legal and other expenses reasonably incurred by
him in connection with any such claim or liability, including
power to defend such persons from all suits or claims as provided
for under the provisions of the Nevada Revised Statutes;
provided, however, that no such persons shall be indemnified
against, or be reimbursed for, any expense incurred in connection
with arty claim or liability arising out of his own negligence or
willful misconduct. The rights accruing to any person under the
foregoing provisions of this section shall not exclude any other
right to which he may lawfully be entitled, nor shall anything
herein contained restrict the right of the Corporation to
indemnify or reimburse such person in any proper case, even
though not specifically herein provided for. The Corporation, its
Directors, Officers, employees and agents shall be My protected
in taking any action or making any payment, or in refusing so to
do in reliance upon the advice of counsel.
Article VIII
Notice
Whenever any notice is required to be given to any shareholder or
Director of the Corporation under the provisions of the Articles
of Incorporation, or under the provisions of the Nevada Statutes,
a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
Attendance at any meeting shall constitute a waiver of notice of
such meetings, except where attendance is for the express purpose
of objecting to the holding of that meeting.
Article IX
Amendments
These Bylaws may be altered, amended, repealed, or new Bylaws
adopted by a majority of the entire Board of Directors at any
regular or special meeting. Any Bylaw adopted by the Board may be
repealed or changed by the action of the shareholders.
Article X
Fiscal Year
The fiscal year of the Corporation shall be fixed and may be
varied by resolution of the Board of Directors.
Article XI
Dividends
The Board of Directors may at any regular or special meeting, as
they deem advisable, declare dividends payable out of the surplus
of the Corporation.
Article XII
Corporate Seal
The seal of the Corporation shall be in the form of a circle and
shall bear the name of the Corporation and the year of
incorporation per sample affixed hereto.
Date: August 26, 1988
Barry Somervail Secretary
<PAGE>
<PAGE>
EXHIBIT 4.1 SWARTZ PRIVATE EQUITY, LLC COMMITMENT WARRANT,
dated August 31, 2000.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH
SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND
ASSESSMENT OF THE RISKS INVOLVED.
Warrant to Purchase
2,000,000 shares
Warrant to Purchase Common Stock
of
PAYFORVIEW.COM CORPORATION
THIS CERTIFIES that Swartz Private Equity, LLC or any
subsequent holder hereof pursuant to Section 8 hereof ("Holder"),
has the right to purchase from PAYFORVIEW.COM CORPORATION, a
Nevada corporation (the "Company"), up to 2,000,000 fully paid
and nonassessable shares of the Company's common stock, $.001 par
value per share ("Common Stock"), subject to adjustment as
provided herein, at a price equal to the Exercise Price as
defined in Section 3 below, at any time beginning on the Date of
Issuance (defined below) and ending at 5:00 p.m., New York, New
York time the date that is five (5) years after the Date of
Issuance (the "Exercise Period").
Holder agrees with the Company that this Warrant to Purchase
Common Stock of the Company (this "Warrant") is issued and all
rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance and Term.
This Warrant shall be deemed to be issued on August 11, 2000
("Date of Issuance"). The term of this Warrant is five (5) years
from the Date of Issuance.
Notwithstanding anything to the contrary herein, the
applicable portion of this Warrant shall not be exercisable
during any time that, and only to the extent that, the number of
shares of Common Stock to be issued to Holder upon such exercise,
when added to the number of shares of Common Stock, if any, that
the Holder otherwise beneficially owns at the time of such
exercise, would equal or exceed 4.99% of the number of shares of
Common Stock then outstanding, as determined in accordance with
Section 13(d) of the Exchange Act (the "4.99% Limitation"). The
4.99% Limitation shall be conclusively satisfied if the
applicable Exercise Notice includes a signed representation by
the Holder that the issuance of the shares in such Exercise
Notice will not violate the 4.99% Limitation, and the Company
shall not be entitled to require additional documentation of such
satisfaction.
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this
Warrant may be exercised as to all or any lesser number of full
shares of Common Stock covered hereby (the "Warrant Shares") upon
surrender of this Warrant, with the Exercise Form attached hereto
as Exhibit A (the "Exercise Form") duly completed and executed,
together with the full Exercise Price (as defined below) for each
share of Common Stock as to which this Warrant is exercised, at
the office of the Company, Attention: Marc Pitcher, 509 Madison
Avenue, Suite 1610, New York, New York 10022, Telephone: (212)
605-0150, Facsimile: (212) 605-0151, or at such other office or
agency as the Company may designate in writing, by overnight
mail, with an advance copy of the Exercise Form sent to the
Company and its Transfer Agent by facsimile (such surrender and
payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant
shall be defined as the date that the advance copy of the
completed and executed Exercise Form is sent by facsimile to the
Company, provided that the original Warrant and Exercise Form are
received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date
the original Exercise Form is received by the Company, if Holder
has not sent advance notice by facsimile.
(c) Delivery of Shares of Common Stock Upon Exercise. Upon
any exercise of this Warrant, the Company shall use its
reasonable best efforts to deliver, or shall cause its transfer
agent to deliver, a stock certificate or certificates
representing the number of shares of Common Stock into which this
Warrant was exercised, within three (3) trading days of the date
that all of the following have been received by the Company: (i)
the original completed and executed Exercise Form, (ii) the
original Warrant and (iii) the Exercise Price (if
applicable)(collectively, the "Receipt Date"). Such stock
certificates shall not contain a legend restricting transfer if a
registration statement covering the resale of such shares of
Common Stock is in effect at the time of such exercise or if such
shares of Common Stock may be resold pursuant to an exemption
from registration, including but not limited to Rule 144 under
the Securities Act of 1933
(d) Economic Loss Due to Late Delivery of Shares. If the
Company fails for any reason to deliver the requisite number of
shares of Common Stock (unlegended, if so required by the terms
of this Warrant)(the "Warrant Shares") to a Holder upon an
exercise of this Warrant within fifteen (15) business days of the
Receipt Date (the "Late Delivery Deadline"), the Company shall
pay such Holder (in addition to any other remedies available to
Holder) an amount equal to ("Non-Delivery Payment"):
(x) the highest closing price for the Company's Common
Stock for any trading day during the period beginning
on and including the Date of Exercise and ending on the
earlier of (i) the date that the Investor receives from
the Company certificates (unlegended, if so required by
the terms of this Warrant) representing the Warrant
Shares of Common Stock issuable in conjunction with
such Exercise, or (ii) the date that the Investor
receives the full amount of the Non-Delivery Payment,
whichever is earlier,
minus
(y) the Exercise Price per share (which, in the case of
a Cashless Exercise, shall be deemed to equal zero),
or, if the Investor has received the Warrant Shares
(unlegended, if so required by the terms of this
Warrant) from the Company prior to the payment of the
Non-Delivery Payment, the lowest closing price of the
Company's Common Stock for the five (5) trading days
immediately preceding the date that such Warrant Shares
are delivered to the Holder.
Non-Delivery Payments shall be payable, in cash or cash
equivalent, within five (5) business days of the Late
Delivery Deadline.
(e) Liquidated Damages. The parties hereto acknowledge and
agree that the sums payable as Non-Delivery Payments shall give
rise to liquidated damages and not penalties. The parties
further acknowledge that (i) the amount of loss or damages likely
to be incurred by the Holder is incapable or is difficult to
precisely estimate, (ii) the amounts specified bear a reasonable
proportion and are not plainly or grossly disproportionate to the
probable loss likely to be incurred by the Investor, and (iii)
the parties are sophisticated business parties and have been
represented by sophisticated and able legal and financial counsel
and negotiated this Agreement at arm's length.
(f) Cancellation of Warrant. This Warrant shall be canceled
upon the Exercise of this Warrant, and, as soon as practical
after the Date of Exercise, Holder shall be entitled to receive
Common Stock for the number of shares purchased upon such
Exercise of this Warrant, and if this Warrant is not exercised in
full, Holder shall be entitled to receive a new Warrant
(containing terms identical to this Warrant) representing any
unexercised portion of this Warrant in addition to such Common
Stock.
(g) Holder of Record. Each person in whose name any Warrant
for shares of Common Stock is issued shall, for all purposes, be
deemed to be the Holder of record of such shares on the Date of
Exercise of this Warrant, irrespective of the date of delivery of
the Common Stock purchased upon the Exercise of this Warrant.
Nothing in this Warrant shall be construed as conferring upon
Holder any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price ("Exercise Price") per share shall
initially equal $0.28 ("Initial Exercise Price"), or, if the Date
of Exercise is more than six (6) months after the Date of
Issuance, the lesser of (i) the Initial Exercise Price or (ii)
the "Lowest Reset," as that term is defined below. The company
shall calculate a "Reset Price" on each six-month anniversary
date of the Date of Issuance which shall equal one hundred
percent (100%) of the lowest Closing Bid Price of the Company's
Common Stock for the five (5) trading days ending on such
six-month anniversary date of the Date of Issuance. The "Lowest
Reset Price" shall equal the lowest Reset price determined on any
six-month anniversary date of the Date of Issuance preceding the
Date of Exercise, taking into account, as appropriate, any
adjustments made pursuant to Section 5 hereof.
For purposes hereof, the term "Closing Bid Price" shall mean
the closing bid price on the Nasdaq Small Cap Market, the
National Market System ("NMS"), the New York Stock Exchange, or
the O.T.C. Bulletin Board, or if no longer traded on the Nasdaq
Small Cap Market, the National Market System ("NMS"), the New
York Stock Exchange, or the O.T.C. Bulletin Board, the "Closing
Bid Price" shall equal the closing price on the principal
national securities exchange or the over-the-counter system on
which the Common Stock is so traded and, if not available, the
mean of the high and low prices on the principal national
securities exchange on which the Common Stock is so traded.
Payment of the Exercise Price may be made by either of the
following, or a combination thereof, at the election of Holder:
(i) Cash Exercise: cash, bank or cashiers check or wire
transfer; or
(ii) Cashless Exercise: The Holder, at its option, may
exercise this Warrant in a cashless exercise transaction. In
order to effect a Cashless Exercise, the Holder shall surrender
this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall
issue Holder a number of shares of Common Stock computed using
the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued
to Holder.
Y = the number of shares of Common Stock for which this
Warrant is being exercised.
A = the Market Price of one (1) share of Common Stock
(for purposes of this Section 3(ii), the "Market Price"
shall be defined as the average Closing Price of the
Common Stock for the five (5) trading days prior to the
Date of Exercise of this Warrant (the "Average Closing
Price"), as reported by the O.T.C. Bulletin Board,
National Association of Securities Dealers Automated
Quotation System ("Nasdaq") Small Cap Market, or if the
Common Stock is not traded on the Nasdaq Small Cap
Market, the Average Closing Price in any other
over-the-counter market; provided, however, that if the
Common Stock is listed on a stock exchange, the Market
Price shall be the Average Closing Price on such
exchange for the five (5) trading days prior to the
date of exercise of the Warrants. If the Common Stock
is/was not traded during the five (5) trading days
prior to the Date of Exercise, then the closing price
for the last publicly traded day shall be deemed to be
the closing price for any and all (if applicable) days
during such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof,
it is intended, understood and acknowledged that the Common Stock
issuable upon exercise of this Warrant in a cashless exercise
transaction shall be deemed to have been acquired at the time
this Warrant was issued. Moreover, it is intended, understood
and acknowledged that the holding period for the Common Stock
issuable upon exercise of this Warrant in a cashless exercise
transaction shall be deemed to have commenced on the date this
Warrant was issued.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8
of this Warrant, this Warrant may be transferred on the books of
the Company, in whole or in part, in person or by attorney, upon
surrender of this Warrant properly completed and endorsed. This
Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the
portion of this Warrant transferred, and Holder shall be entitled
to receive a new Warrant as to the portion hereof retained.
(b) Registrable Securities. In addition to any other
registration rights of the Holder, if the Common Stock issuable
upon exercise of this Warrant is not registered for resale at the
time the Company proposes to register (including for this purpose
a registration effected by the Company for stockholders other
than the Holders) any of its Common Stock under the Act (other
than a registration relating solely for the sale of securities to
participants in a Company stock plan or a registration on Form
S-4 promulgated under the Act or any successor or similar form
registering stock issuable upon a reclassification, upon a
business combination involving an exchange of securities or upon
an exchange offer for securities of the issuer or another
entity)(a "Piggyback Registration Statement"), the Company shall
cause to be included in such Piggyback Registration Statement
("Piggyback Registration") all of the Common Stock issuable upon
the exercise of this Warrant ("Registrable Securities") to the
extent such inclusion does not violate the registration rights of
any other securityholder of the Company granted prior to the date
hereof. Nothing herein shall prevent the Company from
withdrawing or abandoning the Piggyback Registration Statement
prior to its effectiveness.
(c) Limitation on Obligations to Register under a Piggyback
Registration. In the case of a Piggyback Registration pursuant
to an underwritten public offering by the Company, if the
managing underwriter determines and advises in writing that the
inclusion in the registration statement of all Registrable
Securities proposed to be included would interfere with the
successful marketing of the securities proposed to be registered
by the Company, then the number of such Registrable Securities to
be included in the Piggyback Registration Statement, to the
extent such Registrable Securities may be included in such
Piggyback Registration Statement, shall be allocated among all
Holders who had requested Piggyback Registration pursuant to the
terms hereof, in the proportion that the number of Registrable
Securities which each such Holder seeks to register bears to the
total number of Registrable Securities sought to be included by
all Holders. If required by the managing underwriter of such an
underwritten public offering, the Holders shall enter into a
reasonable agreement limiting the number of Registrable
Securities to be included in such Piggyback Registration
Statement and the terms, if any, regarding the future sale of
such Registrable Securities.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time
declare a dividend payable in shares of Common Stock, then
Holder, upon Exercise of this Warrant after the record date for
the determination of holders of Common Stock entitled to receive
such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as
to which this Warrant is exercised, such additional shares of
Common Stock as such Holder would have received had this Warrant
been exercised immediately prior to such record date and the
Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification.
(i) Stock Split. If the Company shall at any time
effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock
shall be changed into or become exchangeable for a larger number
of shares (a "Stock Split"), then upon the effective date
thereof, the number of shares of Common Stock which Holder shall
be entitled to purchase upon Exercise of this Warrant shall be
increased in direct proportion to the increase in the number of
shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price
shall be proportionally decreased.
(ii) Reverse Stock Split. If the Company shall at any
time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock
shall be changed into or become exchangeable for a smaller number
of shares (a "Reverse Stock Split"), then upon the effective date
thereof, the number of shares of Common Stock which Holder shall
be entitled to purchase upon Exercise of this Warrant shall be
proportionately decreased and the Exercise Price shall be
proportionally increased. The Company shall give Holder the same
notice it provides to holders of Common Stock of any transaction
described in this Section 5(b).
(c) Distributions. If the Company shall at any time
distribute for no consideration to holders of Common Stock cash,
evidences of indebtedness or other securities or assets (other
than cash dividends or distributions payable out of earned
surplus or net profits for the current or preceding years) then,
in any such case, Holder shall be entitled to receive, upon
Exercise of this Warrant, with respect to each share of Common
Stock issuable upon such exercise, the amount of cash or
evidences of indebtedness or other securities or assets which
Holder would have been entitled to receive with respect to each
such share of Common Stock as a result of the happening of such
event had this Warrant been exercised immediately prior to the
record date or other date fixing shareholders to be affected by
such event (the "Determination Date") or, in lieu thereof, if the
Board of Directors of the Company should so determine at the time
of such distribution, a reduced Exercise Price determined by
multiplying the Exercise Price on the Determination Date by a
fraction, the numerator of which is the result of such Exercise
Price reduced by the value of such distribution applicable to one
share of Common Stock (such value to be determined by the Board
of Directors of the Company in its discretion) and the
denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger and Warrant Exchange.
The Company shall not, at any time after the date hereof, effect
a merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which
shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class or
classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the
Company's assets (a "Corporate Change"), unless the resulting
successor or acquiring entity (the "Resulting Entity") assumes by
written instrument the Company's obligations under this Warrant,
including but not limited to the Exercise Price reset provisions
as provided herein during the term of the resultant warrants, and
agrees in such written instrument that this Warrant shall be
exerciseable into such class and type of securities or other
assets of the Resulting Entity as Holder would have received had
Holder exercised this Warrant immediately prior to such Corporate
Change, and the Exercise Price of this Warrant shall be
proportionately increased (if this Warrant shall be changed into
or become exchangeable for a warrant to purchase a smaller number
of shares of Common Stock of the Resulting Entity) or shall be
proportionately decreased (if this Warrant shall be changed or
become exchangeable for a warrant to purchase a larger number of
shares of Common Stock of the Resulting Entity); provided,
however, that Company may not affect any Corporate Change unless
it first shall have given thirty (30) days notice to Holder
hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the
term "Exercise Price" shall mean the purchase price per share
specified in Section 3 of this Warrant, until the occurrence of
an event stated in subsection (a), (b), (c) or (d) of this
Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of this Warrant.
No such adjustment under this Section 5 shall be made unless such
adjustment would change the Exercise Price at the time by $0.01
or more; provided, however, that all adjustments not so made
shall be deferred and made when the aggregate thereof would
change the Exercise Price at the time by $0.01 or more.
(f) Adjustments: Additional Shares, Securities or Assets.
In the event that at any time, as a result of an adjustment made
pursuant to this Section 5, Holder shall, upon Exercise of this
Warrant, become entitled to receive shares and/or other
securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares
and/or other securities or assets shall be subject to adjustment
from time to time in a manner and upon terms as nearly equivalent
as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional
shares shall be issuable upon the Exercise of this Warrant, but
on Exercise of this Warrant, Holder may purchase only a whole
number of shares of Common Stock. If, on Exercise of this
Warrant, Holder would be entitled to a fractional share of Common
Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon exercise shall be the next
higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance
such number of authorized and unissued shares of Common Stock (or
other securities substituted therefor as herein above provided)
as shall be sufficient for the Exercise of this Warrant and
payment of the Exercise Price. The Company covenants and agrees
that upon the Exercise of this Warrant, all shares of Common
Stock issuable upon such exercise shall be duly and validly
issued, fully paid, nonassessable and not subject to preemptive
rights, rights of first refusal or similar rights of any person
or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant
has been issued in a transaction exempt from the registration
requirements of the Act by virtue of Regulation D and exempt from
state registration under applicable state laws. The Warrant and
the Common Stock issuable upon the Exercise of this Warrant may
not be pledged, transferred, sold or assigned except pursuant to
an effective registration statement or unless the Company has
received an opinion from the Company's counsel to the effect that
such registration is not required, or the Holder has furnished to
the Company an opinion of the Holder's counsel, which counsel
shall be reasonably satisfactory to the Company, to the effect
that such registration is not required; the transfer complies
with any applicable state securities laws; and, if no
registration covering the resale of the Warrant Shares is
effective at the time the Warrant Shares are issued, the Holder
consents to a legend being placed on certificates for the Warrant
Shares stating that the securities have not been registered under
the Securities Act and referring to such restrictions on
transferability and sale.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above
regarding registration or exemption have been satisfied, Holder
may sell, transfer, assign, pledge or otherwise dispose of this
Warrant, in whole or in part. Holder shall deliver a written
notice to Company, substantially in the form of the Assignment
attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of
warrants to be assigned to each assignee. The Company shall
effect the assignment within ten (10) days, and shall deliver to
the assignee(s) designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer
upon any person other than the Company and Holder any legal or
equitable right, remedy or claim under this Warrant and this
Warrant shall be for the sole and exclusive benefit of the
Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes
be governed by and construed in accordance with the laws of the
state of Georgia, without giving effect to conflict of law
provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss,
theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Company, and upon surrender and
cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made
by Holder to or on the Company shall be sufficiently given or
made if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed, until another address
is designated in writing by the Company, to the address set forth
in Section 2(a) above. Notices or demands pursuant to this
Warrant to be given or made by the Company to or on Holder shall
be sufficiently given or made if sent by certified or registered
mail, return receipt requested, postage prepaid, and addressed,
to the address of Holder set forth in the Company's records,
until another address is designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this
Warrant as of the 31st day of August, 2000.
PAYFORVIEW.COM CORPORATION
By: ________________________________
Marc Pitcher, President
EXHIBIT A
EXERCISE FORM FOR WARRANT
TO: PAYFORVIEW.COM CORPORATION
The undersigned hereby irrevocably exercises the right to
purchase ____________ of the shares of Common Stock (the "Common
Stock") of PAYFORVIEW.COM CORPORATION a Delaware corporation (the
"Company"), evidenced by the attached warrant (the "Warrant"),
and herewith makes payment of the exercise price with respect to
such shares in full, all in accordance with the conditions and
provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or
otherwise dispose of any of the Common Stock obtained on exercise
of the Warrant, except in accordance with the provisions of
Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such
shares be issued free of any restrictive legend, if appropriate,
and a warrant representing any unexercised portion hereof be
issued, pursuant to the Warrant in the name of the undersigned
and delivered to the undersigned at the address set forth below:
Dated: _________
_________________________________________________________________
Signature
_________________________________________________________________
Print Name
_________________________________________________________________
Address
_________________________________________________________________
NOTICE
The signature to the foregoing Exercise Form must correspond to
the name as written upon the face of the attached Warrant in
every particular, without alteration or enlargement or any change
whatsoever.
_________________________________________________________________
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached
warrant (the "Warrant") hereby sells, assigns and transfers unto
the person or persons below named the right to purchase _______
shares of the Common Stock of PAYFORVIEW.COM CORPORATION,
evidenced by the attached Warrant and does hereby irrevocably
constitute and appoint _______________________ attorney to
transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.
Dated: ______________________________
Signature
Fill in for new registration of Warrant:
___________________________________
Name
___________________________________
Address
___________________________________
Please print name and address of assignee
(including zip code number)
_________________________________________________________________
NOTICE
The signature to the foregoing Assignment must correspond to the
name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
_________________________________________________________________
<PAGE>
<PAGE>
EXHIBIT 4.2 SWARTZ PRIVATE EQUITY, LLC COMMITMENT WARRANT SIDE
AGREEMENT, dated August 31, 2000
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of
August 31, 2000, by and among PAYFORVIEW.COM CORPORATION a
corporation duly organized and existing under the laws of the
State of Nevada (the "Company") and Swartz Private Equity, LLC
(hereinafter referred to as "Investor").
RECITALS:
WHEREAS, pursuant to the Company's offering ("Equity Line")
of up to Forty Million Dollars ($40,000,000), excluding any funds
paid upon exercise of the Warrants, of Common Stock of the
Company pursuant to that certain Investment Agreement (the
"Investment Agreement") between the Company and Investor dated on
or about August 31, 2000, the Company has agreed to sell and
Investor has agreed to purchase, from time to time as provided in
the Investment Agreement, shares of the Company's Common Stock
for a maximum aggregate offering amount of Forty Million Dollars
($40,000,000); and
WHEREAS, pursuant to the terms of the Investment Agreement,
the Company has agreed, among other things, to issue to the
Investor Commitment Warrants, as defined in the Investment
Agreement, to purchase a number of shares of Common Stock,
exercisable for five (5) years from their respective dates of
issuance.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth
in Agreement and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Issuance of Commitment Warrants. As compensation for
entering into the Equity Line, Investor received a warrant
convertible into 2,000,000 shares of the Company's Common Stock,
in the form attached hereto as Exhibit A (the "Commitment
Warrants").
2. Issuance of Additional Warrants. On each six month
anniversary of the date of execution by the Company and the
Investor of the Investment Agreement (each, a "Six Month
Anniversary Date"), the Company shall issue to the Investor
additional warrants (the "Additional Warrants"), to purchase a
number of shares of Common Stock, if necessary, such that the sum
of the number of Commitment Warrants and the number of Additional
Warrants issued to Investor shall equal at least "Y%" of the
number of fully diluted shares of Common Stock of the Company on
such Six Month Anniversary Date, excluding any shares issued or
issuable to Swartz Private Equity, LLC, where "Y" shall initially
equal 3.5%, and shall be reduced by 0.5% for each Six Month
Anniversary Date after the first Six Month Anniversary Date. The
Additional Warrants shall initially be exerciseable at a price
equal to the lowest closing price of the Company's Common Stock
for the five (5) trading days immediately preceeding the
applicable Six Month Anniversary date, and otherwise shall have
the same terms and reset provisions as the Commitment Warrants
(which resets shall occur on each six month anniversary of the
date of issuance of the applicable Additional Warrant throughout
the term of the applicable Additional Warrant), shall have
piggyback registration rights and shall have a 5-year term.
3. Opinion of Counsel. Concurrently with the issuance and
delivery of the Commitment Opinion (as defined in the Investment
Agreement) to the Investor, or on the date that is six (6) months
after the date of this Agreement, whichever is sooner, the
Company shall deliver to the Investor an Opinion of Counsel
(signed by the Company's independent counsel) covering the
issuance of the Commitment Warrants and the Additional Warrants,
and the issuance and resale of the Common Stock issuable upon
exercise of the Warrants and the Additional Warrants.
4. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia
applicable to agreements made in and wholly to be performed in
that jurisdiction, except for matters arising under the Act or
the Securities Exchange Act of 1934, which matters shall be
construed and interpreted in accordance with such laws.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of this 31st day of August, 2000.
PAYFORVIEW.COM CORPORATION INVESTOR:
SWARTZ PRIVATE EQUITY, LLC.
By: /s/ Marc Pitcher By: /s/ Eric Swartz
Marc Pitcher, President Eric S. Swartz, Manager
Payforview.com Corporation 1080 Holcomb Bridge Road
300-1055 West Hastings Street Bldg. 200, Suite 285
Vancouver, BC V6E 2E9 Roswell, GA 30076
Telephone: (604) 609-6181 Telephone: (770) 640-8130
Facsimile: (604) 609-6183 Facsimile: (770) 640-7150
<PAGE>
<PAGE>
EXHIBIT 4.3 SWARTZ PRIVATE EQUITY, LLC REGISTRATION RIGHTS
AGREEMENT, dated August 31, 2000
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
entered into as of August 31, 2000, by and among Payforview.com
Corporation, a corporation duly incorporated and existing under
the laws of the State of Nevada (the "Company"), and the
subscriber as named on the signature page hereto (hereinafter
referred to as "Subscriber").
RECITALS:
WHEREAS, pursuant to the Company's offering ("Offering") of
up to Forty Million Dollars ($40,000,000), excluding any funds
paid upon exercise of the Warrants, of Common Stock of the
Company pursuant to that certain Investment Agreement of even
date herewith (the "Investment Agreement") between the Company
and the Subscriber, the Company has agreed to sell and the
Subscriber has agreed to purchase, from time to time as provided
in the Investment Agreement, shares of the Company's Common Stock
for a maximum aggregate offering amount of Forty Million Dollars
($40,000,000);
WHEREAS, pursuant to the terms of the Investment Agreement,
the Company has agreed to issue to the Subscriber the Commitment
Warrants, from time to time, the Purchase Warrants, each as
defined in the Investment Agreement and in certain events
Additional Warrants (as defined in the Warrant Antidilution
Agreement between the Company and the Investor), to purchase a
number of shares of Common Stock, exercisable for five (5) years
from their respective dates of issuance (collectively, the
"Warrants"); and
WHEREAS, pursuant to the terms of the Investment Agreement,
the Company has agreed to provide the Subscriber with certain
registration rights with respect to the Common Stock to be issued
in the Offering and the Common Stock issuable upon exercise of
the Warrants as set forth in this Agreement.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth
in this Agreement and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement
(including the Recitals above), the following terms shall have
the following meanings (such meanings to be equally applicable to
both singular and plural forms of the terms defined):
"Additional Registration Statement" shall have the
meaning set forth in Section 3(b).
"Additional Warrants" shall have the meaning ascribed to it the
Warrant Antidilution Agreement between the Company and the
Investor.
"Amended Registration Statement" shall have the meaning
set forth in Section 3(b).
"Business Day" shall have the meaning set forth in the
Investment Agreement.
"Closing Bid Price" shall have the meaning set forth in
the Investment Agreement.
"Common Stock" shall mean the common stock, par value
$0.01, of the Company.
"Due Date" shall mean the date that is one hundred
twenty (120) days after the date of this Agreement.
"Effective Date" shall have the meaning set forth in
Section 2.3.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, together with the rules and regulations
promulgated thereunder.
"Filing Deadline" shall mean the date that is
forty-five (45) days after the date of this Agreement, which date
shall be extended by up to, but no more than, sixty (60)
additional days if and to the extent that the Company has been
unable to file the Registration Statement due to a delay of the
SEC or other governmental body in responding to previous filings
of the Company.
"Ineffective Period" shall mean any period of time
after the Effective Date during the term hereof that the
Registration Statement or any Supplemental Registration Statement
(each as defined herein) becomes ineffective or unavailable for
use for the sale or resale, as applicable, of any or all of the
Registrable Securities (as defined herein) for any reason (or in
the event the prospectus under either of the above is not current
and deliverable).
"Investment Agreement" shall have the meaning set forth
in the Recitals hereto.
"Holder" shall mean Subscriber, and any other person or
entity owning or having the right to acquire Registrable
Securities or any permitted assignee.
"Piggyback Registration" and "Piggyback Registration
Statement" shall have the meaning set forth in Section 4.
"Put" shall have the meaning as set forth in the
Investment Agreement.
"Register," "Registered," and "Registration" shall mean
and refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act
or any successor rule, and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Securities" shall have the meaning set
forth in Section 2.1.
"Registration Statement" shall have the meaning set
forth in Section 2.2.
"Rule 144" shall mean Rule 144, as amended, promulgated
under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933,
as amended, together with the rules and regulations promulgated
thereunder.
"Subscriber" shall have the meaning set forth in the
preamble to this Agreement.
"Supplemental Registration Statement" shall have the
meaning set forth in Section 3(b).
"Warrants" shall have the meaning set forth in the
above Recitals.
"Warrant Shares" shall mean shares of Common Stock
issuable upon exercise of any Warrant.
2. Required Registration.
2.1 Registrable Securities. "Registrable Securities"
shall mean those shares of the Common Stock of the Company
together with any capital stock issued in replacement of, in
exchange for or otherwise in respect of such Common Stock, that
are: (i) issuable or issued to the Subscriber pursuant to the
Investment Agreement, (ii) issuable or issued upon exercise of
the Warrants, or (iii) issued or issuable pursuant to the Warrant
Antidilution Agreement between the Company and the Investor;
provided, however, that notwithstanding the above, the following
shall not be considered Registrable Securities:
(a) any Common Stock which would otherwise be
deemed to be Registrable Securities, if and to the extent that
those shares of Common Stock may be resold in a public
transaction without volume limitations or other material
restrictions without registration under the Securities Act,
including without limitation, pursuant to Rule 144 under the
Securities Act; and
(b) any shares of Common Stock which have been
sold in a private transaction in which the transferor's rights
under this Agreement are not assigned.
2.2 Filing of Initial Registration Statement. The
Company shall, by the Filing Deadline, file a registration
statement ("Registration Statement") on Form S-1 (or other
suitable form, at the Company's discretion, but subject to the
reasonable approval of Subscriber), covering the resale of a
number of shares of Common Stock as Registrable Securities equal
to at least Twenty Million (20,000,000) shares of Common Stock
and shall cover, to the extent allowed by applicable law, such
indeterminate number of additional shares of Common Stock that
may be issued or become issuable as Registrable Securities by the
Company pursuant to Rule 416 of the Securities Act. In the event
that the Company has not filed the Registration Statement by the
Filing Deadline, then the Company shall pay to Subscriber an
amount equal to $500, in cash, for each Business Day after the
Filing Deadline until such Registration Statement is filed,
payable within ten (10) Business Days following the end of each
calendar month in which such payments accrue. In addition,
anytime the Company has issued Additional Warrants to the
Investor totaling Four Hundred Thousand (400,000) or more shares
which are not registered for resale, the Company shall promptly
file a registration statement (on Form S-1, or other suitable
form, at the Company's discretion, but subject to the reasonable
approval of Investor), covering the resale of a number of shares
of Common Stock as Registrable Securities equal to at least the
number of Additional Warrant shares that are not registered for
resale.
2.3 Registration Effective Date. The Company shall
use its best efforts to have the Registration Statement declared
effective by the SEC (the date of such effectiveness is referred
to herein as the "Effective Date") by the Due Date.
2.4 Shelf Registration. The Registration Statement
shall be prepared as a "shelf" registration statement under Rule
415, and shall be maintained effective until all Registrable
Securities are resold pursuant to the Registration Statement.
2.5 Supplemental Registration Statement. Anytime the
Registration Statement does not cover a sufficient number of
shares of Common Stock to cover all outstanding Registrable
Securities, the Company shall promptly prepare and file with the
SEC such Supplemental Registration Statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of all such Registrable
Securities and shall use its best efforts to cause such
Supplemental Registration Statement to be declared effective as
soon as possible.
3. Obligations of the Company. Whenever required under
this Agreement to effect the registration of any Registrable
Securities, the Company shall, as expeditiously and reasonably
possible:
(a) Prepare and file with the Securities and
Exchange Commission ("SEC") a Registration Statement with respect
to such Registrable Securities and use its best efforts to cause
such Registration Statement to become effective and to remain
effective until all Registrable Securities are resold pursuant to
such Registration Statement, notwithstanding any Termination or
Automatic Termination (as each is defined in the Investment
Agreement) of the Investment Agreement.
(b) Prepare and file with the SEC such amendments
and supplements to such Registration Statement and the prospectus
used in connection with such Registration Statement ("Amended
Registration Statement") or prepare and file any additional
registration statement ("Additional Registration Statement,"
together with the Amended Registration Statement, "Supplemental
Registration Statements") as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such Supplemental Registration
Statements or such prior registration statement and to cover the
resale of all Registrable Securities.
(c) Furnish to the Holders such numbers of copies
of a prospectus, including a preliminary prospectus (if
applicable), in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify
the securities covered by such Registration Statement under such
other securities or Blue Sky laws of the jurisdictions in which
the Holders are located, of such other jurisdictions as shall be
reasonably requested by the Holders of the Registrable Securities
covered by such Registration Statement and of all other
jurisdictions where legally required, provided that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) [Intentionally Omitted].
(f) As promptly as practicable after becoming
aware of such event, notify each Holder of Registrable Securities
of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such
supplement or amendment to each Holder as such Holder may
reasonably request.
(g) Provide Holders with notice of the date that
a Registration Statement or any Supplemental Registration
Statement registering the resale of the Registrable Securities is
declared effective by the SEC, and the date or dates when the
Registration Statement is no longer effective.
(h) Provide Holders and their representatives the
opportunity and a reasonable amount of time, based upon
reasonable notice delivered by the Company, to conduct a
reasonable due diligence inquiry of Company's pertinent financial
and other records and make available its officers and directors
for questions regarding such information as it relates to
information contained in the Registration Statement.
(i) Provide Holders and their representatives the
opportunity to review the Registration Statement and all
amendments or supplements thereto prior to their filing with the
SEC by giving the Holder at least ten (10) business days advance
written notice prior to such filing.
(j) Provide each Holder with prompt notice of the
issuance by the SEC or any state securities commission or agency
of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceeding for
such purpose. The Company shall use its best efforts to prevent
the issuance of any stop order and, if any is issued, to obtain
the removal thereof at the earliest possible date.
(k) Use its best efforts to list the Registrable
Securities covered by the Registration Statement with all
securities exchanges or markets on which the Common Stock is then
listed and prepare and file any required filing with the NASD,
American Stock Exchange, NYSE and any other exchange or market on
which the Common Stock is listed.
4. Ineffective Period.
(a) Ineffective Period Payment. Within five (5)
Business Days of the last day of any Ineffective Period, the
Company will pay to the Investor in cash or cash equivalent
("Ineffective Period Payments"), as liquidated damages for such
suspension and not as a penalty, an amount equal to the number of
shares of Common Stock issued to the Investor in any Put with a
Pricing Period End Date (as defined in the Investment Agreement)
that is thirty (30) business days or less prior to the date that
the Ineffective Period commences, multiplied by the difference
of:
(x) the highest closing price of the
Company's Common Stock for any trading day during
the Ineffective Period,
minus
(y) the lowest closing price of the Company's
Common Stock for the five (5) trading days
including and immediately following the last
trading day of such Ineffective Period.
(b) Liquidated Damages. The parties hereto
acknowledge and agree that the sums payable as Ineffective Period
Payments shall give rise to liquidated damages and not penalties.
The parties further acknowledge that (i) the amount of loss or
damages likely to be incurred by the Holder is incapable or is
difficult to precisely estimate, (ii) the amounts specified bear
a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by
the Investor, and (iii) the parties are sophisticated business
parties and have been represented by sophisticated and able legal
and financial counsel and negotiated this Agreement at arm's
length.
5. Piggyback Registration. If anytime prior to the date
that the Registration Statement is declared effective or during
any Ineffective Period (as defined in the Investment Agreement)
the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than
the Holders) any of its Common Stock under the Securities Act in
connection with the public offering of such securities solely for
cash (other than a registration relating solely for the sale of
securities to participants in a Company stock plan or a
registration on Form S-4 promulgated under the Securities Act or
any successor or similar form registering stock issuable upon a
reclassification, upon a business combination involving an
exchange of securities or upon an exchange offer for securities
of the issuer or another entity), the Company shall, at such
time, promptly give each Holder written notice of such
registration (a "Piggyback Registration Statement"). Upon the
written request of each Holder given by fax within ten (10) days
after mailing of such notice by the Company, the Company shall
cause to be included in such registration statement under the
Securities Act all of the Registrable Securities that each such
Holder has requested to be registered ("Piggyback Registration")
to the extent such inclusion does not violate the registration
rights of any other security holder of the company granted prior
to the date hereof; provided, however, that nothing herein shall
prevent the Company from withdrawing or abandoning such
registration statement prior to its effectiveness.
6. Limitation on Obligations to Register under a Piggyback
Registration. In the case of a Piggyback Registration pursuant
to an underwritten public offering by the Company, if the
managing underwriter determines and advises in writing that the
inclusion in the related Piggyback Registration Statement of all
Registrable Securities proposed to be included would interfere
with the successful marketing of the securities proposed to be
registered by the Company, then the number of such Registrable
Securities to be included in such Piggyback Registration
Statement, to the extent any such Registrable Securities may be
included in such Piggyback Registration Statement, shall be
allocated among all Holders who had requested Piggyback
Registration pursuant to the terms hereof, in the proportion that
the number of Registrable Securities which each such Holder seeks
to register bears to the total number of Registrable Securities
sought to be included by all Holders. If required by the managing
underwriter of such an underwritten public offering, the Holders
shall enter into an agreement limiting the number of Registrable
Securities to be included in such Piggyback Registration
Statement and the terms, if any, regarding the future sale of
such Registrable Securities.
7. Dispute as to Registrable Securities. In the event the
Company believes that shares sought to be registered under
Section 2 or Section 4 by Holders do not constitute "Registrable
Securities" by virtue of Section 2.1 of this Agreement, and the
status of those shares as Registrable Securities is disputed, the
Company shall provide, at its expense, an Opinion of Counsel,
reasonably acceptable to the Holders of the Securities at issue
(and satisfactory to the Company's transfer agent to permit the
sale and transfer), that those securities may be sold
immediately, without volume limitation or other material
restrictions, without registration under the Securities Act, by
virtue of Rule 144 or similar provisions.
8. Furnish Information. At the Company's request, each
Holder shall furnish to the Company such information regarding
Holder, the Registrable Securities held by it, and the intended
method of disposition of such securities to the extent required
to effect the registration of its Registrable Securities or to
determine that registration is not required pursuant to Rule 144
or other applicable provision of the Securities Act. The Company
shall include all information provided by such Holder pursuant
hereto in the Registration Statement, substantially in the form
supplied, except to the extent such information is not permitted
by law.
9. Expenses. All expenses, other than commissions and
fees and expenses of counsel to the selling Holders, incurred in
connection with registrations, filings or qualifications pursuant
hereto, including (without limitation) all registration, filing
and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, shall be borne by the
Company.
10. Indemnification. In the event any Registrable
Securities are included in a Registration Statement under this
Agreement:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, the officers,
directors, partners, legal counsel, and accountants of each
Holder, any underwriter (as defined in the Securities Act, or as
deemed by the Securities Exchange Commission, or as indicated in
a registration statement) for such Holder and each person, if
any, who controls such Holder or underwriter within the meaning
of Section 15 of the Securities Act or the Exchange Act, against
any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following
statements or omissions: (i) any untrue statement or alleged
untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or
supplements thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, and the
Company will reimburse each such Holder, officer or director,
underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this
subsection 9(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of
or is based upon a violation which occurs in reliance upon and in
conformity with written information furnished expressly for use
in connection with such registration by any such Holder, officer,
director, underwriter or controlling person; provided however,
that the above shall not relieve the Company from any other
liabilities which it might otherwise have.
(b) Each Holder of any securities included in
such registration being effected shall indemnify and hold
harmless the Company, its directors and officers, each
underwriter and each other person, if any, who controls (within
the meaning of the Securities Act) the Company or such other
indemnified party, against any liability, joint or several, to
which any such indemnified party may become subject under the
Securities Act or any other statute or at common law, insofar as
such liability (or actions in respect thereof) arises out of or
is based upon (i) any untrue statement or alleged untrue
statement of any material fact contained, on the effective date
thereof, in any registration statement under which securities
were registered under the Securities Act at the request of such
Holder, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any
omission or alleged omission by such Holder to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, to the extent, but only to
the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus,
amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company
by such Holder specifically for use therein. Such Holder shall
reimburse any indemnified party for any legal fees incurred in
investigating or defending any such liability; provided, however,
that such Holder's obligations hereunder shall be limited to an
amount equal to the proceeds to such Holder of the securities
sold in any such registration; and provided further, that no
Holder shall be required to indemnify any party against any
liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such
deficiency is corrected in the final prospectus or for any
liability which arises out of the failure of such party to
deliver a prospectus as required by the Securities Act.
(c) Promptly after receipt by an indemnified
party under this Section 9 of notice of the commencement of any
action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 9, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume,
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the reasonably incurred
fees and expenses of one such counsel to be paid by the
indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential conflicting interests
between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying
party of any liability to the indemnified party under this
Section 9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this
Section 9.
(d) In the event that the indemnity provided in
paragraphs (a) and/or (b) of this Section 9 is unavailable to or
insufficient to hold harmless an indemnified party for any
reason, the Company and each Holder agree to contribute to the
aggregate claims, losses, damages and liabilities (including
legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which
the Company and one or more of the Holders may be subject in such
proportion as is appropriate to reflect the relative fault of the
Company and the Holders in connection with the statements or
omissions which resulted in such Losses. Relative fault shall be
determined by reference to whether any alleged untrue statement
or omission relates to information provided by the Company or by
the Holders. The Company and the Holders agree that it would not
be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation that does not take
account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9,
each person who controls a Holder of Registrable Securities
within the meaning of either the Securities Act or the Exchange
Act and each director, officer, partner, employee and agent of a
Holder shall have the same rights to contribution as such holder,
and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act and each director
and officer of the Company shall have the same rights to
contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The obligations of the Company and Holders
under this Section 9 shall survive the resale, if any, of the
Common Stock, the completion of any offering of Registrable
Securities in a Registration Statement under this Agreement, and
otherwise.
11. Reports Under Exchange Act. With a view to making
available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available,
as those terms are understood and defined in Rule 144; and
(b) use its best efforts to file with the SEC in
a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act.
12. Amendments to Registration Rights. Any provision of
this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the written consent of each Holder affected
thereby. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each Holder, each future
Holder, and the Company. The Company will provide the Purchaser
five (5) business days notice prior to filing any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus and shall give the Purchaser the opportunity to review
and comment on any such amendment or supplement. Failure of the
Purchaser to comment within five (5) business days shall not
preclude the Company from filing such amendment or supplement
after such notice period has expired.
13. Notices. All notices required or permitted under this
Agreement shall be made in writing signed by the party making the
same, shall specify the section under this Agreement pursuant to
which it is given, and shall be addressed if to (i) the Company
at: Payforview.com Corporation Attn: Marc Pitcher, President, 509
Madison Avenue, Ste. 1610, New York, New York 10022; Telephone:
(212) 605-0150, Facsimile: (212) 605-0151 (or at such other
location as directed by the Company in writing) and (ii) the
Holders at their respective last address as the party as shown on
the records of the Company. Any notice, except as otherwise
provided in this Agreement, shall be made by fax and shall be
deemed given at the time of transmission of the fax.
14. Termination. This Agreement shall terminate on the
date all Registrable Securities cease to exist (as that term is
defined in Section 2.1 hereof); but without prejudice to (i) the
parties' rights and obligations arising from breaches of this
Agreement occurring prior to such termination (ii) other
indemnification obligations under this Agreement.
15. Assignment. No assignment, transfer or delegation,
whether by operation of law or otherwise, of any rights or
obligations under this Agreement by the Company or any Holder,
respectively, shall be made without the prior written consent of
the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be
transferred to a subsequent holder of the Holder's Registrable
Securities (provided such transferee shall provide to the
Company, together with or prior to such transferee's request to
have such Registrable Securities included in a Registration, a
writing executed by such transferee agreeing to be bound as a
Holder by the terms of this Agreement), and the Company hereby
agrees to file an amended registration statement including such
transferee or a selling security holder thereunder; and provided
further that the Company may transfer its rights and obligations
under this Agreement to a purchaser of all or a substantial
portion of its business if the obligations of the Company under
this Agreement are assumed in connection with such transfer,
either by merger or other operation of law (which may include
without limitation a transaction whereby the Registrable
Securities are converted into securities of the successor in
interest) or by specific assumption executed by the transferee.
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia
applicable to agreements made in and wholly to be performed in
that jurisdiction, except for matters arising under the
Securities Act or the Exchange Act, which matters shall be
construed and interpreted in accordance with such laws. Any
dispute arising out of or relating to this Agreement or the
breach, termination or validity hereof shall be finally settled
by the federal or state courts located in Fulton County, Georgia.
17. Execution in Counterparts Permitted. This Agreement
may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one (1)
instrument.
18. Specific Performance. The Holder shall be entitled to
the remedy of specific performance in the event of the Company's
breach of this Agreement, the parties agreeing that a remedy at
law would be inadequate.
19. Indemnity. Each party shall indemnify each other party
against any and all claims, damages (including reasonable
attorney's fees), and expenses arising out of the first party's
breach of any of the terms of this Agreement.
20. Entire Agreement; Written Amendments Required. This
Agreement, including the Exhibits attached hereto, the Investment
Agreement, the Common Stock certificates, and the other documents
delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to
the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth
herein or therein. Except as expressly provided herein,
[INTENTIONALLY LEFT BLANK]
neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any
such amendment, waiver, discharge or termination is sought.
IN WITNESS WHEREOF, the undersigned have executed
this Agreement as of this 31st day of August, 2000.
PAYFORVIEW.COM CORPORATION
By:
Marc Pitcher, President
Address: Attn: Marc Pitcher, President
Payforview.com Corporation
509 Madison Avenue, Ste. 1610
New York, New York 10022
Telephone: (212) 605-0150
Facsimile: (212) 605-0151
SUBSCRIBER:
SWARTZ PRIVATE EQUITY, LLC.
By:___________________________
Eric S. Swartz, Manager
Address: 1080 Holcomb Bridge Road
Bldg. 200, Suite 285
Roswell, GA 30076
Telephone: (770) 640-8130
Facsimile: (770) 640-7150
<PAGE>
<PAGE>
EXHIBIT 5.1 OPINION OF DIETERICH & ASSOCIATES REGARDING THE
VALIDITY OF THE COMMON STOCK.
[DIETERICH & ASSOCIATES LETTERHEAD]
November 17, 2000
PayForView.com Corp.
509 Madison Avenue
16th Floor
New York, New York 10022
Re: Registration Statement on Form SB-2
-----------------------------------
Ladies and Gentlemen:
At your request, we have examined the Registration Statement
on Form SB-2 to be filed by PayForView.com Corp. (the "Company")
with the Securities and Exchange Commission in connection with
the registration under the Securities Act of 1933, as amended, of
certain shares of the Company's common stock, par value $0.0001
per share, including 20,000,000 shares of the Company's common
stock underlying the Swartz warrant and equity line (the "Company
Shares").
As your counsel, we are familiar with the proceedings taken
in connection with the authorization, issuance and delivery of
the Company Shares, and we have examined such matters of fact and
law as we have deemed relevant in connection with this opinion.
Based upon the foregoing, we are of the opinion that the
Company Shares when issued upon the exercise of the warrants and
in accordance with the Investment Agreement, dated August 31,
2000, by and between the Company and Swartz, and upon payment of
the purchase price as set forth therein, will be legally and
validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and the reference to our firm under the
caption "Legal Matters" in the Prospectus that is a part thereof.
Respectfully submitted,
DIETERICH & ASSOCIATES
<PAGE>
<PAGE>
EXHIBIT 10.1 MARC PITCHER EMPLOYMENT AGREEMENT, dated
January 3, 1999
January 4, 1999
Attention: Marc Pitcher
305 - 1188 Richards St.
Vancouver, BC V6B 3E6
Tel: 604-834-0067 (cell)
RE: PRESIDENT SERVICE AGREEMENT
The following, when signed by you, will confirm the agreement
reached between Marc Pitcher. ("Executive") and PayForView.com
Inc. ("Company") upon the following terms:
1. Executive will provide services as President of Company and
as a Director beginning January 3,.
Duties
2. Executive shall during his employment under this agreement:
Perform the duties and exercise the powers which the board
of directors of Company (the "Board") may from time to time
properly assign to him in connection with the business of
Company and its subsidiaries;
(a) In the absence of any specific directions from the
Board (but subject always to the memorandum and
articles of Company) have the general control and
responsibility for the management of the business of
Company;
(b) Do all in his power to promote, develop and extend the
business of Company and its subsidiaries and at all
times and in all respects confirm to and comply with
the proper and reasonable directions and regulations of
the Board (the "Services").
3. Executive shall carry out his duties and exercise his powers
jointly with any other managing or executive directors or
officers appointed by the Board to act jointly with him.
Place of Work
4. Executive shall work in any place which the Board may
require for the proper performance of the Services and he
may be required to travel on the business of Company
anywhere within the world.
5. If Company requires Executive to work permanently at a place
which necessitates a move from his present address, Company
will reimburse Executive for all removal expenses directly
and reasonably incurred as a result of the move.
Office of Director
6. During his employment under this agreement Executive shall
not:
(a) Resign as a director of Company
(b) Do or refrain from doing any act whereby his office as
a director of Company is or becomes liable to be
vacated; or
(c) Do anything that would cause him to be disqualified
from continuing to act as a director.
Remuneration
7. Company shall pay Executive a gross annual salary of US
$60,000.00, which includes director fees and is payable
monthly.
8. Company shall pay Executive a monthly automobile allowance
of $500 on the first day of each month of employment.
9. Company will arrange for the issuance to Executive, or his
nominee, for the granting to Executive of 150,000 options to
purchase one share of the common stock of Company each at an
exercise price of US$1 per share which may be exercised
before January 3, 2000.
10. Upon receipt by company of initial financing of at least
$2,000,000 up to $10,000,000 from a source not introduced
by an outside third party, Company shall pay Executive a
bonus of $20,000.
11. Upon receipt by company of secondary financing of at least
$10,000,001 up to $50,000,000 from a source not introduced
by an outside third party, Company shall pay Executive a
bonus of $50,000.
12. The Board shall review Executive remuneration once per year.
Expenses
13. Company shall reimburse Executive for all expenses properly
incurred in the promotion of and in the carrying out of the
Services.
Holidays
14. Executive shall be entitled to six weeks holiday in each
year to be taken at a time or times convenient to Company.
Time and attention
15. During the continuance of his employment under this
agreement Executive shall, unless prevented by incapacity,
devote his whole time and attention to the business of
Company and shall not without the prior written consent of
the Board engage in any other business or be concerned or
interested in any other business of a similar nature to or
competitive with that carried on by Company or its
subsidiaries.
Trade Secrets
14. Executive acknowledges that in the course of employment with
Company, Executive will acquire and be exposed to
information about certain matters which are confidential to
Company and not known to the public or to competitors (the
"Confidential Materials and Information"), and which
Confidential Materials and Information are the exclusive
property of Company and includes:
(a) confidential methods of operation, which includes all
information relating to Company's unique marketing
programs, unique products, unique methods, unique
service systems, unique security information and
systems, and trade secrets;
(b) all of Company's manuals of operation, including,
without limitation, the corporate business plan;
(c) all information regarding Company's existing customers
and clients, including customer lists, contracts,
prices, invoices, computer printouts and other similar
information;
(d) all information concerning Company's potential
customers and clients, including mailing lists,
prospect cards, and other similar information;
(e) any information about internet and entertainment
business that is not known to the public or
competitors, or any other information which gives
Company an opportunity to obtain an advantage over
competitors who do not know of such information;
(f) financial information, including Company's costs,
sales, income, profits and other similar information;
(g) business opportunities, including all ventures
considered by Company, whether or not such ventures are
pursued;
(h) personnel information, including the names of employees
and applicable remuneration and benefit policies, and
(i) computer programs and procedures relating to Company's
business, including related data input procedures or
techniques, and similar information.
15. Executive acknowledges that the Confidential Materials and
Information could be used to the detriment of Company.
Accordingly, throughout the time of Executive's employment
with Company, Executive undertakes not to disclose to any
third party and to treat in strict confidence all
Confidential Materials and Information, except where
disclosure is necessary by Executive to properly discharge
his duties of employment under this agreement. Further,
after the termination of Executive's employment with
Company, regardless of how that termination should occur,
Executive undertakes, without time limitation, not to
disclose to any third party and to treat in strict
confidence all Confidential Materials and Information,
except where disclosure is made with the prior written
permission of an Officer of Company.
16. Executive understands and agrees that the restrictions and
covenants contained in paragraphs 14 - 15 constitute a
material inducement to Company to enter into this agreement
and to employ Executive, and that Company would not enter
into this agreement absent such inducement. Executive agrees
that the restrictions and covenants contained in this
paragraphs 14 - 15 shall be construed independent of any
other provision of this agreement, and the existence of any
claim or cause of action by Executive against Company,
whether predicated under this agreement or otherwise, shall
not constitute a defense to the enforcement by Company of
the said restrictions and covenants contained in paragraphs
14 - 15.
Termination
23. If during his employment under this agreement, Executive
shall cease to be a director of Company (other than by
reason of his resignation or disqualification pursuant to
the articles of Company or by statue or court order) his
employment shall continue as if it had been in the office of
President of Company and the terms of this agreement (other
than those relating to the holding of office of director)
shall continue in full force and effect and Executive shall
have no claims against Company in for such cessation
24. Executive's employment under this agreement may be
terminated by either party giving to the other 8 months
notice in writing. In the event termination is by Company,
Executive may, at his sole option, take cash equivalent to
the 8 month notice period .
Address for Notices
25. Any notices required or permitted to be given hereunder
shall be effectively given in person by letter addressed:
To Company at:
PayForView.com Inc.
c/o Chris Dieterich & Associates
Attention Chris Dieterich
11300 West Olympic Blvd
Suite 800
Los Angeles, CA
90064
To Executive at:
Marc Pitcher
305 - 1188 Richards Street
Vancouver, BC V6B 3E6
and mailed by registered mail, postage prepaid, or delivered
to such address and, if mailed as aforesaid, any such notice
shall be deemed to have been given on the second business
day following that on which the letter containing the notice
is posted. Any party to this Agreement may change its
address from time to time by notice given in accordance with
the foregoing.
28. Any clause or provision of any paragraph that may be found
unenforceable shall be considered to be severable from the
rest of this agreement, and the remainder of this agreement
shall continue in full force and effect in accordance with
the terms of this agreement.
By signing below, the parties agree to the above terms and
conditions:
PAYFORVIEW.COM INC.
______________________ ______________________
By: By: Marc Pitcher
<PAGE>
EXHIBIT 10.2 LONG FORM AGREEMENT COMPLETING PURCHASE OF VOYAGER
ASSETS BY THE REGISTRANT, dated January 5, 1999.
ACQUISITION AGREEMENT
THIS AGREEMENT, is made and entered into on the 5th day of
January, 1999, by and between VOYAGER INTERNATIONAL
ENTERTAINMENT, INC., a Nevada corporation (hereinafter referred
to as "Voyager"), and SIERRA GOLD CORPORATION (the name of which
company will be changed to "payforview.com Corp." as of the
Effective Date of this Agreement), a Nevada corporation,
(hereinafter referred to as "Payforview").
WITNESSETH:
WHEREAS, Voyager has an issued capital of 4,327,131 common
shares.
WHEREAS, Voyager has acquired the right to purchase a film
library known as the Blue Lion Investment Trust Feature Film,
Television Program and Animation Library, which consists of
approximately 1,450 titles.
WHEREAS, Payforview has agreed to purchase, and Voyager has
agreed to cause the shareholders of Voyager to sell one hundred
(100%) percent of the issued and outstanding shares of Voyager
(the "Acquisition"), on the terms and conditions herein below set
forth; and
WHEREAS the Acquisition is to be effected pursuant to the
applicable provisions of the Nevada General Corporation Law (the
"GCL"), with Payforview to be the parent corporation, and Voyager
to be a wholly owned subsidiary of the parent after the
Acquisition, with both to continue existence under the GCL.
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, and for good and valuable consideration, the
receipt and sufficiency of where is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
THE ACQUISITION
1.1 The Acquisition
(a) Voyager hereby agrees to cause the delivery of (100%)
of the issued and outstanding shares in its capital
(the "Voyager Shares"), to Payforview in exchange for
the issuance from treasury of shares of Payforview, on
the basis of 0.6 Voyager Shares for each I share of
Payforview (the "Payforview Shares").
The Payforview Shares will be issued in the names of
those individuals or entities to be specified by
Voyager in the amounts as set forth in Exhibit "A"
attached hereto at the time of the Closing, as defined
below.
(b) Upon delivery of the Payforview Shares as described in
subparagraph (a) above, Voyager will become a wholly
owned subsidiary of Payforview in accordance with the
GCL.
(c) As soon as practicable after satisfaction of or, to the
extent permitted hereunder, the waiver of all
conditions attaching to the Acquisition, Payforview and
Voyager will file the necessary certificates with the
Secretary of State of the State of Nevada and make all
other filings or recordings required by the GCL in
connection with the Acquisition. The closing of the
Acquisition (the "Closing") will occur, and the
Acquisition will become effective at such time as
exchange of Payforview Shares and Voyager Shares has
duly taken place (the "Effective Date"). The Closing
will take place at the offices of Boughton Peterson
Yang Anderson, 2500 -1055 Dunsmuir Street, Vancouver,
British Columbia, or at such other place as the parties
will mutually agree.
1.2 Conversion of Shares
(a) At the Effective Date:
(i) Each share of capital stock of Payforview, if any,
held by Payforview as treasury stock immediately
prior to the Effective Date will be cancelled, and
no payment will be made with respect thereto.
(ii) The certificates representing the Payforview
Shares, duly registered in the names of the
respective shareholders of Voyager, will be
delivered thereto and will contain the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR ANY STATE SECURITIES LAWS. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF A CURRENT AND
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH APPLICABLE STATE SECURITIES LAWS WITH RESPECT
TO SUCH SHARES, OR AN OPINION OF THE REGISTERED
HOLDER'S COUNSEL REASONABLY ACCEPTABLE TO THE
ISSUER'S COUNSEL TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.
(iii)The shareholders of Voyager will deliver to
Payforview the various certificates, instruments,
and documents necessary to accomplish the
acquisition of Voyager by Payforview.
(iv) No fractional shares of Payforview will be issued
in the Acquisition. All fractional shares to be
issued to individual respective shareholders will
be rounded to the nearest whole share.
1.3 Tax-Free Reorganization
The Acquisition is intended to be a share for share exchange
within the meaning of the Internal Revenue Code of 1986, as
amended (the "IRC").
1.4 Secondary Financing
The parties further acknowledge that they will each use their
best efforts and co-operate in the completion of a second stage
financing in the amount of $10,000,000, on or before September
30, 1999.
1.5 Commission
It has been agreed between the parties that 500,000 shares of
Payforview will be issued in payment of a Commission in respect
of the Acquisition, to be held in trust by EAW Enterprises Ltd.
ARTICLE 2
THE ACQUIRED CORPORATION
2.1 Articles of Incorporation
The Articles of Incorporation of Voyager will remain the Articles
of Incorporation of Voyager until amended in accordance with
applicable law.
2.2 By-Laws
The By-Laws of Voyager in effect at the Effective Date will be
the By-Laws of Voyager until amended in accordance with
applicable law.
2.3 Directors and Officers
From and after the Effective Date, until successors are duly
elected or appointed in accordance with applicable law, (i) the
directors of Voyager at the Effective Date will be the directors
of both Voyager and Payforview, and (ii) the officers of Voyager
at the Effective Date will be the officers of both Voyager and
Payforview.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PAYFORVIEW
Payforview represents and warrants to Voyager that:
3.1 Organization and Existence
Payforview is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Nevada.
Payforview has full corporate power and authority and all
governmental licenses, authorizations, consents and approvals to
own and lease the properties and assets it now owns and leases
and to carry on its business as and where such properties and
assets are now owned or leased and such business is now
conducted, other than any such licenses, authorizations, consents
or approvals which, if not obtained or made, would not have a
material adverse effect on the condition (financial or
otherwise), business, assets, liabilities, capitalizations,
financial position, operations, results of operations or
prospects of Payforview (a "Material Adverse Effect on
Payforview"). Payforview has heretofore made available to
Voyager, true, correct and complete copies of the Articles of
Incorporation and By-Laws of Payforview, each as amended to the
date hereof. Payforview is duly licensed or qualified to do
business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the properties and assets
now owned or leased by it or the nature of the business is not
conducted by it requires it to be so licensed or qualified and in
which failure so to qualify could reasonably be expected to have
a Material Adverse Effect on Payforview.
Since its incorporation, Payforview has had no Subsidiaries. For
the purposes of this Agreement, "Subsidiary" means any entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or
indirectly owned by Payforview. For the purposes hereof, the term
"Subsidiary" will mean a subsidiary as defined in Rule 405 under
the Securities Act of 1933 (the "Act").
3.2 Capitalization
(a) The authorized capital stock of Payforview consists of
25,000,000 common shares, par value $0.001 per share,
of which 1,250,000 are issued and outstanding, (on a
"pre-split" basis).
(b) All outstanding shares of capital stock of Payforview
have been duly authorized and validly issued and are
fully paid and non-assessable and are not subject to
preemptive rights created by statute, Payforview's
Articles of Incorporation or By Laws, or any agreement
to which Payforview is a party or by which Payforview
may be bound. None of the outstanding securities of
Payforview was issued in violation of the Securities
Act of 1933, as amended, (the "Securities Act"), or the
securities or blue-sky laws of any state or other
jurisdiction.
3.3 Authority and Non-contravention
(a) Payforview has the full corporate power and authority
to execute, deliver and perform this Agreement and to
consummate the Acquisition, except for confirmation and
approval by Payforview's stockholders in connection
with the consummation of the Acquisition, all corporate
acts and proceedings required to be taken by or on the
part of Payforview to authorize Payforview to execute,
deliver and perform this Agreement and to consummate
the Acquisition have been duly and validly taken. This
Agreement constitutes the legal, valid and binding
agreement of Payforview enforceable against it in
accordance with its terms.
(b) The execution, delivery and performance by Payforview
of this Agreement, and the consummation of the
Acquisition by Payforview, require no consent,
approval, order or authorization of, action by or in
respect of, or registration or filing with, any
governmental body, court, agency, official or authority
(collectively, "Governmental Body"), other than (i)
shareholder approval (ii) the filing of a certificate
in accordance with the GCL; and (iii) such other
filings or registrations with, or authorizations,
consents or approvals of, any Governmental Body, the
failure of which to make or obtain would not materially
adversely affect the ability of Payforview or Voyager
to consummate the Acquisition.
(c) The execution, delivery and performance by Payforview
of this Agreement and consummation by Payforview of the
Acquisition do not and will not:
(i) contravene or conflict with the Articles of
Incorporation or By-Laws of Payforview;
(ii) assuming the requisite approval of Payforview's
stockholders of the Acquisition, contravene or
conflict with or constitute a violation of any
provision of any law, regulation, judgment,
injunction, order or decree binding upon or
applicable to Payforview;
(iii)constitute a default under or give rise to a right
of termination, cancellations, acceleration or
loss of any material benefit (with or without the
giving of notice or lapse of time or both), or
require the consent, approval, waiver or other
action by any person or entity (a "person"), under
any agreement, contract or other instrument
binding upon Payforview, or any license,
franchise, permit or other similar authorization
held by Payforview; or
(iv) result in the creation or imposition of any lien
(as defined below) on any material asset of
Payforview.
3.4 Certain Interests
Except for Employment/Consulting Agreements entered into between
Payforview and each of Nic Meredith, Warren Wayne and Marc
Pitcher, there are and have been no contracts, agreements,
arrangements or other transactions between Payforview, and any
officer, director, or holder of five percent (5%) or more (a
"Five Percent Stockholder") of any class of outstanding shares of
capital stock of Payforview, or any corporation or other entity
controlled by any such officer, director or Five Percent
Stockholder's family, or any affiliate of any such officer,
director or Five Percent Stockholder.
3.5 Debts
Payforview has no material assets or liabilities other than
those, which are part of the Acquisition, and as set forth and
made part of this Agreement. There are no additional debts or
liabilities, actual or potential, of any nature, including taxes,
assessments, contingent liabilities, or choses in action.
3.6 Compliance
Payforview is not in violation of any applicable provisions of
any law, regulation, order, judgment or decree of any federal or
state court or Governmental Body, the violation of which could
reasonably be expected to have a Material Adverse Effect on
Payforview.
3.7 Financial Information
Payforview has delivered to Voyager copies of the balance sheet
of Payforview as of December 31, 1998 (the "Payforview Balance
Sheet") and the related statements of income and changes in
stockholder's equity for the twelve (12) month period then ended,
as prepared by Payforview (collectively, the "Payforview
Financial Statements"). The Payforview Financial Statements
fairly represent, in conformity with generally accepted
accounting principles consistently applied, the financial
position of Payforview as of such date and its results of
operations and changes in financial position for the twelve month
period then ended.
3.8 Undisclosed Liabilities
Except for (i) liabilities reflected in the Payforview Balance
Sheet and (ii) liabilities incurred in the ordinary course of
business of Payforview subsequent to December 31, 1998,
Payforview has no liabilities or obligations (whether absolute,
accrued or contingent) that are of a character which, under
generally accepted accounting principles, should be accrued,
shown, disclosed or indicated in a balance sheet of Payforview,
or are material to the business, financial condition or results
of operations of Payforview, and there is no existing condition,
situation or set of circumstances which, to the best knowledge of
Payforview, could reasonably be expected to result in such a
liability or obligation.
3.9 Absence of Certain Changes
Since December 31, 1998, there has not been:
(a) any change in condition (financial or otherwise) of the
properties, assets, liabilities, business or prospects
of Payforview which can reasonably be expected to have
a Material Adverse Effect on Payforview.
(b) any redemption, purchase or other acquisition of any
shares of the capital stock of Payforview, or any
issuance of any shares of capital stock other than a
two for one stock split increasing the issued and
outstanding shares of Payforview; or
(c) any amendment of the Articles of Incorporation or By-
Laws of Payforview, except such as may be necessary to
comply with the terms of this Agreement (complete and
correct copies of which have been delivered to
Voyager).
3.10 Employee Benefit Plans
There is no "employee benefit plan," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974 ("ERISA"),
which (i) is subject to any provision of ERISA, and (ii) is
maintained, administered or contributed to by Payforview or any
affiliate (as defined below) and covers any employee or former
employee of Payforview or any affiliate or under which Payforview
or any affiliate has any material liability. For purposes of this
Paragraph, "affiliate" of any person means any other person which
is a member of a controlled group of corporations with such
person (within the meaning of Section 414(b) of the Code).
3.11 Finder's Fees
There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act
on behalf of Payforview who might be entitled to any fee or
commission from Voyager or any of its affiliates upon
consummation of the Acquisition.
3.12 Tax and Other Returns and Reports
(a) All federal, state, county, local and foreign returns,
information returns, statements, reports and
declarations (collectively, "Returns") relating to
taxes (as defined below) required to be filed by
Payforview have been timely filed, or will be timely
filed prior to the Effective Date, with the appropriate
Governmental Body in all jurisdictions in which such
Returns are required to be filed;
(b) All federal, state, county, local and foreign income,
profits, franchise, gross receipts, sales, use,
occupation, property, withholding, excise and other
taxes, duties, charges or assessments, including
interest, penalties and additions thereto
(collectively, a "Tax" or "Taxes") of Payforview
reflected in the Return have been fully paid or
adequately provided for on the books, and financial
statements of Payforview in accordance with generally
accepted accounting principles at least on a quarterly
basis.
(c) To the best of Payforview's knowledge, no issues have
been raised (and are currently pending) by the Internal
Revenue Service, or any other taxing authority in
connection with any of the Returns referred to in
subparagraph (i) above, which, individually or in the
aggregate, might have a Material Adverse Effect on
Payforview. To Payforview's knowledge, no state of fact
exists which constitutes grounds for the assessment of
further Tax liability beyond that shown on the Returns
described in subparagraph (i) above, or the books and
financial statements of Payforview as stated in
subparagraph (ii) above.
(d) All tax obligations of Payforview are accurately
reflected in the Financial Statements.
(e) Payforview is not subject to any penalty by reason of a
violation of any order, rule, or regulations of, or a
default with respect to any return, report or
declaration required to be filed with any federal,
state, county, local or foreign or other Governmental
Body to which it is subject, which violations or
defaults, individually or in the aggregate, would have
a Material Adverse Effect on Payforview.
3.13 Products Liability
There is no action, suit, proceeding or, to the knowledge of
Payforview, inquiry or investigation pending by or before any
court or Governmental Body against Payforview relating to any
product alleged to have been sold by Payforview and alleged to
have been defective, or improperly designed or manufactured, nor,
to the knowledge of Payforview, is there any valid basis for any
such action, proceeding or investigation.
3.14 Books and Records
The books of account, minute books, stock record books, and other
records of Payforview, all of which have been or will be made
available to Voyager, are complete and correct in all material
respects, and there are no others. At the Effective Date, all of
those books and records of Payforview will be in the possession
of Payforview.
3.15 Copies of Documents
Payforview has delivered or made available to Voyager true and
correct copies of all documents listed in any Schedule to this
Agreement.
3.16 Representations and Warranties
The representations and warranties of Payforview herein, or in
any certificate or other writing delivered by Payforview pursuant
hereto, or in connection with the Acquisition, do not contain any
untrue statement of a material fact, or, taken together, omit to
state a material fact necessary in order to make the statements
herein and therein not misleading in light of the circumstances
in which made.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF VOYAGER
4.1 Organization and Existence
(a) Voyager is a corporation duly incorporated, validly
existing, and in good standing under the laws of the
State of Nevada. Voyager has full corporate power and
authority, and all governmental licenses,
authorizations, consents and approvals to own and lease
the properties and assets it now owns and leases, and
to carry on its business as and where such properties
and assets it now owns and leases, and to carry on its
business as and where such properties and assets are
now owned or leased, and such business is now
conducted, other than any such licenses,
authorizations, consents or approvals which, if not
obtained or made, would not have a material adverse
effect on the condition (financial or otherwise),
business, assets, liabilities, capitalization,
financial position, operations, results of operations
or prospects of Voyager (a Material Adverse Effect on
Voyager). Voyager has heretofore made available to
Payforview true, correct and complete copies of the
Articles of Incorporation and By-Laws, each as amended
to the date hereof, of Voyager. Voyager is duly
licensed or qualified to do business as a foreign
corporation, and is in good standing in all
jurisdictions in which the character of the properties
and assets now owned or leased by it, or the nature of
the business now conducted by it, requires it to be so
licensed or qualified, and in which failure so to
qualify could reasonably be expected to have a Material
Adverse Effect on Voyager.
4.2 Capitalization
(a) The authorized capital stock of Voyager consists of
10,000,000 common shares, of which, as at the date of
this Agreement, 4,327,131 are issued and outstanding.
(b) All outstanding shares of capital stock of Voyager have
been duly authorized and validly issued, and are fully
paid and non-assessable, and are not subject to
preemptive rights created by statutes, Voyager's
Articles of Incorporation or By Laws, or any agreement
to which Voyager is a party or by which Voyager may be
bound. Except as set forth in this Paragraph, there are
outstanding (i) no securities of Voyager convertible
into or exchangeable for shares of capital stock or
voting securities of Voyager, and (ii) no options or
other rights to acquire from Voyager, and no
obligations of Voyager to issue, any capital stock,
voting securities or securities convertible into or
exchangeable for capital stock of Voyager. None of the
outstanding securities of Voyager was issued in
violation of the Securities Act, or the securities or
blue sky laws of any state or other jurisdiction.
4.3 Authority and Non-contravention
(a) Voyager has the full corporate power and authority to
execute and deliver and perform this Agreement, and to
consummate the Acquisition. Except for any required
approval by Voyager's stockholders, all corporate acts
and proceedings required to be taken by or on the part
of Voyager to authorize Voyager to execute, deliver and
perform this Agreement, and to consummate the
Acquisition, have been duly and validly taken. This
Agreement constitutes the legal, valid and binding
agreement of Voyager enforceable against it in
accordance with its terms.
(b) The execution, delivery and performance by Voyager of
this Agreement and the consummation of the Acquisition
by Voyager require no consent, approval, order or
authorization of, action by or in respect of, or
registration or filing with, any Governmental Body
other than (i) the filing of a certificate of merger in
accordance with the GCL, and (ii) such other filings or
registrations with or authorizations, consents or
approvals of, any Governmental Body, the failure of
which to make or obtain would not materially adversely
affect the ability of Voyager or Payforview to
consummate this Acquisition.
(c) The execution, delivery and performance by Voyager of
this Agreement and the consummation of the Acquisition
do not and will not:
(i) contravene or conflict with the Articles of
Incorporation or By-Laws of Voyager;
(ii) assuming compliance with the matters referred to
in Paragraph 4.3(b) and assuming the requisite
approval of Voyager's stockholders to the
Acquisition, contravene or conflict with or
constitute a violation of any provision of any
law, regulation, judgment, injunction, order or
decree binding or applicable to Voyager;
(iii)constitute a default under or give rise to a right
of termination, cancellation, acceleration or loss
of any material benefit (with or without the
giving of notice or lapse of time or both), or
require the consent, approval, waiver or other
action by any person, under any agreement,
contract or other instrument binding upon Voyager
or any license, franchise, permit or other similar
authorization held by Voyager; or
(iv) result in the creation or imposition of any lien
on any material asset of Voyager.
4.4 Certain Interests
There are and have been no contracts, agreements, arrangements or
other transactions between Voyager, and any officer, director, or
Five Percent Stockholder of Voyager, or any corporation or other
entity controlled by any such officer, director or Five Percent
Stockholder, a member of any such officer, director or Five
Percent Stockholder's family, or any affiliate of any such
officer, director or Five Percent Stockholder.
4.5 Litigation
There is no action, suit, investigation or proceeding pending or,
to the knowledge of Voyager, threatened against or affecting
Voyager or any of its properties before any court or arbitrator
or any Governmental Body which, if determined or resolved
adversely to Voyager, may reasonably be expected to have a
Material Adverse Effect on Voyager or that would prevent or
hinder the consummation of the Acquisition. Voyager has not been
charged by any Governmental Body with a material violation of,
or, to the knowledge of Voyager, threatened by any Governmental
Body with a charge of a violation of, any federal, state, county
or municipal law or regulation, the resolution of which could
reasonably be expected to have a Material Adverse Effect on
Voyager.
4.6 No Default
Voyager is not in default under, and no condition exists that
with notice or lapse of time or both would constitute a default
under, (i) its Articles of Incorporation or By-Laws, (ii) any
mortgage, loan agreement, contract, agreement, lease, lease
purchase, indenture or evidence of indebtedness for borrowed
money or other instrument to which Voyager is a party or by which
Voyager or any of the assets of Voyager is bound, or (iii) any
judgment, order, decree or injunction of any court, arbitrator or
Governmental Body, which default or potential default could
reasonably be expected to have a Material Adverse Effect on
Voyager.
4.7 Compliance
Voyager is not in violation of any applicable provision of any
law, regulation, order, judgment or decree of any federal or
state court or Governmental Body, the violation of which could
reasonably be expected to have a Material Adverse Effect on
Voyager.
4.8 Employees
To the best knowledge of Voyager, no key employee of Voyager is,
or is now expected to be, in violation of any term of any
employment contract, patent disclosure agreement, non-competition
agreement or any other contract or agreement, or any restrictive
covenant, or any other common law obligation to a former employer
relating to the right of any such employee to be employed by
Voyager because of the nature of the business conducted or to be
conducted by Voyager, of the use of trade secrets or proprietary
information by others, and the employment of the employees of
Voyager does not subject Voyager to any material liability to any
former employer of any such employee.
4.9 Employee Benefit Plan
There is no "employee benefit plan", as defined in Section 3(3)
of ERISA, which (i) is subject to any provision of ERISA; and
(ii) is maintained, administered or contributed to by Voyager or
any affiliate (as defined below) and covers any employee or
former employee of Voyager or any affiliate, or under which
Voyager or any affiliate has any material liability. For
purposes of this Paragraph, "affiliate" of any person means any
other person which is a member of a controlled group of
corporations with such person (within the meaning of Section
414(b) of the IRC)
4.10 Tax and Other Returns and Reports
(a) All Returns relating to taxes required to be filed have
been timely filed, or will be timely filed prior to the
Effective Date, with the appropriate Governmental Body
in all jurisdictions in which Returns are required to
be filed;
(b) All taxes of Voyager reflected in the Returns have been
fully paid or adequately provided for on the books and
financial statements of Voyager in accordance with
generally accepted accounting principles at least on a
quarterly basis;
(c) To the best of Voyager's knowledge, no issues have been
raised (and are currently pending) by the Internal
Revenue Service or any other taxing authority in
connection with any of the Returns referred to in
subparagraph (i) above, which, individually or in the
aggregate, might have a Material Adverse Effect on
Voyager. To Voyager's knowledge, no state of facts
exists which constitutes grounds for the assessment of
further Tax liability beyond that shown on the Returns
described in subparagraph (i) above on the books and
financial statements of Voyager as stated in
subparagraph (ii) above.
Voyager is not subject to any penalty by reason of a
violation of any order, rule or regulation of, or a
default with respect to any return, report or
declaration required to be filed with, any federal,
state, county, local or foreign or other Governmental
Body to which it is subject, which violations or
defaults, individually or in the aggregate, would have
a Material Adverse Effect on Voyager.
4.11 Copies of Documents
Voyager has delivered or made available to Payforview true and
correct copies of all documents listed in any Schedule to this
Agreement, or requested by Payforview.
4.12 Representations and Warranties
The representations and warranties of Voyager herein or in any
certificate or other writing delivered by Voyager pursuant hereto
or in connection with the Acquisition do not contain any untrue
statement of a material fact, or, taken together, omit to state a
material fact necessary in order to make the statements herein
and therein not misleading in light of the circumstances in which
made.
ARTICLE 5
COVENANTS OF VOYAGER AND PAYFORVIEW
The parties hereto agree that:
5.1 Regulatory Approvals
Prior to the Effective Date, each party will execute and file, or
join in the execution and filing of, any application or other
document that may be necessary in order to obtain the
authorization, approval or consent of any Governmental Body,
federal, state, local or foreign, which may be reasonably
required, or that the other party may reasonably request, in
connection with the consummation of the Acquisition. Each party
will use its best efforts to obtain all such authorization,
approvals and consents.
5.2 Certain Filings
Payforview and Voyager will cooperate with one another:
(a) in determining whether any action by or in respect of,
or filing with, any Governmental Body is required, or
any actions, consents, approvals or waivers are
required to be obtained from parties to any material
contracts, in connection with the consummation of the
Acquisition; and
(b) in seeking any such actions, consents approvals or
waivers or making any such filings, furnishing
information required in connection therewith and
seeking to timely obtain any such actions, consents,
approvals or waivers.
5.3 Satisfaction of Conditions Precedent
Payforview and Voyager will use their reasonable best efforts to
satisfy or cause to be satisfied all the conditions precedent
that are set forth in Articles 3 and 4 hereof, as applicable to
each of them, and to cause the Acquisition to be consummated,
and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all
filings with, and give all notices to, third parties that may be
necessary or reasonably required on its part in order to effect
the Acquisition.
5.4 Public Announcements
Voyager and Payforview will consult with each other before
issuing any press release or making any public statement with
respect to this Agreement and the Acquisition and, except as may
be required by applicable law or any listing agreement with any
Voyager securities exchange, will not issue any such press
release or make any such public statement prior to such
consultation and without approval of the other.
5.5 Further Assurance
At and after the Effective Date, the officers and directors of
Voyager will be authorized to execute and deliver, in the name
and on behalf of Voyager or Payforview, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on
behalf of Voyager or Payforview, any other actions and things to
vest, perfect or confirm of record or otherwise in either Voyager
or Payforview any and all right, title and interest in, to and
under any of the rights, properties or assets of Voyager acquired
or to be acquired by Payforview as a result of, or in connection
with, the Acquisition.
ARTICLE 6
CONDITIONS 0F THE ACQUISITION
6.1 Conditions to the Obligations of Each Party
The respective obligations of Payforview and Voyager under this
Agreement are subject to the satisfaction at or prior to the
Effective Date of the following conditions:
(a) Neither Voyager nor Payforview will be subject to any
order, decree or injunction of a court of competent
jurisdiction that prohibits or delays any of the
transactions contemplated by this Agreement, or that
will require any divestiture as a result of such
transactions or that will require all or any part of
the business of Voyager to be held separate.
(b) There will not have been any action by any court or
Governmental Body rendering the transactions
contemplated hereby illegal.
(c) If necessary to effect the Acquisition, this Agreement
will have been duly approved by the stockholders of
Voyager and the stockholders of Payforview in
accordance with applicable law and the respective
Certificates of Incorporation and By-Laws of Voyager
and Payforview.
(d) No order of any court or administrative agency will be
in effect which restrains or prohibits the transactions
contemplated hereby; no suit, action, investigation,
inquiry or proceeding by any Governmental Body or other
person will be pending or threatened against either
Voyager or Payforview which challenges the validity or
legality, or seeks to restrain the consummation, of the
transactions contemplated hereby, and no written advice
will have been received by Voyager or Payforview or
their respective counsel from any Governmental Body,
and remain in effect, stating that an action or
proceeding will, if the Acquisition is consummated or
sought to be consummated, be filed seeking to
invalidate or restrain the Acquisition; provided that,
in the case of such a proceeding brought or threatened
by a person other than a Governmental Body, the
condition set forth in this Paragraph 6. 1 (d) will be
deemed to have been satisfied if Voyager and Payforview
will have been provided with an opinion of counsel
satisfactory to them, to the effect that such
proceeding is or would be without substantial merit.
(e) No new United States federal or state legislation or
regulation will have been enacted or adopted which, in
the judgment of the Board of Directors of either
Voyager or Payforview, renders it inadvisable for such
party to proceed with the Acquisition, and no United
States federal or state authority has proposed to apply
any law or regulation to Voyager or Payforview in a
manner which, in the judgment of the Board of Directors
of Voyager or Payforview, renders it inadvisable for
such party to proceed with the Acquisition.
6.2 Conditions to the Obligation of Payforview
The obligation of Payforview to consummate the Acquisition is
further subject to the satisfaction on or prior to the Effective
Date of the following further conditions;
(a) Voyager will have performed in all material respects
all of its obligations hereunder required to be
performed by it at or prior to the Effective Date.
(b) The representations and warranties of Voyager contained
in this Agreement and in any certificate or other
writing delivered by Voyager pursuant hereto will be
true and correct in all material respects at and as of
the Effective Date as if made at and as of such time.
(c) Payforview will have received, or be satisfied that it
will receive, any material consents, approvals or
waivers from third parties required to consummate the
Acquisition or made necessary as a result of the
Acquisition.
(d) Payforview will have received all documents it may
reasonably request relating to the existence of Voyager
and its corporate authority for this Agreement, all in
form and substance satisfactory to Payforview.
6.3 Conditions to Obligations of Voyage
The obligations of Voyager to consummate the Acquisition are
further subject to the satisfaction on or prior to the Effective
Date of the following further conditions:
(a) Payforview will have performed in all material respects
all of its obligations hereunder required to be
performed by it at or prior to the Effective Date,
(b) The representations and warranties of Payforview
contained in this Agreement and in any certificate or
other writing delivered by Payforview pursuant hereto
will be true and correct in all material respects at
and as of the Effective Date as if made at and as of
such time.
(c) Voyager will have received a certificate signed on
behalf of Payforview by an officer of Payforview to the
effect set forth in subparagraphs (a) and (b) of this
Paragraph.
(d) Voyager will have received, or be satisfied that it
will receive, any material consents, approvals or
waivers from third parties required to consummate the
Acquisition or made necessary as a result of the
Acquisition.
(e) Voyager will have received all documents it may
reasonably request relating to the existence of
Payforview and its corporate authority for this
Agreement, all in form and substance satisfactory to
Voyager.
(f) Payforview will have delivered to Voyager, and Voyager
will have approved all reports and statements required
to be filed with the United States Securities and
Exchange Commission to bring Payforview current as of
the Effective Date.
(g) Payforview will have completed and filed all federal
and state tax returns required as of the Effective
Date.
ARTICLE 7
TERMINATION
7.1 Termination
This Agreement may be terminated and the Acquisition may be
abandoned at any time prior to the Effective Date
(notwithstanding any approval of this Agreement by the
stockholders of Payforview or Voyager):
(a) By mutual written consent of Voyager and Payforview;
(b) By either Voyager and Payforview if there has been a
breach of a material representation, warranty, covenant
or agreement contained in this Agreement on the part of
the other party and such breach has not been promptly
cured;
(c) By either Voyager and Payforview, if the acquisition
has not been consummated on or before May 31, 1999,
provided that neither party may terminate this
Agreement pursuant to this clause if such party's
failure to fulfill any of its obligations under this
Agreement will have been the reason that the Effective
Date will not have occurred on or before said date;
(d) By either Voyager and Payforview, if there will be any
law or regulation that makes consummation of the
Acquisition illegal or otherwise prohibited, or if any
judgment, injunction, order or decree enjoining Voyager
or Payforview from consummating the Acquisition is
entered and such judgment, injunction, order or decree
will become final and nonappealable;
7.2 Effect of Termination
If this Agreement is terminated pursuant to Paragraph 7. 1, this
Agreement will become void and of no effect with no liability on
the part of any party hereto, except that the agreements
contained in Paragraphs 5.4 and 8.4 will survive the termination
hereof.
ARTICLE 8
MISCELLANEOUS
8.1 Notices
All notices, requests and other communications to any party
hereunder will be in writing (including telecopy or similar
writing) and will be given,
If to Payforview to:
Payforview.com Corp.
(Sierra Gold Corporation)
Attention: Marc Pitcher
President
300 - 1055 West Hastings Street
Vancouver, B.C.
V6E 2E9
Telecopier No.: (604) 609-6183
If to Voyager, to:
Voyager International Entertainment Inc.
Attention: Nic Meredith
30O - 1055 West Hastings Street
Vancouver, B.C.
V6E 2E9
Telecopier No.: (604) 609-6183
With a copy to:
Andrew Walker
Boughton Peterson Yang Anderson
2500 - 1055 Dunsmuir Street
Vancouver, British Columbia, V7X IS8
Telecopier No.: (604) 683-5317
Or such other address or telecopier number as such party may
hereafter specify for the purpose by notice to the other parties
hereto. Each such notice, request or other communication will be
effective (i) if given by telecopier, when such telecopier is
transmitted to the telecopier number specified in this Paragraph
and the appropriate confirmation of receipt is received, or (ii)
if given by any other means when delivered at the address
specified in this Paragraph.
8.2 Survival of Representations and Warranties
The representations and warranties confirmed herein and in any
certificate or other writing delivered pursuant hereto will not
survive the Effective Date or the termination of this Agreement.
8.3 Amendments: No Waivers
(a) Any provision of this Agreement may be amended or
waived prior to the Effective Date if, and only if,
such amendment or waiver is in writing and signed, in
the case of an amendment, by Voyager and Payforview, or
in the case of a waiver, by the party against whom the
waiver is to be effective, provided that after the
adoption of this Agreement by the stockholders of
Voyager, no such amendment or waiver will, without the
further approval of such stockholders, alter or change
(i) the amount or kind of consideration to be received
in exchange for any shares of capital stock of Voyager;
(ii) any term of the Articles of Incorporation of the
Payforview; or (iii) any of the terms or conditions of
this Agreement if such alteration or change would
adversely affect the holders of any shares of capital
stock of Voyager.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder will operate as a
waiver thereof, nor will any single or partial exercise
thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
The rights and remedies herein provided will be
cumulative and not exclusive of any rights or remedies
provided by law.
8.4 Expenses: Fees
All costs and expenses incurred in connection with this Agreement
will be paid by the party incurring such costs or expenses.
8.5 Successors and Assigns
The provisions of this Agreement will be binding upon and enure
to the benefit of the parties hereto and their respective
successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other parties
hereto.
8.6 Governing Law
This Agreement will be construed in accordance with and governed
by the laws of the State of Nevada, without regard to the
conflicts of law principles thereof
8.7 Entire Agreement: Counterparts: Effectiveness
This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings (including any
representations and warranties made by any party), both written
and oral, among the parties with respect to the subject matter
hereof. This Agreement maybe signed in any number of
counterparts, each of which will be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement will become effective when each party
hereto will have received counterparts hereof signed by all of
the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective authorized
officers as of the date and year first above written.
PAYFORVIEW.COM CORP.
(Sierra Gold Corporation)
Per:
/s/ Marc Pitcher
Authorized Signatory
VOYAGER INTERNATIONAL
ENTERTAINMENT, INC.
Per:
/s/ Nic Meredith
Authorized Signatory
<PAGE>
EXHIBIT "A"
SHAREHOLDERS OF VOYAGER
<TABLE>
<S> <C> <C>
Name of Shareholder No. of Voyager Payforview.com
Shares Shares
Argel Holdings Ltd.
55 Frederick Street
Nassau
BAHAMAS 2,000,000 1,200,000
Southampton Genetic Sciences Inc.
55 Frederick Street
Nassau
BAHAMAS 2,000,000 1,200,000
Al Chisholm
1205, 1150 Burnaby Street
Vancouver, BC V6E 1P2
CANADA 6,000 3,600
Harry Meredith
Rosemount, Grange Road
St. Cross, Winchester
Hants S023 9RT
UNITED KINGDOM 1,000 600
Margot Meredith
Rosemount, Grange Road
St. Cross, Winchester
Hants S023 9RT
UNITED KINGDOM 1,000 600
Guy Meredith
Dymoke Barn, Church Lane
Easton, Nr. Winchester
Hants S021 1EH
UNITED KINGDOM 1,000 600
Mark Meredith
214 Loddon Bridge Road
Woodley, Reading
Berks RG5 4BS
UNITED KINGDOM 1,000 600
Lisa Greaves
#3, 1395 West 13th Avenue
Vancouver, BC V7M 2H1
CANADA 1,000 600
Michael Trigg
317 North Dollarton Highway
North Vancouver, BC V7G 1M9
CANADA 1,000 600
Panos Kappos
#6, 1946 West 12th Avenue
Vancouver,BC V6J 2E9
CANADA 1,000 600
Joe Dhami
1936 West 12th Avenue
Vancouver,BC V6J 2E9
CANADA 1,000 600
Mike Sweatman
4883 8A Avenue
Tsawwassen, BC V4M 1S8
CANADA 1,000 600
Jim Newton
404 -110 Cambie Street
Vancouver, BC V6B 2M8
CANADA 1,000 600
Brian Tingle
7871 Sunnymede
Richmond, BC V6Y 1H3
CANADA 1,000 600
Andrew Phillips
106 Parkgate Place
1281 Parkgate Avenue
North Vancouver, BC V7H 3A3
CANADA 1,000 600
James Carruthers
2760 West 19th Avenue
Vancouver, BC V6L 1E3
CANADA 1,000 600
Don Osborne
2760 West 19th Avenue
Vancouver, BC V6L 1E3
CANADA 1,000 600
Lisa Simard
Unit 2, 5740 Marine Way
RR#2
Sechelt, BC V0N 2A0
CANADA 1,000 600
Carolyn Anger
1125 Howe Street, 4th Floor
Vancouver, BC V6C 2K8
CANADA 1,000 600
Jay Stevenson
29 - 1656 Adanar Street
Vancouver BC V5L 2C6
CANADA 1,000 600
Ron Melnechenko
215 - 237 East 4th Avenue
Vancouver, BC V5T 4R4
CANADA 1,000 600
Laurie Roland
RR#1, Westley Site C25
Sechelt, BC V0N 3A0
CANADA 1,000 600
Frank Levine
RR#6, S19 C8
Gibsons, BC V0N 1V0
CANADA 1,000 600
WT Ventures
55 Frederick Street
Nassau
BAHAMAS 250,000 150,000
Al Partington
5677 Sundale Place
Surrey, BC V3S 7M6
CANADA 10,000 6,000
Ian Keay
3721 197th Street
Langley, BC V3A 1B2
CANADA 6,667 4,000
Steve Hynes
The Artists Studios
505 - 1529 West 6th Avenue
West Vancouver, BC V7J 1R1
CANADA 12,800 7,680
Renata Verhagan
5 - 2144 Oxford Street
Vancouver, BC V5L 1E9
CANADA 7,000 4,200
Sara Stockstad
#2 - 2760 Yale Street
Vancouver, BC V5K 1C3
CANADA 5,000 3,000
Shannon Sirch
29 - 2714 Tranquille Road
Kamloops, BC V2B 7Y2
CANADA 2,666 1,600
Sheldon & Sherri Romain
6676 Westsyd Road
Kamloops, BC V2B 8N7
CANADA 2,666 1,600
Rick Stockstad
16395 94th Avenue
Surrey, BC V4N 3C7
CANADA 2,000 1,200
Gary Menard
2500 - 1055 Dunsmuir Street
Vancouver, BC V7X 1S8
CANADA 1,000 600
Amanda Klassen
2401 Ord Road
Kamloops, BC V2B 7V8
CANADA 666 400
Victor & Arli Klassen
2401 Ord Road
Kamloops, BC V2B 7V8
CANADA 666 400
EAW Enterprises Ltd., in trust
c/o 2500 - 1055 Dunsmuir Street
Vancouver, BC V7X 1S8
CANADA 500,000
------------- -------------
TOTAL TO BE ISSUED 4,327,131 3,096,280
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 10.3 BACCHUS ENTERTAINMENT LETTER OF INTENT, dated
January 29, 1999
[BACCHUS ENTERTAINMENT LETTERHEAD]
Friday, January 29, 1999
Attention- Warren Wayne
Payforview.com
404 - 110 Cambie St.,
Vancouver, BC V6B 2M8
Tel: 688-6306 Fax- 688-9519
Re: Letter of Intent for merger, distribution and acquisitions
Dear Sirs/Mesdames,
The following, when signed by you, Payforview.com ("Pay") will
constitute a letter of intent to enter into an agreement with
Blackstone Media Arts Ltd. dba Bacchus Entertainment ("Bacchus")
regarding distribution and acquisition of intellectual property
rights and the purchase by Pay of Bacchus shares on the following
proposed terms and conditions:
Purchase of Bacchus Stock by Pay
1. Bacchus is a television distribution company which is in the
business of financing, acquiring, producing and distributing
product for the broadcast industry.
2. Pay intends to acquire 40% of the outstanding and issued
shares of Bacchus for a price to be determined by assessing
the value of Bacchus in exchange for restricted trading
shares of Pay;
3. Pay will provide Bacchus with a shareholder loan of
approximately $250,000 over a period of one year to provide
Bacchus with working capital to meet its projected expenses
for a period of one year (including salary for Penny Green).
Details of what the capital is needed for will be provided
by Bacchus;
4. Pay will provide Bacchus with $10,000 to meet its immediate
cash flow requirements, to be paid as follows:
A) $3,000 by February 1, 1999;
B) $2,000 by February 9, 1999; and
C) $5,000 by February 20, 1999.
The $10,000 will be considered in assessing the amount of
restricted shares to be paid to Bacchus by Pay for
acquisition of Bacchus stock. If an agreement consisting of
the terms outlined in this letter of intent is not reached
between Bacchus and Pay by March 29, 1999, Bacchus Will
immediately refund the $ 10,000 to Pay;
5. Pay will have full audit rights to Bacchus and Bacchus shall
provide Pay with full business plans and accounting
information and other information on an ongoing basis as
required by Bacchus, both before and after the acquisition
of Bacchus stock;
Exclusive Distribution Rights
6. Bacchus will continue to act as the exclusive distributor
for all rights (except Internet broadcast rights) to all of
the film, television and video product that is owned by Pay,
under the same terms as set out in the agreement dated
November, 1998 between Voyager and Bacchus for distribution
of the Columbia/Coca Cola library;
Acquisition of Internet Rights
7. Bacchus shall acquire Internet broadcast rights to films and
television product, live entertainment and sports for Pay
under the. following terms and conditions:.
a) Bacchus shall acquire the Internet broadcast rights in
its own name and license those rights exclusively to
Pay;
b) Unless otherwise negotiated on a particular project,
Pay shall pay Bacchus $0.50 for each viewing made by a
viewer (based on a pay per view cost of $1.50 or a
monthly cable cost of $10.00 per individual) for each
movie or other title that is made available for viewing
on the Internet by Pay by licensing agreement with
Bacchus;
c) Payments shall be monthly; and
d) Pay shall keep a record of hits and views of each movie
or other title, and Bacchus shall have access to these
records all of the time;
e) Bacchus shall arrange for a pass for Warren Wayne to
attend the American Film Market in Los Angeles from
February 25, 1999 to March 5, 1999 (a value of $1500);
f) Bacchus has entered into a verbal agreement to acquire
the Internet rights from Westar Entertainment, Inc. for
the following pictures: "The Process", "Double Cross"
and "Beretta's Island", and shall provide Pay with a
license and materials for broadcasting these films as
soon as possible;
g) Where it owns the Internet broadcast rights, and where
doing so will not conflict with other licensing rights,
Bacchus will license its product to Pay for the fee set
out in 7b).
Rave Party April 1, 1999 Internet Broadcast
8. Bacchus will arrange for Pay to have the exclusive broadcast
rights to a party being produced on April 1, 1999 by Go
Productions Inc. ("Go"), as follows:
a) Go is an experienced live event production company, the
principals of which have produced many events including
the Queen Elizabeth Theatre all night dance party on
Dec 31, 1998, the Yeltsin-Clinton Summit, The opening
of GM Place, and Lilith Fair;
b) Go shall put on an all night dance party (9 pm to 4 am)
on April 1, 1999 and April 2, 1999 at the Plaza of
Nations for between 2,000 and 4,000 people, which shall
feature at least one international top DJ, tentatively
Eric Morillo, David Morales, Roger Sanchez, Dereck
Carter and one other world renowned DJ playing at a top
club in London, Berlin, Tokyo or New York, and with top
selling CDs (the "Feature DJ");
c) Pay shall provide Go with $30,000 (out of total
production costs of$ 100,000) up front (no later than
February 4, 1999) as an investment as a partner in
producing the Party. The money shall be used to secure
the venue and the Feature DJ and shall be recouped
first out of revenues (and recouped against any monies
payable to Bacchus or Go for the share of Party
Profits).
d) As investor in the party, Pay shall first recoup
$30,000, before any division of profits or any fees are
taken by Go, and Pay shall receive 25% of the profits
(estimated at $15,000);
e) Bacchus shall receive 10% of revenues and 45% of net
profits (all revenues including CD sales, less
production and broadcast costs) from the Internet
broadcast of the party, and out of its share, Bacchus
shall negotiate payment to Go;
f) At the Party, there shall be a section for V.I.P.
guests, and Pay shall receive 35 tickets at no cost for
V.I.P. guests. The total number of V.I.P. guests who
will be admitted for no charge will be 150. Any
additional V.I.P. post tickets will be paid for at
cost;
g) Pay shall provide free Internet advertising for the
Party and Go shall provide free advertising for Pay in
all Party promotions, including logos on the Party
flyers and giant displays of Pay promo materials at
Pay;
h) Bacchus and Pay shall co-produce the live broadcast of
the Party, and all costs shall be paid by Pay;
i) All costs of broadcasting shall be paid by Pay but
$2,000 shall come out of the Production budget;
j) All parties shall work together to arrange for direct
retail sales of CDs of featured DJs and artists to be
made directly through Pay or its agent (Amazon.com) as
follows:
1) Pay, with assistance of Bacchus and Go, shall
negotiate the Internet retail sales rights to
one or more CDs of the Featured DJ (the deal
will have to be made with a major record
label);
2) Go and Bacchus shall arrange for at least one
DJ to create, license and produce a CD
through the record company owned by Pay;
3) Go and Bacchus shall arrange for at least one
artist to create original music to be
included in a CD to be produced by Pay's
record company;
h) Pay shall have a right of first refusal through Bacchus
of all broadcast rights for all future parties put on
by Go;
i) Pay shall arrange for advertisers to sponsor the Party,
the fees of which will form part of the revenues;
j) The intention is to use the Party as a test for future
live productions of all night parties, and to create an
ongoing relationship between the parties.
Additional Terms
9. The jurisdiction of this agreement is British Columbia and
the laws and forums of British Columbia shall govern this
agreement.
10. The parties intend to enter into a long form agreement
embodying the terms set out in this letter of intent. Both
parties will negotiate in good faith to reach an agreement
which will replace this letter of intent.
11. This letter of intent may be signed by fax transmission.
12. All amounts. in this agreement are in Canadian dollars
unless otherwise stated.
Please confirm your agreement with the foregoing by signing,
dating and returning this letter to Bacchus.
Yours truly,
Blackstone Media Arts Ltd. dba Bacchus Entertainment per
/s/
Penny G. Green
CEO & President
READ, UNDERSTOOD ACCEPTED:
PAYFORVIEW.COM per
/s/ Date: January 29, 1999
<PAGE>
EXHIBIT 10.4 ITV.NET SERVICE AGREEMENT, dated March 11, 1999
SERVICE AGREEMENT BETWEEN ITVNET, INC AND PAYFORVIEW.COM
Overview:
This agreement (two pages) outlines the terms of a service
agreement between ITVnet, Inc., ("ITV") located at 6777 Hollywood
Blvd, Suite 1100, Los Angeles, CA., and Payforview.com ("PAYV")
located at 1055 W. Hastings St., Vancouver, BC. PAYV wishes to
contract ITV for the purposes of delivering streaming video
content over the Internet. These streams will be made available
for watching from both the Payforview.com Website and the ITV
Website.
ITVnet, Inc. is an Internet streaming media company dedicated to
the development of advanced technology and high-performance
networks that provide for automated, scalable and cost effective
delivery of multimedia. ITV's integrated database, network and
e-commerce multimedia systems can provide payforview.com a
solution to get their service in operation quickly and reliably.
PAYV is an Internet-based Entertainment Company, publicly trading
on the OTC Bulletin Board exchange. PAYV intends to distribute
movies, and other visual entertainment direct to viewers on a
pay-for-view and retail basis. As such, PAYV has acquired film
libraries which it wishes to be made viewable, in order to better
illustrate its' business model to potential clients, partners and
investors.
The intention of this agreement is to provide PAYV with an
immediate "operational proof of concept" in illustrating their
acquired video libraries.
Terms:
1. Responsibilities of ITV:
* Digital encoding, for up to a maximum of 30 hours of video
content (industry standard rate is $10/min and $200 per tape
setup charge.
* Encoding of content optimized for 56KB or 28.8 delivery
* Color balancing of video
* Output of video to Scalable MPEG-4 "V" CODEC's
* Normalization of audio
* Output of Audio to Voxware MetaSound CODEC's
* Storage space for the encoded files, on a multi-peered
Backbone NetShow VideoServer
* Storage and hosting of all WebPages that provide for the
direct launching of the PAYV videos
* Webcast transmission of PAYV video content provided for a
one month period (Apr. 1 through Apr. 30, 1999)
* Web-site integration assistance (and ITV Webmaster will
provide the necessary linkage details for streaming video to
play off of the PAYV site)
* Reasonable technical assistance for successful deployment
All ITV delivery of services as defined under "Terms" will take
place during the months of March and April 1999. All encoding
work is to be completed by April 15. The period through and
until April 30 defines the length of ITV's services offered
within this contract.
***NOTE***ITV's ability to meet the 30 hours requirement is
dependent upon PAYV being able to provide ITV with content in a
prompt and timely fashion as described in Page 2, Section 2.
2. Responsibilities of PAYV:
* Acquisition of all necessary rights and legal permissions as
relate to PAYV's video content, in order to provide for the
operational and legitimate Internet distribution needs
within this agreement. PAYV will provide along with each
video delivered for encoding and eventual streaming
distribution the following:
* Determination and written instructions of any specifics
with regard to PAYV's videos. Note: All videos are to
be cued up from the point that the encoding is to
begin. If only a segment of a video is to be encoded,
the length of the segment must be logged on a separate
attached piece of paper.
* Provisioning of the videos in any of the following
formats: S-VHS (mono or stereo), Hi-8, or 3/4. Note:
Beta masters may be used provided PAYV pays for all
rental and delivery costs.
* Appropriate Titling, Copyright and other related.
* Videos to be provided in a prompt and timely fashion. 5
hours of content to be delivered by March 15 and an
additional 10 hours provided by March 20. The balance of 15
hours of content to be provided by April 5. This staggering
of content will insure that ITV may meet its milestones of
30 hours on encoded content.
* Payment of a fee of US $20,000 to ITV. The terms of payment
are 4 (four) equal payments of $5,000 according to the
following schedule - US $5,000 fee to be paid on Mar 17, 24,
31 and April 6, 1999 inclusive.
3. Marketing:
* ITV and PAYV will cooperate and approve the issuance of
press releases initiated by either party to together in
which the other party is mentioned.
* ITV will promote PAYV, its corporate logo and its' video
assets on its corporate Web site (www.itv.net).
* PAYV will promote ITV, its corporate logo, its personal
video destination web site (to be named) and its'
technological abilities on its corporate web site
(www.payforview.com).
4. Master Service Agreement ("MSA")
Upon completion of a MSA, which will be created to describe in
detail the services that ITV will provide to PAYV in return for
the fees that will be charged, ITV will work with PAYV post April
30, 1999, to further develop the PAYV web site, transaction
interface, provide ongoing video storage and network distribution
mechanisms and act as webmaster for the site working
independently or in partnership with other providers as approved
by PAYV. ITV may also develop web-based customized search,
tracking and reporting capabilities for PAYV.
Signatures below will be the authority to proceed with
preparation of necessary legal and regulatory documentation for
the agreement under the terms outlined herein.
Signed by:
/s/ /s/
Date: March 11, 1999 Date: March 11, 1999
William Mutual Marc Pitcher
President President
ITVnet, Inc. Payforview.com
<PAGE>
EXHIBIT 10.5 SPORTSWORLD NETWORK INTERNET BROADCAST AGREEMENT,
dated March 25, 1999
[SPORTSWORLD LETTERHEAD]
License Agreement
No. #2442-99/rk
Made this 31st March 1999, Between:
Sportsworld Network (Australia) Pty Limited
Suite 29, 20 Commercial Road,
Melbourne Victoria 3004
AUSTRALIA, in this document referred to as the Licensor and
Payforview.com
Suite 300
Guinness Tower
1055 West Hastings Street
Vancouver B.C.
CANADA V6E 2E9 in this document referred to as the Licensee.
Attention: Penny O Green Tel: # 1 604 609 6181
VP, Programming Fax: # 1 604 609 6183
By this Agreement, both parties agree to the specifications and
terms detailed herein.
Title of Program: Various-see details under
Special Conditions
Number of Episodes/Duration: Various-see details under
Special Conditions
Episode Numbers: Various-see details under
Special Conditions
Commencement: 1st July 1999
Territory: Worldwide
License: Non Exclusive
Broadcast Period: July 1 1999 to July 1 2000
License Fee: 8% of gross revenues to
Licensee; minimum Guarantee is
25000 Payforview.com shares
(pre 9th April 1999 stock
split)
Material Format: Digital Betacam SP PAL
Technical Costs: To be paid by Licensee
Freight Costs: To be paid by Licensee
Terms of Payment: Refer to attached schedule
The above conditions may not be modified by either party without
written agreement. The Licensee shall have the option of editing
the programme for its promotion.
Signed: /s/ Signed: /s/
Sportsworld Network (Australia) Payforview.com
Pty Limited
Date: 31/3/99 Date: April 14, 1999
<PAGE>
[SPORTSWORLD LETTERHEAD]
Schedule
# 2442-99/rk
1. Total Payment:
License Fee 8% of Gross Revenue - minimum guarentee
25,000 Payforview.com
Technical costs To be paid by Licensee - shares (pre
9/4/99 share split)
Freight costs To be paid by Licensee
Share certificate deliverable to:
Sportsworld Media Group Pty.
6 Henrietta St
London WC2E 8P5
U.K.
2. Special Conditions:
Program No. of Episodes/ Episode
Duration Nos.
Xtreme Helichallenge 4 episodes x 30 minutes 1 to 4
Profiles 12 episodes x 5 minutes 1 to 12
Magic Moments 200 segments x 60-120 seconds 1 to 200
3. Delivery Details:
Material to be delivered to above address via TNT Express
Worldwide upon signing of License Agreement.
Signed: /s/ Signed: /s/
Sportsworld Network (Australia) Payforview.com
Pty Limited
Date: 31/3/99 Date: April 14, 1999
<PAGE>
EXHIBIT 10.6 REEL MEDIA LICENSE FOR INTERNET BROADCAST OF 750
FILM LIBRARY
[BACCHUS ENTERTAINMENT LTD. LETTERHEAD]
Monday, February 15, 1999
Attention: Tom T. Moore
Reel Media International, Inc.
4516 Lovers Lane, Suite 178
Dallas, TX 75225 USA
Tel: (214) 321-3301
Fax: (214) 522-3448
Email: [email protected]
Dear Sirs,
RE: ACQUISITIONS FOR PAYFORVIEW.COM
The following, when signed by you, Reel Media International
("Reel") will outline the basic deal terms with Agreement with
Bacchus Entertainment Ltd. ("Bacchus") regarding the grant of
access to materials to the programs listed in Exhibit 1
(consisting of 18 pages) annexed hereto (the "Programs") for
exhibition on the Payforview.com ("PFV") internet-broadcast
systems:
1. Reel grants Bacchus the right and license, but not the
obligation, to access the delivery materials for the
Programs and exhibit them by internet broadcast in the
territory of the Universe (the "Territory"); The materials
must be accessed within one year;
2. Reel agrees that if it provides access to the delivery
materials of the Programs to any other person or entity for
the purposes of exhibiting by internet broadcast it will
notify Bacchus of the key terms of such agreement within 30
days;
3. The term of this agreement shall be for 4 years from the
date of signing this agreement (the "Term");
4. As compensation for providing access to the Programs, Reel
shall receive 35,000 shares of restricted common stock of
Payforview.com, which shall be delivered within 60 days of
signing this agreement;
5. In addition to receiving stock, Reel shall receive 3% of the
revenues from the Programs, which shall be defined as
advertising revenues for air time sold during the exhibition
by Pfv internet broadcast of any of the Programs and any
retail fees collected from Pfv subscribers for individual
exhibitions of any of the Programs that is selected by a
subscriber and paid for by a subscriber. Reel shall receive
these fees on a quarterly calendar basis;
6. Within sixty days following the close of each calendar
quarter during the Term, Bacchus shall provide to Reel an
accounting statement showing the fees due for the quarter,
accompanied by payment in the amount indicated;
7. Reel with provide Bacchus with masters of the Programs in
Digital Betacom at a cost of $275 (or less if Bacchus can
find a cheaper laboratory, and approval by Reel which is not
to be unreasonably withheld) and slides of the Programs for
$5 a piece where available; Cost of masters subject to
change after 90 days from signature.
8. Reel warrants that it has done copyright searches on each of
the titles in the Programs and that each one is in the
public domain in within the United States, and that all of
the Programs that were created in the United States will be
in the public domain in the Territory, and real agrees to
indemnify Pfv and Bacchus for any and all claims,
liabilities, causes of action, judgments, costs and expenses
(including attorney fees) which arise as a result of any
misrepresentation by Reel;
9. Bacchus may assign this agreement to Pfv, on assumption by
Pfv of the obligations of Bacchus under this agreement, upon
which assumption Bacchus will no longer be liable for any
obligations under this agreement;
10. The jurisdiction of this agreement is the State of
California, and any dispute shall be arbitrated through the
American Film Marketing Association;
11. A fax copy of this agreement shall be deemed to be an
original;
12. It is a condition precedent to this agreement being binding
on the parties that it be signed below for approval by Pfv;
13. Both parties intend to enter into a long forth agreement.
Unit a long form agreement is signed, this agreement shall
govern the rights and obligations between the parties.
Yours truly,
BACCHUS ENTERTAINMENT LTD. per
/s/
Penny O. Green
C.E.O. & President
AGREED TO AND ACCEPTED:
REEL MEDIA INTERNATIONAL
Per: /s/ Date: February 17, 1999
APPROVED
PAYFORVIEW.COM
Per: /s/ Date: February 19, 1999
<PAGE>
EXHIBIT 10.7 SAGE ENTERTAINMENT INC. AGREEMENT, dated
March 29, 1999
[PAYFORVIEW.COM LETTERHEAD]
Monday, March 29, 1999
Attention: Stephen Kutner
Sage Entertainment, Inc.
60 East 42nd Street, Suite 630
New York, NY 10165
Tel: 212-687-8603 Fax: 212-687-8829
RE: CONSULTANT SERVICES
The following, when signed by you, will confirm the agreement
reached between Sage Entertainment, Inc. ("SEI") and
Payforview.com Inc. ("Payforview") upon the following terms:
1. Kutner will act as a programming consultant to Payforview,
answering questions periodically, assisting Payforview in
evaluating and licensing content, including assisting
Payforview in contacting major film studios;
2. Also, Kutner will act on the board of advisors of Voyageur
Film Sales, the film distribution division of Payforview on
a project by project basis may assist Voyageur in selling
pictures and television product in the US;
3. In consideration, Payforview shall deliver to SEI:
(a) $1,000 US a month beginning April 1, 1999;
(b) 1,000 commons shares of Payforview restricted from
trading for one year which will be delivered to SEI
prior to April 9, 1999;
(c) a percentage, to be negotiated of US sales arranged by
SEI on behalf of Voyageur;
4. Within 30 days of Payforview being properly financed, the
monthly payment terms with SEI will be increased (to be
agreed on by both parties);
5. SEI gives Payforview permission to use Stephen Kutner's name
in connection with a press release and the business plans of
Payforview and Voyageur.
By signing below, the parties agree to the above terms and
conditions:
PAYFORVIEW.COM INC. SAGE ENTERTAINMENT, INC.
/s/ /s/
By: Penny Green By: Stephen Kutner
<PAGE>
<PAGE>
EXHIBIT 10.8 TURN-KEY ENTERTAINMENT INVESTMENT AGREEMENT
TURN-KEY ENTERTAINMENT LLC
Company Agreement
THIS COMPANY AGREEMENT, dated as of May ____, 2000, among
Sid Amira, an individual residing in the State of New York
("Amira"), Payforview.com Corp., a Nevada corporation (PFV), and
the parties who shall hereafter be admitted to the Company as
Members and Substituted Members. In consideration of the mutual
covenants and agreements herein and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Defined Terms
The following terms shall have the following meanings
for purposes of this Agreement:
"Adjusted Capital Account Deficit" shall mean, with
respect to any Member, the deficit balance, if any, in such
Member's Capital Account as of the end of the relevant tax year,
after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts
which such Member is deemed to be obligated to restore pursuant
to the penultimate sentences in Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations; and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2) (ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the
Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Affiliate" of a Person shall mean any Person that is
directly, or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with, such
Person; for purposes of this definition, "control" shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract,
or otherwise.
"Agreement" shall mean this Company Agreement, as
originally executed and as amended, modified, supplemented, or
restated from time to time, as the circumstances may require.
"Applicable Percentage" shall mean such percentage as
may be determined by the Manager from time to time to reflect the
appropriate effective combined federal, state and local income
taxation rate payable by any Member with respect to its Taxable
Income Allocation, determined without regard to any tax
attributes of any such Member.
"Assignee" shall mean any recipient of a Transfer
permitted under the provisions of Article 7 who has not become a
Substituted Member.
"Capital Account" shall have the meaning set forth in
Section 4.5.
"Capital Contribution" shall mean, as of any
determination date, any contribution (or as the context requires,
the aggregate amount of all contributions) to the capital of the
Company in cash or property by a Member as of such date.
"Closing" shall mean a closing in which Persons who
have executed counterparts of this Agreement are admitted to the
Company as Members and reflected as such on the books and records
of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time, as interpreted by the
applicable regulations thereunder. Any reference herein to a
specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future law.
"Company" shall mean the limited liability company
created and governed hereby, as such Company may from time to
time be constituted.
"Company Act" shall mean the Delaware Limited Liability
Company Act, Section 18-101, et seq., as amended from time to
time.
"Company Expenses" shall have the meaning set forth in
Section 5.5.
"Distributable Cash" shall mean all cash proceeds
received by the Company from sources other than Capital
Contributions, less all amounts required to pay current Company
Expenses and such reserves as may be created by the Manager to
defray actual or expected future Company Expenses.
"Entity" shall mean any partnership, corporation,
limited liability company, unincorporated organization or
association, trust, or other entity.
"Fair Market Value" shall mean the fair market value of
Company assets as determined in good faith by the Manager.
"Fiscal Year" means (i) the period commencing on the
date first written above and ending on December 31, 2000; (ii)
any subsequent twelve (12) month period commencing January 1 and
ending on December 31; or (iii) any portion of the period
described in clause (ii) for which the Company is required to
allocate Profits, Losses, and other items of the Company's
income, gain, loss, or deduction pursuant to Article 4 hereof.
"Incapacity" shall mean, in the case of any Person, (i)
when such Person (A) makes an assignment for the benefit of
creditors, (B) files a voluntary petition in bankruptcy, (C) is
adjudged bankrupt or insolvent, or has entered against it an
order of relief in any bankruptcy or insolvency proceeding, (D)
files a petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, (E) files
an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against it in any
proceeding of such a nature, or (F) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or
liquidator of or for it or of or for all or any substantial part
of its properties; (ii) if within 120 days after the commencement
of any proceeding against such Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, the
proceeding has not been dismissed, or if within 90 days after the
appointment, without such Person's consent or acquiescence, of a
trustee, receiver or liquidator of or for such Person or of or
for all or any substantial part of its properties, the
appointment is not vacated or stayed, or if within 90 days after
the expiration of any such stay, the appointment is not vacated;
or (iii) upon the filing of a certificate of dissolution or its
equivalent for such Person, or the revocation of such Person's
Certificate of Incorporation or Formation.
"Including" shall mean including, without limitation.
"Indemnified Person" shall have the meaning set forth
in Section 5.7.
"Interest" shall mean the entire ownership interest of
a Member in the Company at any particular time, including the
right of such Member to any and all benefits to which a Member
may be entitled as provided in this Agreement and such Member's
"limited liability company interest" under the Company Act,
together with the obligations of such Member to comply with the
terms and provisions of this Agreement.
"Manager" shall mean a Member appointed by the Members
to manage the Company in accordance with Section 5.1.
"Member" shall mean any Person who, at the time of
reference thereto, has been admitted as a member of the Company
(whether an initial, additional, or Substituted Member), and has
not ceased to be a member of the Company as provided in this
Agreement, in such Person's capacity as a member of the Company.
"Notification" shall mean a writing containing
information to be communicated to any Person, sent in accordance
with the provisions of Section 11.1.
"Percentage Interest" shall mean, with respect to any
Member, such Member's percentage interest set forth on Exhibit A
hereto as it may be amended, modified or supplemented from time
to time.
"Person" shall mean any individual and any Entity.
"Preferred Interests" shall have the meaning set forth
in Section 3.2.
"Profits" and "Losses" shall mean, for each Fiscal
Year, an amount equal to the Company's taxable income or loss for
such Fiscal Year, determined in accordance with Code Section
703(a) (for this purpose, all items of income, gain, loss, or
deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall be
added to such taxable income or loss;
(ii) Any expenditures of the Company described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall be
subtracted from such taxable income or loss;
(iii) Gain or loss resulting from any disposition
of property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Fair Market Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its
Fair Market Value; and
(iv) To the extent an adjustment to the adjusted
tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in
liquidation of a Member's Interest in the Company, the amount of
such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition
of the asset and shall be taken into account for purposes of
computing Profits or Losses.
For purposes of determining the Profits, Losses, or any
other items allocable to any period, Profits, Losses, and any
such other items shall be determined on a daily, monthly, or
other basis, as determined by the Manager using any permissible
method under Code Section 706 and the Regulations thereunder.
"Regulations" shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of
succeeding regulations).
"Substituted Member" shall mean any Person admitted to
the Company as a Member pursuant to the provisions of Section
7.3.
"Tax Liability Deficiency" shall mean, in any Fiscal
Year with respect to any Member, the amount (if any) by which (A)
the product of (i) such Member's Taxable Income Allocations
multiplied by (ii) the Applicable Percentage exceeds (B) the
amount of Distributable Cash distributed to such Member in such
Fiscal Year pursuant to Section 4.1.
"Tax Liability Distributions" shall have the meaning
set forth in Section 4.2.
"Taxable Income Allocation" shall mean, in any Fiscal
Year with respect to any Member, the cumulative allocations of
federal taxable income of the Company made in such Fiscal Year to
such Member pursuant to Section 4.4.
2. Organization
2.1 Domicile
The Company is a Delaware limited liability company
organized under, and governed by the provisions of, the Company
Act, subject to the terms and conditions of this Agreement.
2.2 Name
The name of the Company is Turn-key Entertainment LLC.
The business of the Company may be conducted, upon compliance
with all applicable laws, under any name designated by the
Manager.
2.3 Principal Office
The principal office of the Company shall be located at
575 Madison Avenue, 10th Floor, New York, New York 10022-2511.
The Manager may from time to time change the principal office and
establish additional offices.
2.4 Registered Office; Registered Agent
The Manager shall cause the Company to maintain a
registered agent and registered office in accordance with the
Company Act. The name and address of initial registered agent is
Corporation Service Company. The address of the initial
registered office of the Company is 1013 Centre Road, Wilmington,
Delaware 19805-1297.
2.5 Purpose
The purpose of the Company is to engage in any act or
activity which is not prohibited by the Company Act. The Company
shall have the power to do any and all acts necessary,
appropriate, proper, advisable, incidental or convenient to or
for the protection and benefit of the Company.
2.6 Powers
The Company shall have all lawful powers to take any
and all actions and to engage in any and all activities and
transactions as may be necessary or desirable to carry out its
purpose.
2.7 Term
The term of the Company shall commence on the date the
Certificate of Formation of the Company is filed in the office of
the Secretary of State of Delaware in accordance with the Company
Act and shall continue until the tenth anniversary of such date,
unless earlier terminated pursuant to the provisions of Article
8.
3. Members; Capital
3.1 Members
(a) The names, addresses, Capital Contributions and
Percentage Interests of the Members are set forth in Exhibit A
hereto, in the form attached and as it may hereafter be amended,
modified, or supplemented from time to time in accordance with
this Agreement, and shall be reflected in the books and records
of the Company.
(b) No Member shall be required to lend any funds to
the Company.
(c) The Interest each Member holds in the Company
shall be uncertificated.
3.2 Capital
(a) As its initial Capital Contribution to the
Company, each Member is contributing to the Company
simultaneously herewith the amount in cash and other property
described on Exhibit A hereto. No Member shall be obligated to
make any additional Capital Contributions.
(b) In addition to the Capital Contribution to the
Company described in Exhibit A, PFV agrees to provide the Company
with (i) office space and (ii) the services of its employees, as
requested by the Company from time to time, each at no cost to
the Company for so long as PFV is a Member.
(c) The Manager may accept additional Capital
Contributions in addition to the initial Capital Contributions
referred to above from existing Members or upon the admission of
additional Members. In the event that the Manager desires to
solicit additional Capital Contributions it shall first offer
each of the existing Members the opportunity for a period of
twenty (20) days to make such additional Capital Contributions in
proportion to their respective Percentage Interests at that time.
To the extent that the existing Members do not subscribe for the
full amount of the aggregate additional Capital Contribution
requested by the Manager, the Manager shall be entitled for a
period of sixty (60) days to solicit such Capital Contributions
from Persons who are not Members. It is understood and agreed
that such additional Capital Contributions will have the effect
of diluting the Percentage Interests of the Members who do not
elect to make the full amount of the additional Capital
Contributions which they are entitled to make.
(d) No Member shall be paid interest on nor shall
interest be payable in respect of any Capital Contribution to the
Company or on or in respect of such Member's Capital Account.
(e) Except as otherwise provided by the express terms
of any Preferred Interests, no Member shall have any right to
receive the return of its Capital Contribution, except as
provided in Article 8. No distribution to a Member shall be
treated as a return of the Capital Contribution of such Member
except as provided by the express terms of any Preferred
Interests, in Article 8 or except as required by the Company Act.
(f) The Manager shall have the authority, in its
discretion, to dilute the Percentage Interest of the Members as
in effect from time to time through the solicitation of
additional Capital Contributions which may provide for preferred
economic rights (the "Preferred Interests"), including, but not
limited to, relative Percentage Interests which are greater or
lesser in proportion to the aggregate amount invested than prior
rounds of investment in the Company, subject, however, to the
rights of the existing Members to subscribe for such Preferred
Interests pursuant to the provisions of clause (c) of this
Section 3.2. Upon the receipt of any additional Capital
Contributions, including, but not limited to, Capital
Contributions with respect to Preferred Interests, the Manager
shall amend the names, addresses, Capital Contributions and
Percentage Interests of the Members as set forth in Exhibit A
hereto and shall promptly distribute a copy of such amended
Exhibit A to the Members.
(g) The Manager shall value all Capital Contributions
consisting of assets other than cash in good faith and all
determinations by the Manager as to the fair market value of such
non-cash Capital Contributions shall be conclusive and binding on
all Members for all purposes of this Agreement.
4. Distributions; Allocations
4.1 Distributions
(a) To the extent permitted by the Company Act,
Distributable Cash shall be distributed to Members at the times
and in the amounts provided in Section 4.2 and at such other
times and in such other amounts as the Manager shall determine in
its sole and absolute discretion.
(b) Subject to Section 8.2, distributions of
Distributable Cash will be made to all Members pro rata in
accordance with their respective Percentage Interests.
(c) Notwithstanding any provision to the contrary
contained in this Agreement, no distribution shall be made by the
Company in violation of Section 18-607 of the Company Act.
4.2 Tax Liability Distributions
Distributions of Distributable Cash shall be made to the
Members pro rata in accordance with the amount of their Tax
Liability Deficiency (if any) until each Member has received such
distributions in the amount equal to such Member's Tax Liability
Deficiency ("Tax Liability Distributions"). In determining the
amount of distributions of Distributable Cash made to any Member
pursuant to Section 4.1, the amounts of Tax Liability
Distributions made pursuant to this Section 4.2 shall be treated
as an advance distribution of Distributable Cash otherwise made
to such Member pursuant to Section 4.1. Tax Liability
Distributions shall be made quarterly unless the Manager
determines that such distributions should be made either more or
less frequently.
4.3 Allocations of Profits and Losses
The Profits and Losses of the Company shall be determined
and allocated to each Member with respect to each Fiscal Year of
the Company. The determination shall be as of the end of each
Fiscal Year and shall be made within ninety (90) days after the
close of each Fiscal Year. Except as provided in Section 4.4 or
4.5 below, Profits and Losses for any Fiscal Year shall be
allocated among the Members pro rata in accordance with their
respective Percentage Interests.
4.4 Special Allocations - Qualified Income Offset
If any Member unexpectedly receives an adjustment,
allocation or distribution described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), that causes such
Member to have an Adjusted Capital Account Deficit, items of
Company income and gain shall be allocated, in accordance with
Treasury Regulation Section 1.704-1(b)(2)(ii)(d), to the Member
in an amount and manner sufficient to eliminate, to the extent
required by such Treasury Regulation, the Adjusted Capital
Account Deficit of the Member as quickly as possible; provided
that an allocation pursuant to this Section 4.4 shall be made if
and only to the extent that such Member would have an Adjusted
Capital Account Deficit after all other allocations provided in
this Article 4 have been tentatively made as if this Section 4.4
were not in this Agreement. It is intended that this Section 4.4
qualify and be construed as a "qualified income offset" within
the meaning of treasury Regulations 1.704-1(b)(2)(ii)(d), which
shall be controlling in the event of a conflict between such
Treasury Regulation and this Section 4.4.
4.5 Tax Allocations: Code Section 704(c)
Solely for tax purposes, in determining each Member's
allocable taxable income or loss, depreciation, depletion,
amortization and gain or loss with respect to any contributed
property, or with respect to revalued property where the
Company's property is revalued pursuant to paragraph
(b)(2)(iv)(f) of Section 1.704-1 of the Regulations, shall be
allocated to the Members in the manner (as to revaluations, in
the same manner as) provided in Section 704(c) of the Code. The
allocation shall take into account, to the full extent required
or permitted by the Code, the difference between the adjusted
basis of the property to the Member contributing it (or, with
respect to property which has been revalued, the adjusted basis
of the property to the Company) and the fair market value of the
property determined in good faith by the Manager at the time of
its contribution or revaluation, as the case may be.
Any elections or other decisions relating to such
allocations shall be made by the Manager in any manner that
reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 4.4 are solely for purposes
of federal, state, and local taxes and shall not affect, or in
any way be taken into account in computing, any Person's Capital
Account or share of Profits, Losses, other items, or
distributions pursuant to any provisions of this Agreement.
4.6 Maintenance of Capital Accounts
Each Member's Capital Account shall be maintained by the
Company in accordance with the capital accounting rules of
Section 704(b) of the Code as follows:
(a) The Capital Account of each Member shall be
credited with (i) the amount of cash and the Fair Market Value of
any property contributed to the Company by such Member (net of
liabilities secured by such contributed property that the Company
is considered to assume or take subject to under Section 752 of
the Code), (ii) the amount of Profits allocated to such Member
for federal income tax purposes pursuant to the provisions of
this Agreement and any items in the nature of income or gain that
are specially allocated to such Member, and (iii) the amount of
any Company liabilities assumed by such Member or secured by any
property distributed to such Member;
(b) The Capital Account of each Member shall be
debited by (i) the amount of cash and the Fair Market Value of
any property distributed to such Member, (ii) such Member's
allocable share of Losses and any items in the nature of
deduction or loss that are specially allocated to such Member,
and (iii) the amount of any liabilities of such Member assumed by
the Company or secured by any assets contributed by that Member
to the Company (to the extent of the value of the securing
assets); and
(c) In the event all or a portion of an Interest in
the Company is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent it relates to the transferred
Interest.
(d) In determining the amount of any liability for
purposes of subparagraphs (a) and (b) above, there shall be taken
into account Code Section 752(c) and any other applicable
provisions of the Code and Regulations.
The foregoing provisions and the other provisions of
this Agreement relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with such
Regulations. In the event the Manager shall determine (for
example, in connection with the Company's incurring or assuming
indebtedness to an extent not anticipated as of the date hereof)
that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto are computed in order
to comply with such Regulations, the Manager may make such
modification, provided that it is not likely to have a material
effect on the amounts distributable to any Member pursuant to
Section 8.2 hereof upon the dissolution and liquidation of the
Company. The Manager also shall (i) make any adjustments that
are necessary or appropriate to maintain equality between the
Capital Accounts of the Members and the amount of Company capital
reflected on the Company's balance sheet, as computed for book
purposes in accordance with Regulations Section
1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications
in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b).
5. Management of the Company
5.1 Management by the Manager
(a) The business and affairs of the Company shall be
managed and conducted under the direction of a Member appointed
to act as the Company's manager (the "Manager"). The Manager
shall be Amira for so long as Amira shall be the beneficial owner
of an Interest. In the event that Amira ceases to be the
beneficial owner of an Interest, then Members whose aggregate
Percentage Interests represent at least 66 2/3% of the Percentage
Interests of all Members shall be entitled to elect a new
Manager. Notwithstanding the foregoing, should the powers
conferred to the Manager pursuant to this Section 5.1(a) devolve
to a board of directors or similar body then PFV shall have the
right to nominate one person to such board of directors or
similar body for so long as PFV shall be a Member.
(b) The Manager shall be entitled to such compensation
from the Company for serving as the Manager as shall be agreed to
from time to time by Members whose aggregate Percentage Interest
represent at least 66 2/3% of the Percentage Interests of all
Members.
(c) Meetings (if any) of the Manager and the Members
relating to the management of the Company shall be held on such
dates and in such places as the Manager shall determine in its
sole discretion. There shall be no requirements that formal
meetings of the Manager or the Members be held.
5.2 Powers of the Manager
Except as otherwise expressly provided in this Agreement,
the Manager shall have all of the rights, powers, and obligations
of a manager of a manager-managed limited liability company
organized under the Company Act and otherwise as provided by law.
Except as otherwise expressly provided in this Agreement
(including, without limitation, in Section 5.3 hereof), the
Manager is hereby granted the right, power, and authority to do
on behalf of the Company all things which, in its reasonable
commercial judgment, are necessary or appropriate to manage the
Company's affairs and fulfill the purposes of the Company,
including, by way of illustration and not by way of limitation,
the power and authority from time to time:
(a) to perform all normal business functions and
otherwise operate and manage the business and affairs of the
Company in accordance with and as limited by this Agreement;
(b) to employ and dismiss from employment on behalf of
the Company any and all employees, agents, attorneys, consultants
and other professionals;
(c) to enter into, make and perform on behalf of the
Company such contracts, agreements and other undertakings as it
may deem necessary for the conduct of the business of the
Company;
(d) to establish and maintain one or more bank
accounts for the Company in such bank or banks as may, from time
to time, be designated as depositories of the funds of the
Company;
(e) to incur on behalf of the Company all expenditures
permitted by this Agreement and, to the extent that funds of the
Company are available, to pay all such expenses and debts and
obligations of the Company;
(f) to admit new Members to the Company and to admit
an Assignee of a Member's Interest as a Substituted Member in the
Company, pursuant to and subject to the terms of Article 7;
(g) to establish and maintain a Capital Account and
other appropriate accounts for each Member subject to and in
accordance with the provisions of this Agreement;
(h) subject to Article 4 and Section 8.2, to determine
the amount and timing of distributions of Distributable Cash to
the Members;
(i) to establish and maintain the books and records of
the Company in accordance with Section 10.1;
(j) to cause the Company to purchase or bear the cost
of any insurance covering the potential liabilities of the
Manager;
(k) to establish subsidiaries of the Company;
(l) to compromise and settle claims against or on
behalf of the Company;
(m) to cause the Company to merge into or with another
Entity, to restructure or recapitalize the Company;
(n) to invest and reinvest the assets of the Company;
and
(o) to select, employ and dismiss from employment the
auditors of the Company.
The specific grants of power and authority to the
Manager under this Section 5.2 in no way limit the rights, power,
or authority of the Manager under this Agreement, the Company
Act, or as otherwise provided by law.
5.3 Obligations of the Manager; Tax Matters
(a) The Manager shall take all action which may be
necessary or appropriate for the continuation of the Company's
valid existence as a limited liability company under the laws of
the State of Delaware and of each other jurisdiction in which
such action is necessary or appropriate to protect the limited
liability of the Members.
(b) The Manager shall prepare or cause to be prepared
and shall cause the Company to file on or before the due date (or
any extension thereof) any federal, state, local, or foreign tax
return required to be filed by the Company. The Manager shall
cause the Company to pay any taxes payable by the Company (it
being understood that the expenses of preparation and filing of
such tax returns, and the amounts of such taxes, are expenses of
the Company, not of the Manager); provided, however, that the
Manager shall not be required to agree to payment of any tax so
long as the Manager or the Company is in good faith and by
appropriate legal proceeding contesting the validity,
applicability, or amount thereof and such contest does not
materially endanger any right or interest of the Company.
(c) The Manager shall be the "tax matters partner" of
the Company for purposes of the Code.
(d) Except as otherwise provided herein, the Manager
shall determine whether to make any and all elections for
federal, state, local and foreign tax purposes including, without
limitation, making the election under Section 754 of the Code in
accordance with applicable regulations thereunder. The Manager
shall have the right to seek or revoke any such election
(including, without limitation, the election under Section 754 of
the Code) upon the Manager's determination that such revocation
is in the best interests of the Members. Notwithstanding any
contrary provision hereof, the Manager shall have no right to
make an election under Section 301.7701-3 of the Regulations to
classify the Company for federal income tax purposes as anything
other than a partnership.
5.4 Restricted Transactions
The Company shall not perform any act that would subject any
Member to personal liability for the debts or obligations of the
Company.
5.5 Company Expenses
The Company shall bear (i) all of the amounts expended by or
on behalf of the Company for its organization, including legal
fees associated with the preparation of this Agreement, and (ii)
all expenses related to the Company's existence and operations,
including any out-of-pocket expenses related to the
investigation, acquisition, monitoring, management and sale of
investments, and the investment and management of funds, on
behalf of any Person or Persons with whom the Company has entered
into an advisory, consulting, management or similar agreement,
and ancillary expenses related to these activities, including
costs of communications, meeting expenses, taxes, custodial and
settlement fees or expenses, transaction costs (including
brokerage commissions and transaction taxes), legal and
accounting fees, costs of quotation services and other fees and
expenses paid by the Company on behalf of such Person or Persons
(the amounts described in clauses (i) and (ii), collectively,
"Company Expenses"). All or any portion of the Company Expenses
may be borne or reimbursed to the Company by any Person or
Persons with whom the Company has entered into an advisory,
consulting, management or similar agreement pursuant to the terms
and conditions of such agreement. The Manager may, in its
discretion, arrange for any of the Members or any of their
Affiliates to advance funds to the Company for the payment of
Company Expenses and each such Member or Affiliate shall be
entitled to the reimbursement on demand of any funds so advanced.
5.6 Duty and Liability of the Manager
(a) The sole duty of the Manager to the Company and
the Members shall be to act in a manner the Manager believes in
good faith to be in the best interests of the Company.
(b) Neither the Manager, its Affiliates, nor any of
its respective directors, officers, employees or agents shall be
liable, responsible, or accountable in damages or otherwise to
the Company or any Member for any act or omission performed or
omitted by one or more of them except for breach of the duty set
forth in Section 5.6(a), and none of such Persons shall have any
liability to the Company or any Member for such Person's good
faith reliance on the provisions of this Agreement, including the
provisions of Section 5.6(a). Notwithstanding the generality of
this paragraph, this paragraph shall not limit the liability of
any Person for any intentional misconduct, for any knowing
violation of law, or for any transaction for which such Person
(or, in the case of individual appointees, the entity that
appointed such Person) received a benefit in violation or breach
of any provision of this Agreement.
(c) Neither the Manager, its Affiliates, nor any of
its directors, officers, employees or agents shall have any
liability to any Member for the repayment of any amounts
outstanding in the Capital Account of a Member, including Capital
Contributions. Any such payment shall be solely from the assets
of the Company.
5.7 Indemnification of the Manager
(a) The Company shall, solely from the assets of the
Company, indemnify and hold harmless, to the maximum extent
permitted by law, any present or former Manager, its Affiliates,
and any present or former director, officer, employee or agent of
such Manager or its Affiliates (each, an "Indemnified Person")
against any claims, demands, liabilities, costs, losses, damages,
or expenses (including attorneys' fees and costs, judgments,
fines, penalties and amounts paid in settlement) incurred by any
such Indemnified Party arising out of or relating to any acts or
omissions or alleged acts or omissions of such Indemnified Person
that relate in any way to the Company or the business or assets
thereof; provided, however, that such Indemnified Person has not
been adjudicated in a final judgment or other final adjudication
(not subject to appeal) to have breached the duty set forth in
Section 5.6(a) or to have engaged in intentional misconduct, a
knowing violation of law, or any transaction for which such
Indemnified Person (or in the case of individual appointees, the
entity that appointed such Indemnified Person) received a benefit
in violation or breach of any provision of this Agreement.
(b) The Company shall pay expenses (including
attorneys' fees and costs) as they are incurred by an Indemnified
Person in connection with any action, claim, or proceeding that
such Indemnified Person asserts in good faith to be subject to
the indemnification provisions of this Section 5.7, upon receipt
of an undertaking from such Indemnified Person to repay all
amounts so paid by the Company to the extent that it is
adjudicated in a final judgment or other final adjudication (not
subject to appeal) that such Indemnified Person is not entitled
to be indemnified by the Company under this Agreement.
(c) The Manager, notwithstanding any apparent conflict
of interest, and subject only to the duty expressly set forth in
Section 5.6(a) hereof, shall have the power to, and is hereby
authorized and directed to, cause the Company to comply with the
indemnification and expense payment provisions hereof. If a
claim for indemnification or payment of expenses hereunder is not
paid in full within ten (10) days after a written claim therefor
has been received by the Company, the claimant may file suit to
recover the unpaid amount and, if successful in whole or in part,
shall be entitled to be indemnified for the expense of
prosecuting such claim. In any such action the Company shall
have the burden of proving that the claimant is not entitled to
the requested indemnification or payment of expenses under this
Agreement.
(d) The indemnification provided or granted pursuant
to this Section 5.7 shall not be deemed exclusive of any other
rights to which any Person seeking indemnification may be
entitled under any law, agreement, or otherwise, either as to
actions in such Person's official capacity or as to actions in
another capacity while holding such office.
(e) In no event shall a Member be subject to personal
liability by reason of the indemnification provisions set forth
in this Agreement.
5.8 Officers
The Manager may, at its discretion, appoint officers of
the Company. The officers of the Company may consist of all or
any of the following: a President, one or more Vice Presidents, a
Treasurer and a Secretary or such other officers as the Manager
may prescribe from time to time. The officers shall exercise
such powers and perform such duties as are prescribed by the
Manager. Any number of offices may be held by the same person,
as the Manager may determine.
5.9 Term of Officers
The officers of the Company (if any) shall hold office
for the term for which they were appointed and until their
successors are elected and qualified; provided, however, that any
officer may be removed with or without cause by the Manager.
6. Rights and Obligations of Members
6.1 Limitation of Liability
No Member shall have any liability under this Agreement
except as expressly provided in this Agreement and the Company
Act.
6.2 Management of the Business
A Member, as such, shall have no right to control and
shall take no part in the management or control of the Company's
business but may exercise the rights and powers of a Member under
this Agreement.
6.3 No Authority to Act
A Member, as such, shall have no power to represent,
act for, sign for, or bind the Company. The Members hereby
consent to the exercise by the Manager of the powers conferred on
it by law and this Agreement.
6.4 Outside Activities of the Members
Except as expressly provided herein and subject to any
contrary agreement entered into by a Member with the Company, any
Member and any officer, director, employee, agent, trustee,
Affiliate, or shareholder of any Member, may have business
interests and engage in business activities in addition to those
relating to the Company, including business interests and
activities in direct competition with the Company. Neither the
Company nor any Member shall have any rights by virtue of this
Agreement in any business venture of any other Member and such
Person shall have no obligation pursuant to this Agreement to
offer any interest in any business venture to the Company or any
other Member.
7. Transferability of Interests
7.1 Restrictions on Transfers of Interests
(a) Notwithstanding any other provision of this
Agreement, except as provided in Section 7.1(b) below, no sale,
exchange, transfer, pledge, assignment or other disposition,
whether voluntary or by operation of law ("Transfer"), of a
Member's Interest or any portion thereof or interest therein
shall be made unless such Transfer: (x) is approved by the
Manager, (y) the transferring Member and the transferee comply
with all applicable provisions of this Article 7, and (z) in the
opinion of legal counsel (who may be legal counsel to the
Company), satisfactory in form and substance to the Manager
(which opinion may be waived, in whole or in part, at the
discretion of the Manager),
(i) will not subject the Company to regulation
under the Investment Company Act of 1940, as amended;
(ii) in the absence of registration, will not
violate any federal securities law or any state securities or
"Blue Sky" law (including any investor suitability standard)
applicable to the Company or the Interest to be Transferred; and
(iii) will not cause the Company to cease to be
classified as a partnership for federal income tax purposes or to
become a "publicly traded partnership" within the meaning of
Section 7704 of the Code;
and any such opinion of counsel is delivered in writing to the
Company prior to the date of the proposed Transfer.
(b) Each Member agrees that it shall, upon request of
the Manager, execute and deliver such certificates or other
documents and perform such acts as the Manager deems appropriate
in connection with a Transfer of an Interest by that Member to
preserve the limited liability of the Members under the laws of
the jurisdictions in which the Company is doing business.
(c) Any purported Transfer of an Interest (or any
portion thereof or any interest therein) which is made in advance
of Notification thereof to the Company in accordance with Section
7.2 or is not made in compliance with this Agreement is hereby
declared to be null and void and of no force or effect
whatsoever.
(d) Each Member agrees that it will, prior to the time
the other Members approve the proposed Transfer of an Interest
(or any portion thereof or any interest therein) by such Member,
pay all reasonable expenses, including attorneys' fees and costs,
incurred by the Company in connection with such Transfer.
7.2 Assignees
(a) The Company shall not recognize for any purpose
any purported Transfer of all or any fraction of the Interest of
a Member unless the provisions of this Article 7 shall have been
complied with and there shall have been filed with the Company a
dated Notification of such Transfer, in form satisfactory to the
Manager, executed and acknowledged by both the transferor and the
transferee, and such Notification contains (i) the acceptance by
the transferee of all of the terms and provisions of this
Agreement and (ii) the representations of the transferor and the
transferee that such Transfer was made in accordance with all
applicable laws and regulations and all applicable provisions of
this Agreement. If the provisions of this Agreement have been
complied with, the Transfer shall be recognized by the Company as
effective on the day on which such Notification is filed with the
Company and the transferee shall become an Assignee as of such
date.
(b) Unless and until an Assignee becomes a Substituted
Member, such Assignee shall not be entitled to vote or give
consents with respect to any Interest held by such Assignee.
(c) Any Member which Transfers all of its Interest
shall not cease to be a Member until one or more Substituted
Members are admitted in its stead as transferee(s) of its entire
Interest.
(d) Anything herein to the contrary notwithstanding,
both the Company and the Manager shall be entitled to treat the
transferor of all or any portion of an Interest as the absolute
owner thereof in all respects, and shall incur no liability for
distributions made in good faith to it, until such time as a
Notification conforming to the requirements of this Article 7 has
been received by the Company and accepted by the Manager.
(e) A Person who is the Assignee of all or any portion
of the Interest of a Member, but does not become a Substituted
Member with respect thereto and desires to make a further
Transfer of all or any portion of such Interest, shall be subject
to all the provisions of this Article 7 to the same extent and in
the same manner as any Member desiring to make a Transfer of its
Interest.
7.3 Substituted Members
(a) No Member shall have the right to substitute in
its place any Assignee of all or any portion of such Member's
Interest. Any such Assignee shall be admitted to the Company as
a Substituted Member only if a decision to admit the Assignee as
a Substituted Member is adopted by the Manager pursuant to
Section 5.2. The Members hereby agree that the Manager may, on
behalf of each Member and on behalf of the Company, cause Exhibit
A hereto and the books and records of the Company to be
appropriately amended in the event of such admission.
(b) Each Substituted Member, as a condition to its
admission as a Member, shall execute and acknowledge such
instruments, in form and substance satisfactory to the Manager,
as the Manager deems necessary or desirable to effectuate such
admission and to confirm the agreement of the Substituted Member
to be bound by all the terms and provisions of this Agreement
with respect to the Interest acquired. All reasonable expenses,
including attorneys' fees and costs, incurred by the Company in
this connection shall be borne by such Substituted Member.
7.4 Indemnification
Each Member shall indemnify and hold harmless the Company
and the Manager and their respective directors, officers,
employees, and agents from and against any and all claims,
demands, liabilities, costs, losses, damages, or expenses
(including attorneys' fees and costs, judgments, fines,
penalties, and amounts paid in settlement) incurred by any such
Person by reason of or arising from any actual or alleged
misrepresentation, or misstatement or omission of facts, by such
Member or its transferee in connection with any Transfer or
purported Transfer of such Member's Interest (or any portion
thereof or interest therein), or the admission of a Substituted
Member to the Company in respect thereof.
7.5 Incapacity of a Member
Upon the Incapacity of a Member, the trustee or receiver of
its estate shall have all the rights of a Substituted Member for
the purpose of settling or managing the estate of such Member and
such power as the Member possessed to assign all or any part of
its Interest and to join with such Assignee in satisfying
conditions precedent to such Assignee becoming a Substituted
Member.
8. Dissolution; Liquidation
8.1 Dissolution
(a) The Company shall be dissolved upon the written
consent of the Members holding at least 66 2/3% of the Percentage
Interests of all Members.
(b) The death, retirement, resignation, expulsion,
bankruptcy or dissolution of any Member or the occurrence of any
other event that terminates the continued membership of any
Member shall not cause the Company to be dissolved or its affairs
to be wound up, and upon the occurrence of any such event, the
Company shall be continued without dissolution, unless within 90
days following the occurrence of such event, the Members
unanimously agree in writing to dissolve the Company.
(c) Dissolution of the Company shall be effective on
the day on which the event occurs giving rise to the dissolution,
but the Company shall not terminate until the certificate of
cancellation of the Company has been filed with the office of the
Secretary of State of the State of Delaware in accordance with
Section 18-203 of the Company Act and the winding up and
liquidation of the Company has been completed in accordance with
Section 8.2.
8.2 Liquidation
(a) Upon dissolution, the Company shall cease to carry
on its business, and the Manager or a liquidating trustee, if one
is appointed by the Manager (reference in this Section 8.2 to the
Manager to be construed hereafter as reference as well to such
liquidating trustee), shall, at the expense of the Company, wind
up the affairs of the Company and, in its sole discretion,
liquidate all or any part of the assets of the Company. The
Manager shall determine the time, manner and terms of any sale or
other disposition of the Company's assets for the purpose of
obtaining, in its opinion, fair value for such assets, and the
time, manner and terms of any distribution of assets provided for
in Section 8.2(b), it being expressly recognized that deferral of
a distribution, or distribution of all or any portion of the
assets of the Company in kind, rather than in cash, may be
appropriate by reason of the nature of the assets or the
restrictions under which they are held.
(b) After adjustment of the Capital Accounts of
Members as provided in Section 4.5 for any gains or losses
realized or deemed realized with respect to the disposition of
Company assets or with respect to Company assets to be
distributed in kind, the assets of the Company shall be paid out
in the following order:
(i) first, to pay all expenses of liquidation and
winding up;
(ii) second, to the payment and discharge of all
of the Company's debts and obligations to creditors other than
Members which are also creditors of the Company;
(iii) third, to the payment and discharge of all
of the Company's debts and obligations to Members which are also
creditors of the Company;
(iv) fourth, to fund reserves for contingent or
other potential liabilities of the Company (whether or not
specifically foreseen) other than in respect of items listed in
subsequent clauses of this Section 8.2(b), to the extent deemed
reasonable by the Manager; and
(v) fifth, to the Members in accordance with and
to the extent of the positive balances of their Capital Accounts.
(c) When the Manager has complied with the foregoing
liquidation plan, the Manager shall cause the Company, to the
extent required by applicable law, to execute, acknowledge, and
cause to be filed a certificate of cancellation of the Company.
(d) Any reserves established by the Manager pursuant
to Section 8.2(b)(iv) shall be held for so long as the Manager
shall deem necessary in a special account maintained for the
purpose of paying contingent or other potential liabilities or
obligations and shall thereafter be distributed in accordance
with Section 8.2(b).
9. Amendments
9.1 Adoption of Amendments
(a) Amendments to this Agreement must be approved in
writing by all of the Members; provided, however, that amendments
to this Agreement which are of a ministerial nature and do not
affect the rights of the Members (including, without limitation,
ministerial amendments appropriate to reflect changes in the
Company Act and mechanical amendments appropriate to admit
Substituted Members) may be adopted and implemented by the
Manager.
(b) The Manager shall, within a reasonable time after
the adoption of any amendment to this Agreement, send
Notification of such amendment to the Members and make any
filings necessary or desirable to reflect and effect such
amendment.
(c) Upon the adoption of any amendment to this
Agreement, the amendment shall be executed by the Members whose
consent is required hereunder and shall be recorded in the
records of each jurisdiction, if any, in which recording is
necessary for the Company to conduct business or to preserve the
limited liability of the Members.
10. Accounting and Reporting
10.1 Records and Accounting
Proper and complete records and books of account of the
business of the Company, including a current and updated list of
the names, business addresses, Capital Contributions, Capital
Accounts and Percentage Interests of all Members, and any other
items required by the Company Act, shall be maintained at the
Company's principal place of business. Each Member or its duly
authorized representative shall have the access and information
rights set forth in Section 18-305 of the Company Act.
10.2 Financial Reports
The Manager shall prepare in accordance with generally
accepted accounting principles, and deliver to each Member:
(a) within one hundred and twenty (120) days after the
end of each Fiscal Year, annual financial statements of the
Company, including statements of operations and statements of
assets and liabilities and Members' capital examined by a firm of
independent certified public accountants selected by the Manager;
and
(b) from time to time and with reasonable promptness,
such further information with respect to the condition of the
Company as any Member may reasonably request.
10.3 Tax Information
Within ninety (90) days after the end of each Fiscal
Year, the Manager will cause to be delivered to each Person who
was a Member at any time during such Fiscal Year all information
necessary for the preparation of such Member's income tax returns
in all jurisdictions designated by such Member, including a
statement showing such Member's share of Profits or Losses and
credits for such year for federal income tax purposes, and the
amounts of any distributions made to or for the account of such
Member pursuant to this Agreement.
10.4 Elections
In addition to the matters referred to in Section 5.2
and subject to the limitations of Section 5.4, the Manager may
cause the Company to make all elections required or permitted to
be made by the Company under the Code.
11. Miscellaneous
11.1 Notification
(a) Any Notification to any Member shall be given at
the address of such Member set forth in Exhibit A hereto, as
amended, modified or supplemented from time to time, and if
subsequently changed, to such other address of which such Member
shall advise each of the other Members in writing. Any
Notification to the Company shall be given at the principal
office of the Company.
(b) Any Notification shall be deemed to have been duly
given if personally delivered or sent by overnight courier
service, mail, or facsimile transmission (provided confirmation
of receipt is obtained) and will be deemed given, unless earlier
received, (i) if sent by certified or registered mail, return
receipt requested, five calendar days after being deposited in
the United States mail, postage prepaid; (ii) if sent by United
States Express Mail or overnight courier, one business day after
being deposited in the United States mail or with the overnight
courier, postage prepaid; (iii) if sent by facsimile
transmission, on the date sent provided confirmation of receipt
is obtained; and (iv) if delivered by hand, on the date of
receipt.
11.2 Governing Law; Separability of Provisions
The internal substantive laws of the State of Delaware,
as in effect from time to time, shall govern the validity of this
Agreement, the construction of its terms and interpretation of
the rights and duties of the parties. The invalidity or
unenforceability of any one provision of this Agreement shall in
no way affect the validity of any other provision, and all other
provisions shall remain in full force and effect.
11.3 Further Action
The parties shall execute and deliver all documents,
provide all information, and take or refrain from taking action
as may be necessary or appropriate to achieve the purposes of
this Agreement.
11.4 Headings, etc.
The headings in this Agreement are inserted for
convenience of reference only and shall not affect interpretation
of this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or the
plural shall include the singular and the plural, and pronouns
stated in either the masculine or the neuter gender shall include
the masculine, the feminine, and the neuter.
11.5 Binding Provisions
The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, successors, and assigns of the respective parties
hereto.
11.6 No Waiver
No waiver by any party of any breach of any term hereof
shall be construed as a waiver of any subsequent breach of that
term or any other term of the same or of a different nature.
11.7 Counterparts
This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and
each of such counterparts shall, for all purposes, constitute one
agreement binding on all the parties, notwithstanding that all
parties are not signatories to the same counterpart.
11.8 No Third Party Rights
This Agreement is intended solely for the benefit of
the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any Person other than the
parties hereto, except as expressly provided to the contrary
elsewhere in this Agreement.
11.9 Integration
This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter contained in this
Agreement and supersedes all prior understandings of the parties
with respect to such subject matter.
IN WITNESS WHEREOF, the partes hereto have executed
this Company Agreement as of the date first above written.
__________________________________
Sid Amira
PAYFORVIEW.COM CORP.
By:__________________________________
Name: Marc A. Pitcher
Title: President and COO
<PAGE>
Exhibit A
CAPITAL PERCENTAGE
MEMBERS CONTRIBUTIONS INTERESTS
Sid Amira $100.00 75%
15 West 72nd Street
Apartment 4C
New York, NY 10023
Payforview.com Corp. $1,400,000 25%
575 Madison Avenue 2,000,000 shares
10th Floor of unregistered common
New York, NY 10022-2511 stock of Payforview.com Corp.
<PAGE>
<PAGE>
EXHIBIT 10.9 SWARTZ PRIVATE EQUITY, LLC INVESTMENT AGREEMENT,
dated August 31, 2000
PAYFORVIEW.COM CORPORATION
INVESTMENT AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE OR OTHER
SECURITIES AUTHORITIES. THEY MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE FEDERAL
AND STATE SECURITIES LAWS.
THIS INVESTMENT AGREEMENT DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE
SECURITIES DESCRIBED HEREIN BY OR TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES AUTHORITIES, NOR HAVE SUCH
AUTHORITIES CONFIRMED THE ACCURACY OR DETERMINED THE
ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF
RISK. THE INVESTOR MUST RELY ON ITS OWN ANALYSIS OF THE
INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE
RISK FACTORS SET FORTH IN THE ATTACHED DISCLOSURE DOCUMENTS
AS EXHIBIT J.
SEE ADDITIONAL LEGENDS AT SECTIONS 4.7.
THIS INVESTMENT AGREEMENT (this "Agreement" or
"Investment Agreement") is made as of the 31st day of August,
2000, by and between Payforview.com Corporation, a corporation
duly organized and existing under the laws of the State of Nevada
(the "Company"), and the undersigned Investor executing this
Agreement ("Investor").
RECITALS:
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue to
the Investor, and the Investor shall purchase from the Company,
from time to time as provided herein, shares of the Company's
Common Stock, as part of an offering of Common Stock by the
Company to Investor, for a maximum aggregate offering amount of
Forty Million Dollars ($40,000,000) (the "Maximum Offering
Amount"); and
WHEREAS, the solicitation of this Investment Agreement and,
if accepted by the Company, the offer and sale of the Common
Stock are being made in reliance upon the provisions of
Regulation D ("Regulation D") promulgated under the Act, Section
4(2) of the Act, and/or upon such other exemption from the
registration requirements of the Act as may be available with
respect to any or all of the purchases of Common Stock to be made
hereunder.
TERMS:
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement
(including the recitals above), the following terms shall have
the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"20% Approval" shall have the meaning set forth in Section
5.25.
"9.9% Limitation" shall have the meaning set forth in
Section 2.3.1(f).
"Accredited Investor" shall have the meaning set forth in
Section 3.1.
"Act" shall mean the Securities Act of 1933, as amended.
"Advance Put Notice" shall have the meaning set forth in
Section 2.3.1(a), the form of which is attached hereto as Exhibit
E.
"Advance Put Notice Confirmation" shall have the meaning set
forth in Section 2.3.1(a), the form of which is attached hereto
as Exhibit F.
"Advance Put Notice Date" shall have the meaning set forth
in Section 2.3.1(a).
"Affiliate" shall have the meaning as set forth Section 6.4.
"Aggregate Issued Shares" equals the aggregate number of
shares of Common Stock issued to Investor pursuant to the terms
of this Agreement or the Registration Rights Agreement as of a
given date, including Put Shares and Warrant Shares.
"Agreed Upon Procedures Report" shall have the meaning set
forth in Section 2.5.3(b).
"Agreement" shall mean this Investment Agreement.
"Automatic Termination" shall have the meaning set forth in
Section 2.3.2.
"Bring Down Cold Comfort Letters" shall have the meaning set
forth in Section 2.3.6(b).
"Business Day" shall mean any day during which the Principal
Market is open for trading.
"Calendar Month" shall mean the period of time beginning on
the numeric day in question in a calendar month and for Calendar
Months thereafter, beginning on the earlier of (i) the same
numeric day of the next calendar month or (ii) the last day of
the next calendar month. Each Calendar Month shall end on the
day immediately preceding the beginning of the next succeeding
Calendar Month.
"Cap Amount" shall have the meaning set forth in Section
2.3.10.
"Capital Raising Limitations" shall have the meaning set
forth in Section 6.5.1.
"Capitalization Schedule" shall have the meaning set forth
in Section 3.2.4, attached hereto as Exhibit K.
"Change in Control" shall have the meaning set forth within
the definition of Major Transaction, below.
"Closing" shall mean one of (i) the Investment Commitment
Closing and (ii) each closing of a purchase and sale of Common
Stock pursuant to Section 2.
"Closing Bid Price" means, for any security as of any date,
the last closing bid price for such security during Normal
Trading on the O.T.C. Bulletin Board, or, if the O.T.C. Bulletin
Board is not the principal securities exchange or trading market
for such security, the last closing bid price during Normal
Trading of such security on the principal securities exchange or
trading market where such security is listed or traded as
reported by such principal securities exchange or trading market,
or if the foregoing do not apply, the last closing bid price
during Normal Trading of such security in the over-the-counter
market on the electronic bulletin board for such security, or, if
no closing bid price is reported for such security, the average
of the bid prices of any market makers for such security as
reported in the "pink sheets" by the National Quotation Bureau,
Inc. If the Closing Bid Price cannot be calculated for such
security on such date on any of the foregoing bases, the Closing
Bid Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Investor in
this Offering. If the Company and the Investor in this Offering
are unable to agree upon the fair market value of the Common
Stock, then such dispute shall be resolved by an investment
banking firm mutually acceptable to the Company and the Investor
in this offering and any fees and costs associated therewith
shall be paid by the Company.
"Commitment Evaluation Period" shall have the meaning set
forth in Section 2.6.
"Commitment Warrants" shall have the meaning set forth in
Section 2.4.1, the form of which is attached hereto as Exhibit U.
"Commitment Warrant Exercise Price" shall have the meaning
set forth in Section 2.4.1.
"Common Shares" shall mean the shares of Common Stock of the
Company.
"Common Stock" shall mean the common stock of the Company.
"Company" shall mean Payforview.com Corporation, a
corporation duly organized and existing under the laws of the
State of Nevada.
"Company Designated Maximum Put Dollar Amount" shall have
the meaning set forth in Section 2.3.1(a).
"Company Designated Minimum Put Share Price" shall have the
meaning set forth in Section 2.3.1(a).
"Company Termination" shall have the meaning set forth in
Section 2.3.12.
"Conditions to Investor's Obligations" shall have the
meaning as set forth in Section 2.2.2.
"Delisting Event" shall mean any time during the term of
this Investment Agreement, that the Company's Common Stock is not
listed for and actively trading on the O.T.C. Bulletin Board, the
Nasdaq Small Cap Market, the Nasdaq National Market, the American
Stock Exchange, or the New York Stock Exchange or is suspended or
delisted with respect to the trading of the shares of Common
Stock on such market or exchange.
"Disclosure Documents" shall have the meaning as set forth
in Section 3.2.4.
"Due Diligence Review" shall have the meaning as set forth
in Section 2.5.
"Effective Date" shall have the meaning set forth in Section
2.3.1.
"Equity Securities" shall have the meaning set forth in
Section 6.5.1.
"Evaluation Day" shall have the meaning set forth in Section
2.3.1(b).
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Excluded Day" shall have the meaning set forth in Section
2.3.1(b).
"Extended Put Period" shall mean the period of time between
the Advance Put Notice Date until the Pricing Period End Date.
"Impermissible Put Cancellation" shall have the meaning set
forth in Section 2.3.1(e).
"Indemnified Liabilities" shall have the meaning set forth
in Section 9.
"Indemnities" shall have the meaning set forth in Section 9.
"Indemnitor" shall have the meaning set forth in Section 9.
"Individual Put Limit" shall have the meaning set forth in
Section 2.3.1 (b).
"Ineffective Period" shall have the meaning given to it in
the Registration Rights Agreement.
"Intended Put Share Amount" shall have the meaning set forth
in Section 2.3.1(a).
"Investment Commitment Closing" shall have the meaning set
forth in Section 2.2.1.
"Investment Agreement" shall mean this Investment Agreement.
"Investment Commitment Opinion of Counsel" shall mean an
opinion from Company's independent counsel, substantially in the
form attached as Exhibit B, or such other form as agreed upon by
the parties, as to the Investment Commitment Closing.
"Investment Date" shall mean the date of the Investment
Commitment Closing.
"Investor" shall have the meaning set forth in the preamble
hereto.
"Key Employee" shall have the meaning set forth in Section
5.17, as set forth in Exhibit N.
"Late Payment Amount" shall have the meaning set forth in
Section 2.3.8.
"Legend" shall have the meaning set forth in Section 4.7.
"Major Transaction" shall mean and shall be deemed to have
occurred at such time upon any of the following events:
(i) a consolidation, merger or other business
combination or event or transaction following which the holders
of Common Stock of the Company immediately preceding such
consolidation, merger, combination or event either (i) no longer
hold a majority of the shares of Common Stock of the Company or
(ii) no longer have the ability to elect the board of directors
of the Company (a "Change of Control");
(ii) the sale or transfer of a portion of the Company's
assets not in the ordinary course of business;
(iii) the purchase of assets by the Company not in the
ordinary course of business; or
(iv) a purchase, tender or exchange offer made to the
holders of outstanding shares of Common Stock.
"Market Price" shall equal the lowest Closing Bid Price for
the Common Stock on the Principal Market during the Pricing
Period for the applicable Put.
"Material Facts" shall have the meaning set forth in Section
2.3.6(a).
"Maximum Put Dollar Amount" shall mean the lesser of (i) the
Company Designated Maximum Put Dollar Amount, if any, specified
by the Company in a Put Notice, and (ii) $4 million.
"Maximum Offering Amount" shall mean have the meaning set
forth in the recitals hereto.
"NASD" shall have the meaning set forth in Section 6.9.
"Nasdaq 20% Rule" shall have the meaning set forth in
Section 2.3.10.
"Normal Trading" shall mean trading that occurs between 9:30
AM and 4:00 PM, New York City Time, on any Business Day, and
shall expressly exclude "after hours" trading.
"Numeric Day" shall mean the numerical day of the month of
the Investment Date or the last day of the calendar month in
question, whichever is less.
"NYSE" shall have the meaning set forth in Section 6.9.
"Offering" shall mean the Company's offering of Common Stock
and Warrants issued under this Investment Agreement.
"Officer's Certificate" shall mean a certificate, signed by
an officer of the Company, to the effect that the representations
and warranties of the Company in this Agreement required to be
true for the applicable Closing are true and correct in all
material respects and all of the conditions and limitations set
forth in this Agreement for the applicable Closing are satisfied.
"Opinion of Counsel" shall mean, as applicable, the
Investment Commitment Opinion of Counsel, the Put Opinion of
Counsel, and the Registration Opinion.
"Payment Due Date" shall have the meaning set forth in
Section 2.3.8.
"Pricing Period" shall mean, unless otherwise shortened
under the terms of this Agreement, the period beginning on the
Business Day immediately following the Put Date and ending on and
including the date which is 20 Business Days after such Put Date.
"Pricing Period End Date" shall mean the last Business Day
of any Pricing Period.
"Principal Market" shall mean the O.T.C. Bulletin Board, the
Nasdaq Small Cap Market, the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange, whichever is at
the time the principal trading exchange or market for the Common
Stock.
"Proceeding" shall have the meaning as set forth Section
5.1.
"Purchase" shall have the meaning set forth in Section
2.3.7.
"Purchase Warrant Exercise Price" shall have the meaning set
forth in Section 2.4.2.
"Purchase Warrants" shall have the meaning set forth in
Section 2.4.2, the form of which is attached hereto as Exhibit D.
"Put" shall have the meaning set forth in Section 2.3.1(d).
"Put Cancellation" shall have the meaning set forth in
Section 2.3.11(a).
"Put Cancellation Date" shall have the meaning set forth in
Section 2.3.11(a).
"Put Cancellation Notice" shall have the meaning set forth
in Section 2.3.11(a), the form of which is attached hereto as
Exhibit Q.
"Put Cancellation Notice Confirmation" shall have the
meaning set forth in Section 2.3.11(c), the form of which is
attached hereto as Exhibit S.
"Put Closing" shall have the meaning set forth in Section
2.3.8.
"Put Closing Date" shall have the meaning set forth in
Section 2.3.8.
"Put Date" shall mean the date that is specified by the
Company in any Put Notice for which the Company intends to
exercise a Put under Section 2.3.1, unless the Put Date is
postponed pursuant to the terms hereof, in which case the "Put
Date" is such postponed date.
"Put Dollar Amount" shall be determined by multiplying the
Put Share Amount by the respective Put Share Prices with respect
to such Put Shares, subject to the limitations herein.
"Put Notice" shall have the meaning set forth in Section
2.3.1(d), the form of which is attached hereto as Exhibit G.
"Put Notice Confirmation" shall have the meaning set forth
in Section 2.3.1(d), the form of which is attached hereto as
Exhibit H.
"Put Opinion of Counsel" shall mean an opinion from
Company's independent counsel, in the form attached as Exhibit I,
or such other form as agreed upon by the parties, as to any Put
Closing.
"Put Share Amount" shall have the meaning as set forth
Section 2.3.1(b).
"Put Share Price" shall have the meaning set forth in
Section 2.3.1(c).
"Put Shares" shall mean shares of Common Stock that are
purchased by the Investor pursuant to a Put.
"Registrable Securities" shall have the meaning as set forth
in the Registration Rights Agreement.
"Registration Opinion" shall have the meaning set forth in
Section 2.3.6(a), the form of which is attached hereto as Exhibit
R.
"Registration Opinion Deadline" shall have the meaning set
forth in Section 2.3.6(a).
"Registration Rights Agreement" shall mean that certain
registration rights agreement entered into by the Company and
Investor on even date herewith, in the form attached hereto as
Exhibit A, or such other form as agreed upon by the parties.
"Registration Statement" shall have the meaning as set forth
in the Registration Rights Agreement.
"Regulation D" shall have the meaning set forth in the
recitals hereto.
"Reporting Issuer" shall have the meaning set forth in
Section 6.2.
"Restrictive Legend" shall have the meaning set forth in
Section 4.7.
"Required Put Documents" shall have the meaning set forth in
Section 2.3.5.
"Right of First Refusal" shall have the meaning set forth in
Section 6.5.2.
"Risk Factors" shall have the meaning set forth in Section
3.2.4, attached hereto as Exhibit J.
"Schedule of Exceptions" shall have the meaning set forth in
Section 5, and is attached hereto as Exhibit C.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall mean this Investment Agreement, together
with the Common Stock of the Company, the Warrants and the
Warrant Shares issuable pursuant to this Investment Agreement.
"Semi-Annual Non-Usage Fee" shall have the meaning set forth
in Section 2.6.
"Share Authorization Increase Approval" shall have the
meaning set forth in Section 5.25.
"Stockholder 20% Approval" shall have the meaning set forth
in Section 6.11.
"Supplemental Registration Statement" shall have the meaning
set forth in the Registration Rights Agreement.
"Term" shall mean the term of this Agreement, which shall be
a period of time beginning on the date of this Agreement and
ending on the Termination Date.
"Termination Date" shall mean the earlier of (i) the date
that is three (3) years after the Effective Date, or (ii) the
date that is thirty (30) Business Days after the later of (a) the
Put Closing Date on which the sum of the aggregate Put Share
Price for all Put Shares equal the Maximum Offering Amount, (b)
the date that the Company has delivered a Termination Notice to
the Investor, (c) the date of an Automatic Termination, and (d)
the date that all of the Warrants have been exercised.
"Termination Fee" shall have the meaning as set forth in
Section 2.6.
"Termination Notice" shall have the meaning as set forth in
Section 2.3.12.
"Third Party Report" shall have the meaning set forth in
Section 3.2.4.
"Trading Volume " shall mean the volume of shares of the
Company's Common Stock that trade between 9:30 AM and 4:00 PM,
New York City Time, on any Business Day, and shall expressly
exclude any shares trading during "after hours" trading.
"Transaction Documents" shall have the meaning set forth in
Section 9.
"Transfer Agent" shall have the meaning set forth in Section
6.10.
"Transfer Agent Instructions" shall mean the Company's
instructions to its transfer agent, substantially in the form
attached as Exhibit T, or such other form as agreed upon by the
parties.
"Trigger Price" shall have the meaning set forth in Section
2.3.1(b).
"Truncated Pricing Period" shall have the meaning set forth
in Section 2.3.11(d).
"Truncated Put Share Amount" shall have the meaning set
forth in Section 2.3.11(b).
"Unlegended Share Certificates" shall mean a certificate or
certificates (or electronically delivered shares, as appropriate)
(in denominations as instructed by Investor) representing the
shares of Common Stock to which the Investor is then entitled to
receive, registered in the name of Investor or its nominee (as
instructed by Investor) and not containing a restrictive legend
or stop transfer order, including but not limited to the Put
Shares for the applicable Put and Warrant Shares.
"Use of Proceeds Schedule" shall have the meaning as set
forth in Section 3.2.4, attached hereto as Exhibit L.
"Volume Limitations" shall have the meaning set forth in
Section 2.3.1(b).
"Warrant Shares" shall mean the Common Stock issued or
issuable upon exercise of the Warrants.
"Warrants" shall mean Purchase Warrants and Commitment
Warrants.
2. Purchase and Sale of Common Stock.
2.1 Offer to Subscribe.
Subject to the terms and conditions herein and the
satisfaction of the conditions to closing set forth in Sections
2.2 and 2.3 below, Investor hereby agrees to purchase such
amounts of Common Stock and accompanying Warrants as the Company
may, in its sole and absolute discretion, from time to time elect
to issue and sell to Investor according to one or more Puts
pursuant to Section 2.3 below.
2.2 Investment Commitment.
2.2.1 Investment Commitment Closing. The
closing of this Agreement (the "Investment Commitment Closing")
shall be deemed to occur when this Agreement and the Registration
Rights Agreement have been executed by both Investor and the
Company, the Transfer Agent Instructions have been executed by
both the Company and the Transfer Agent, and the other Conditions
to Investor's Obligations set forth in Section 2.2.2 below have
been met.
2.2.2 Conditions to Investor's Obligations. As a
prerequisite to the Investment Commitment Closing and the
Investor's obligations hereunder, all of the following (the
"Conditions to Investor's Obligations") shall have been satisfied
prior to or concurrently with the Company's execution and
delivery of this Agreement:
(a) the following documents shall have been delivered
to the Investor: (i) the Registration Rights Agreement
(executed by the Company and Investor), (ii) the
Investment Commitment Opinion of Counsel (signed by the
Company's counsel), (iii) the Transfer Agent
Instructions (executed by the Company and the Transfer
Agent), and (iv) a Secretary's Certificate as to (A)
the resolutions of the Company's board of directors
authorizing this transaction, (B) the Company's
Certificate of Incorporation, and (C) the Company's
Bylaws;
(b) this Investment Agreement, accepted by the
Company, shall have been received by the Investor;
(c) [Intentionally Left Blank].
(d) other than continuing losses described in the Risk
Factors set forth in the Disclosure Documents (provided
for in Section 3.2.4), as of the Closing there have
been no material adverse changes in the Company's
business prospects or financial condition since the
date of the last balance sheet included in the
Disclosure Documents, including but not limited to
incurring material liabilities; and
(e) the representations and warranties of the Company
in this Agreement shall be true and correct in all
material respects and the conditions to Investor's
obligations set forth in this Section 2.2.2 shall have
been satisfied as of such Closing; and the Company
shall deliver an Officer's Certificate, signed by an
officer of the Company, to such effect to the Investor.
2.3 Puts of Common Shares to the Investor.
2.3.1 Procedure to Exercise a Put. Subject to
the Individual Put Limit, the Maximum Offering Amount and the Cap
Amount (if applicable), and the other conditions and limitations
set forth in this Agreement, at any time beginning on the date on
which the Registration Statement is declared effective by the SEC
(the "Effective Date"), the Company may, in its sole and absolute
discretion, elect to exercise one or more Puts according to the
following procedure, provided that each subsequent Put Date after
the first Put Date shall be no sooner than five (5) Business Days
following the preceding Pricing Period End Date:
(a) Delivery of Advance Put Notice. At
least ten (10) Business Days but not more than twenty (20)
Business Days prior to any intended Put Date (unless otherwise
agreed in writing by the Investor), the Company shall deliver
advance written notice (the "Advance Put Notice," the form of
which is attached hereto as Exhibit E, the date of such Advance
Put Notice being the "Advance Put Notice Date") to Investor
stating the Put Date for which the Company shall, subject to the
limitations and restrictions contained herein, exercise a Put and
stating the number of shares of Common Stock (subject to the
Individual Put Limit and the Maximum Put Dollar Amount) which the
Company intends to sell to the Investor for the Put (the
"Intended Put Share Amount").
The Company may, at its option, also designate in any
Advance Put Notice (i) a maximum dollar amount of Common Stock,
not to exceed $4,000,000, which it shall sell to Investor during
the Put (the "Company Designated Maximum Put Dollar Amount")
and/or (ii) a minimum purchase price per Put Share at which the
Investor may purchase shares of Common Stock pursuant to such Put
Notice (a "Company Designated Minimum Put Share Price"). The
Company Designated Minimum Put Share Price, if applicable, shall
be no greater than the lesser of (i) 80% of the Closing Bid Price
of the Company's common stock on the Business Day immediately
preceding the Advance Put Notice Date, or (ii) the Closing Bid
Price of the Company's common stock on the Business Day
immediately preceding the Advance Put Notice Date minus $0.15.
The Company may decrease (but not increase) the Company
Designated Minimum Put Share Price for a Put at any time by
giving the Investor written notice of such decrease not later
than 12:00 Noon, New York City time, on the Business Day
immediately preceding the Business Day that such decrease is to
take effect. A decrease in the Company Designated Minimum Put
Share Price shall have no retroactive effect on the determination
of Trigger Prices and Excluded Days for days preceding the
Business Day that such decrease takes effect.
Notwithstanding the above, if, at the time of delivery of an
Advance Put Notice, more than two (2) Calendar Months have passed
since the date of the previous Put Closing, such Advance Put
Notice shall provide at least twenty (20) Business Days notice of
the intended Put Date, unless waived in writing by the Investor.
In order to effect delivery of the Advance Put Notice, the
Company shall (i) send the Advance Put Notice by facsimile on
such date so that such notice is received by the Investor by 6:00
p.m., New York, NY time, and (ii) surrender such notice on such
date to a courier for overnight delivery to the Investor (or two
(2) day delivery in the case of an Investor residing outside of
the U.S.). Upon receipt by the Investor of a facsimile copy of
the Advance Put Notice, the Investor shall, within two (2)
Business Days, send, via facsimile, a confirmation of receipt
(the "Advance Put Notice Confirmation," the form of which is
attached hereto as Exhibit F) of the Advance Put Notice to the
Company specifying that the Advance Put Notice has been received
and affirming the intended Put Date and the Intended Put Share
Amount.
(b) Put Share Amount. The "Put Share Amount"
is the number of shares of Common Stock that the Investor shall
be obligated to purchase in a given Put, and shall equal the
lesser of (a) the Intended Put Share Amount, and (b) the
Individual Put Limit. The "Individual Put Limit" shall equal the
lesser of (i) 1,500,000 shares of Common Stock, (ii) 15% of the
sum of the aggregate daily reported Trading Volumes in the
outstanding Common Stock on the Company's Principal Market,
(excluding any block trades of the lesser (x) 50,000 shares of
Common Stock, or (y) 20% of the aggregate trading volume on the
day that such block trade occurs, but not excluding any block
trades of less than 20,000 shares), for all Evaluation Days (as
defined below) in the Pricing Period, (iii) the number of Put
Shares which, when multiplied by their respective Put Share
Prices, equals the Maximum Put Dollar Amount, and (iv) the 9.9%
Limitation, but in no event shall the Individual Put Limit exceed
15% of the sum of the aggregate daily reported Trading Volumes in
the outstanding Common Stock on the Company's Principal Market,
(excluding any block trades of the lesser (x) 50,000 shares of
Common Stock, or (y) 20% of the aggregate trading volume on the
day that such block trade occurs, but not excluding any block
trades of less than 20,000 shares)for the twenty (20) Business
Days immediately preceding the Put Date (this limitation,
together with the limitation in (i) immediately above, are
collectively referred to herein as the "Volume Limitations").
Company agrees not to trade Common Stock or arrange for Common
Stock to be traded for the purpose of artificially increasing the
Volume Limitations.
For purposes of this Agreement:
"Trigger Price" for any Pricing Period shall mean the
greater of (i) the Company Designated Minimum Put Share Price,
plus $0.10, or (ii) the Company Designated Minimum Put Share
Price divided by .93.
An "Excluded Day" shall mean each Business Day during a
Pricing Period where the lowest intra-day trading price of the
Common Stock is less than the Trigger Price.
An "Evaluation Day" shall mean each Business Day during
a Pricing Period that is not an Excluded Day.
(c) Put Share Price. The purchase price for
the Put Shares (the "Put Share Price") shall equal the lesser of
(i) the Market Price for such Put, minus $0.10, or (ii) 93% of
the Market Price for such Put, but shall in no event be less than
the Company Designated Minimum Put Share Price for such Put, if
applicable.
(d) Delivery of Put Notice. After delivery
of an Advance Put Notice, on the Put Date specified in the
Advance Put Notice the Company shall deliver written notice (the
"Put Notice," the form of which is attached hereto as Exhibit G)
to Investor stating (i) the Put Date, (ii) the Intended Put Share
Amount as specified in the Advance Put Notice (such exercise a
"Put"), (iii) the Company Designated Maximum Put Dollar Amount
(if applicable), and (iv) the Company Designated Minimum Put
Share Price (if applicable). In order to effect delivery of the
Put Notice, the Company shall (i) send the Put Notice by
facsimile on the Put Date so that such notice is received by the
Investor by 6:00 p.m., New York, NY time, and (ii) surrender such
notice on the Put Date to a courier for overnight delivery to the
Investor (or two (2) day delivery in the case of an Investor
residing outside of the U.S.). Upon receipt by the Investor of a
facsimile copy of the Put Notice, the Investor shall, within two
(2) Business Days, send, via facsimile, a confirmation of receipt
(the "Put Notice Confirmation," the form of which is attached
hereto as Exhibit H) of the Put Notice to Company specifying that
the Put Notice has been received and affirming the Put Date and
the Intended Put Share Amount.
(e) Delivery of Required Put Documents. On or
before the Put Date for such Put, the Company shall deliver the
Required Put Documents (as defined in Section 2.3.5 below) to the
Investor (or to an agent of Investor, if Investor so directs).
Unless otherwise specified by the Investor, the delivery of the
Put Shares of Common Stock shall be in the form of physical
certificates. If specifically requested by the Investor, the Put
Shares shall be transmitted electronically pursuant to such
electronic delivery system as the Investor shall request. If the
Company has not delivered all of the Required Put Documents to
the Investor on or before the Put Date, the Put shall be
automatically cancelled, unless the Investor agrees to delay the
Put Date by up to three (3) Business Days, in which case the
Pricing Period begins on the Business Day following such new Put
Date. If the Company has not delivered all of the Required Put
Documents to the Investor on or before the Put Date (or new Put
Date, if applicable), and the Investor has not agreed in writing
to delay the Put Date, the Put is automatically canceled (an
"Impermissible Put Cancellation") and, unless the Put was
otherwise canceled in accordance with the terms of Section
2.3.11, the Company shall pay the Investor $5,000 for its
reasonable due diligence expenses incurred in preparation for the
canceled Put and the Company may deliver an Advance Put Notice
for the subsequent Put no sooner than ten (10) Business Days
after the date that such Put was canceled, unless otherwise
agreed by the Investor.
(f) Limitation on Investor's Obligation to
Purchase Shares. Notwithstanding anything to the contrary in this
Agreement, in no event shall the Investor be required to
purchase, and an Intended Put Share Amount may not include, an
amount of Put Shares, which when added to the number of Put
Shares acquired by the Investor pursuant to this Agreement during
the 31 days preceding the Put Date with respect to which this
determination of the permitted Intended Put Share Amount is being
made, would exceed 9.99% of the number of shares of Common Stock
outstanding (on a fully diluted basis, to the extent that
inclusion of unissued shares is mandated by Section 13(d) of the
Exchange Act) on the Put Date for such Pricing Period, as
determined in accordance with Section 13(d) of the Exchange Act
(the "Section 13(d) Outstanding Share Amount"). Each Put Notice
shall include a representation of the Company as to the Section
13(d) Outstanding Share Amount on the related Put Date. In the
event that the Section 13(d) Outstanding Share Amount is
different on any date during a Pricing Period than on the Put
Date associated with such Pricing Period, then the number of
shares of Common Stock outstanding on such date during such
Pricing Period shall govern for purposes of determining whether
the Investor, when aggregating all purchases of Shares made
pursuant to this Agreement in the 31 calendar days preceding such
date, would have acquired more than 9.99% of the Section 13(d)
Outstanding Share Amount. The limitation set forth in this
Section 2.3.1(f) is referred to as the "9.9% Limitation."
2.3.2 Termination of Right to Put. The
Company's right to require the Investor to purchase any
subsequent Put Shares shall terminate permanently (each, an
"Automatic Termination") upon the occurrence of any of the
following:
(a) the Company shall not exercise a Put or
any Put thereafter if, at any time, either the Company or any
director or executive officer of the Company has engaged in a
transaction or conduct related to the Company that has resulted
in (i) a Securities and Exchange Commission enforcement action,
or (ii) a civil judgment or criminal conviction for fraud or
misrepresentation, or for any other offense that, if prosecuted
criminally, would constitute a felony under applicable law;
(b) the Company shall not exercise a Put or
any Put thereafter, on any date after a cumulative time period or
series of time periods, consisting only of Ineffective Periods
and Delisting Events, that lasts for an aggregate of four (4)
months;
(c) the Company shall not exercise a Put or
any Put thereafter if at any time the Company has filed for
and/or is subject to any bankruptcy, insolvency, reorganization
or liquidation proceedings or other proceedings for relief under
any bankruptcy law or any law for the relief of debtors
instituted by or against the Company or any subsidiary of the
Company;
(d) the Company shall not exercise a Put
after the sooner of (i) the date that is three (3) years after
the Effective Date, or (ii) the Put Closing Date on which the
aggregate of the Put Dollar Amounts for all Puts equal the
Maximum Offering Amount; and
(e) the Company shall not exercise a Put
after the Company has breached any covenant in Section 2.6,
Section 6, or Section 9 hereof.
(f) if no Registration Statement has been
declared effective by the date that is one (1) year after the
date of this Agreement, the Automatic Termination shall occur on
the date that is one (1) year after the date of this Agreement.
2.3.3 Put Limitations. The Company's right to
exercise a Put shall be limited as follows:
(a) notwithstanding the amount of any Put,
the Investor shall not be obligated to purchase any additional
Put Shares once the aggregate Put Dollar Amount paid by Investor
equals the Maximum Offering Amount;
(b) the Investor shall not be obligated to
acquire and pay for the Put Shares with respect to any Put for
which the Company has announced a subdivision or combination,
including a reverse split, of its Common Stock or has subdivided
or combined its Common Stock during the Extended Put Period;
(c) the Investor shall not be obligated to
acquire and pay for the Put Shares with respect to any Put for
which the Company has paid a dividend of its Common Stock or has
made any other distribution of its Common Stock during the
Extended Put Period;
(d) the Investor shall not be obligated to
acquire and pay for the Put Shares with respect to any Put for
which the Company has made, during the Extended Put Period, a
distribution of all or any portion of its assets or evidences of
indebtedness to the holders of its Common Stock;
(e) the Investor shall not be obligated to
acquire and pay for the Put Shares with respect to any Put for
which a Major Transaction has occurred during the Extended Put
Period.
2.3.4 Conditions Precedent to the Right of the
Company to Deliver an Advance Put Notice or a Put Notice and the
Obligation of the Investor to Purchase Put Shares. The right of
the Company to deliver an Advance Put Notice or a Put Notice and
the obligation of the Investor hereunder to acquire and pay for
the Put Shares incident to a Closing is subject to the
satisfaction, on (i) the date of delivery of such Advance Put
Notice or Put Notice and (ii) the applicable Put Closing Date, of
each of the following conditions:
(a) the Company's Common Stock shall be listed for and
actively trading on the O.T.C. Bulletin Board, the
Nasdaq Small Cap Market, the Nasdaq National Market or
the New York Stock Exchange and the Put Shares shall be
so listed, and to the Company's knowledge there is no
notice of any suspension or delisting with respect to
the trading of the shares of Common Stock on such
market or exchange;
(b) the Company shall have satisfied any and all
obligations pursuant to the Registration Rights
Agreement, including, but not limited to, the filing of
the Registration Statement with the SEC with respect to
the resale of all Registrable Securities and the
requirement that the Registration Statement shall have
been declared effective by the SEC for the resale of
all Registrable Securities and the Company shall have
satisfied and shall be in compliance with any and all
obligations pursuant to this Agreement and the
Warrants;
(c) the representations and warranties of the Company
are true and correct in all material respects as if
made on such date and the conditions to Investor's
obligations set forth in this Section 2.3.4 are
satisfied as of such Closing, and the Company shall
deliver a certificate, signed by an officer of the
Company, to such effect to the Investor;
(d) the Company shall have reserved for issuance a
sufficient number of Common Shares for the purpose of
enabling the Company to satisfy any obligation to issue
Common Shares pursuant to any Put and to effect
exercise of the Warrants;
(e) the Registration Statement is not subject to an
Ineffective Period as defined in the Registration
Rights Agreement, the prospectus included therein is
current and deliverable, and to the Company's knowledge
there is no notice of any investigation or inquiry
concerning any stop order with respect to the
Registration Statement; and
(f) if the Aggregate Issued Shares after the Closing
of the Put would exceed the Cap Amount, the Company
shall have obtained the Stockholder 20% Approval as
specified in Section 6.11, if the Company's Common
Stock is listed on the NASDAQ Small Cap Market or the
NASDAQ National Market System (the "NMS"), and such
approval is required by the rules of the NASDAQ.
(g) the Company shall have no knowledge of any event
more likely than not to have the effect of causing any
Registration Statement to be suspended or otherwise
ineffective (which event is more likely than not to
occur within the twenty Business Days following the
date on which such Advance Put Notice or Put Notice is
deemed delivered).
(h) there is not then in effect any law, rule or
regulation prohibiting or restricting the transactions
contemplated hereby, or requiring any consent or
approval which shall not have been obtained, nor is
there any pending or threatened proceeding or
investigation which may have the effect of prohibiting
or adversely affecting any of the transactions
contemplated by this Agreement.
2.3.5 Documents Required to be Delivered on the
Put Date as Conditions to Closing of any Put. The Closing of any
Put and Investor's obligations hereunder shall additionally be
conditioned upon the delivery to the Investor of each of the
following (the "Required Put Documents") on or before the
applicable Put Date:
(a) a number of Unlegended Share Certificates
equal to the Intended Put Share Amount, in denominations of not
more than 50,000 shares per certificate;
(b) the following documents: Put Opinion of
Counsel, Officer's Certificate, Put Notice, Registration Opinion,
and any report or disclosure required under Section 2.3.6 or
Section 2.5;
(c) all documents, instruments and other
writings required to be delivered on or before the Put Date
pursuant to any provision of this Agreement in order to implement
and effect the transactions contemplated herein.
2.3.6 Accountant's Letter and Registration
Opinion.
(a) The Company shall have caused to be
delivered to the Investor, (i) whenever required by Section
2.3.6(b) or by Section 2.5.3, and (ii) on the date that is three
(3) Business Days prior to each Put Date (the "Registration
Opinion Deadline"), an opinion of the Company's independent
counsel, in substantially the form of Exhibit R (the
"Registration Opinion"), addressed to the Investor stating, inter
alia, that no facts ("Material Facts") have come to such
counsel's attention that have caused it to believe that the
Registration Statement is subject to an Ineffective Period or to
believe that the Registration Statement, any Supplemental
Registration Statement (as each may be amended, if applicable),
and any related prospectuses, contain an untrue statement of
material fact or omits a material fact required to make the
statements contained therein, in light of the circumstances under
which they were made, not misleading. If a Registration Opinion
cannot be delivered by the Company's independent counsel to the
Investor on the Registration Opinion Deadline due to the
existence of Material Facts or an Ineffective Period, the Company
shall promptly notify the Investor and as promptly as possible
amend each of the Registration Statement and any Supplemental
Registration Statements, as applicable, and any related
prospectus or cause such Ineffective Period to terminate, as the
case may be, and deliver such Registration Opinion and updated
prospectus as soon as possible thereafter. If at any time after
a Put Notice shall have been delivered to Investor but before the
related Pricing Period End Date, the Company acquires knowledge
of such Material Facts or any Ineffective Period occurs, the
Company shall promptly notify the Investor and shall deliver a
Put Cancellation Notice to the Investor pursuant to Section
2.3.11 by facsimile and overnight courier by the end of that
Business Day.
(b) (i) the Company shall engage its
independent auditors to perform the procedures in accordance with
the provisions of Statement on Auditing Standards No. 71, as
amended, as agreed to by the parties hereto, and reports thereon
(the "Bring Down Cold Comfort Letters") as shall have been
reasonably requested by the Investor with respect to certain
financial information contained in the Registration Statement and
shall have delivered to the Investor such a report addressed to
the Investor, on the date that is three (3) Business Days prior
to each Put Date.
(ii) in the event that the Investor
shall have requested delivery of an Agreed Upon Procedures Report
pursuant to Section 2.5.3, the Company shall engage its
independent auditors to perform certain agreed upon procedures
and report thereon as shall have been reasonably requested by the
Investor with respect to certain financial information of the
Company and the Company shall deliver to the Investor a copy of
such report addressed to the Investor. In the event that the
report required by this Section 2.3.6(b) cannot be delivered by
the Company's independent auditors, the Company shall, if
necessary, promptly revise the Registration Statement and the
Company shall not deliver a Put Notice until such report is
delivered.
2.3.7 Investor's Obligation and Right to Purchase
Shares. Subject to the conditions set forth in this Agreement,
following the Investor's receipt of a validly delivered Put
Notice, the Investor shall be required to purchase (each a
"Purchase") from the Company a number of Put Shares equal to the
Put Share Amount, in the manner described below.
2.3.8 Mechanics of Put Closing. Each of the
Company and the Investor shall deliver all documents, instruments
and writings required to be delivered by either of them pursuant
to this Agreement at or prior to each Closing. Subject to such
delivery and the satisfaction of the conditions set forth in
Sections 2.3.4 and 2.3.5, the closing of the purchase by the
Investor of Shares shall occur by 5:00 PM, New York City Time, on
the date which is five (5) Business Days following the applicable
Pricing Period End Date (the "Payment Due Date") at the offices
of Investor. On each or before each Payment Due Date, the
Investor shall deliver to the Company, in the manner specified in
Section 8 below, the Put Dollar Amount to be paid for such Put
Shares, determined as aforesaid. The closing (each a "Put
Closing") for each Put shall occur on the date that both (i) the
Company has delivered to the Investor all Required Put Documents,
and (ii) the Investor has delivered to the Company such Put
Dollar Amount and any Late Payment Amount, if applicable (each a
"Put Closing Date").
If the Investor does not deliver to the Company the Put
Dollar Amount for such Put Closing on or before the Payment Due
Date, then the Investor shall pay to the Company, in addition to
the Put Dollar Amount, an amount (the "Late Payment Amount") at a
rate of X% per month, accruing daily, multiplied by such Put
Dollar Amount, where "X" equals one percent (1%) for the first
month following the date in question, and increases by an
additional one percent (1%) for each month that passes after the
date in question, up to a maximum of five percent (5%) per month;
provided, however, that in no event shall the amount of interest
that shall become due and payable hereunder exceed the maximum
amount permissible under applicable law.
2.3.9 Limitation on Short Sales. The Investor
and its affiliates shall not engage in short sales of the
Company's Common Stock; provided, however, that the Investor may
enter into any short exempt sale or any short sale or other
hedging or similar arrangement it deems appropriate with respect
to Put Shares after it receives a Put Notice with respect to such
Put Shares so long as such sales or arrangements do not involve
more than the number of such Put Shares specified in the Put
Notice.
2.3.10 Cap Amount. If the Company becomes
listed on the Nasdaq Small Cap Market or the Nasdaq National
Market, then, unless the Company has obtained Stockholder 20%
Approval as set forth in Section 6.11 or unless otherwise
permitted by Nasdaq, in no event shall the Aggregate Issued
Shares exceed the maximum number of shares of Common Stock (the
"Cap Amount") that the Company can, without stockholder approval,
so issue pursuant to Nasdaq Rule 4460(i)(1)(d)(ii) (or any other
applicable Nasdaq Rules or any successor rule) (the "Nasdaq 20%
Rule").
2.3.11 Put Cancellation.
(a) Mechanics of Put Cancellation. If at any
time during a Pricing Period the Company discovers the existence
of Material Facts or any Ineffective Period or Delisting Event
occurs, the Company shall cancel the Put (a "Put Cancellation"),
by delivering written notice to the Investor (the "Put
Cancellation Notice"), attached as Exhibit Q, by facsimile and
overnight courier. The "Put Cancellation Date" shall be the date
that the Put Cancellation Notice is first received by the
Investor, if such notice is received by the Investor by 6:00
p.m., New York, NY time, and shall be the following date, if such
notice is received by the Investor after 6:00 p.m., New York, NY
time.
(b) Effect of Put Cancellation. Anytime a
Put Cancellation Notice is delivered to Investor after the Put
Date, the Put, shall remain effective with respect to a number of
Put Shares (the "Truncated Put Share Amount") equal to the
Individual Put Limit for the Truncated Pricing Period.
(c) Put Cancellation Notice Confirmation.
Upon receipt by the Investor of a facsimile copy of the Put
Cancellation Notice, the Investor shall promptly send, via
facsimile, a confirmation of receipt (the "Put Cancellation
Notice Confirmation," a form of which is attached as Exhibit S)
of the Put Cancellation Notice to the Company specifying that the
Put Cancellation Notice has been received and affirming the Put
Cancellation Date.
(d) Truncated Pricing Period. If a Put
Cancellation Notice has been delivered to the Investor after the
Put Date, the Pricing Period for such Put shall end at on the
close of trading on the last full trading day on the Principal
Market that ends prior to the moment of initial delivery of the
Put Cancellation Notice (a "Truncated Pricing Period") to the
Investor.
2.3.12 Investment Agreement Cancellation. The
Company may terminate (a "Company Termination") its right to
initiate future Puts by providing written notice ("Termination
Notice") to the Investor, by facsimile and overnight courier, at
any time other than during an Extended Put Period, provided that
such termination shall have no effect on the parties' other
rights and obligations under this Agreement, the Registration
Rights Agreement or the Warrants. Notwithstanding the above, any
cancellation occurring during an Extended Put Period is governed
by Section 2.3.11.
2.3.13 Return of Excess Common Shares. In the
event that the number of Shares purchased by the Investor
pursuant to its obligations hereunder is less than the Intended
Put Share Amount, the Investor shall promptly return to the
Company any shares of Common Stock in the Investor's possession
that are not being purchased by the Investor.
2.4 Warrants.
2.4.1 Commitment Warrants. In partial
consideration hereof, the Company has issued and delivered or
will issue and deliver to Investor or its designated assignees,
warrants (the "Commitment Warrants") in the form attached hereto
as Exhibit U, or such other form as agreed upon by the parties,
to purchase 2,000,000 shares of Common Stock. Each Commitment
Warrant shall be immediately exercisable in accordance with its
terms, and shall have a term beginning on the date of issuance
and ending on date that is five (5) years thereafter. The
Warrant Shares shall be registered for resale pursuant to the
Registration Rights Agreement. The Investment Commitment Opinion
of Counsel shall cover the issuance of the Commitment Warrant and
the issuance of the common stock upon exercise of the Commitment
Warrant.
Notwithstanding any Termination or Automatic Termination of
this Agreement, regardless of whether or not the Registration
Statement is or is not filed, and regardless of whether or not
the Registration Statement is approved or denied by the SEC, the
Investor shall retain full ownership of the Commitment Warrant as
partial consideration for its commitment hereunder.
2.4.2 Purchase Warrants. Within five (5)
Business Days of the end of each Pricing Period, the Company
shall issue and deliver to the Investor a warrant ("Purchase
Warrant"), in the form attached hereto as Exhibit D, or such
other form as agreed upon by the parties, to purchase a number of
shares of Common Stock equal to 10% of the Put Share Amount for
that Put. Each Purchase Warrant shall be exerciseable at a price
(the "Purchase Warrant Exercise Price") which shall initially
equal 110% of the Market Price for the applicable Put, and shall
have semi-annual reset provisions. Each Purchase Warrant shall
be immediately exercisable at the Purchase Warrant Exercise
Price, and shall have a term beginning on the date of issuance
and ending on the date that is five (5) years thereafter. The
Warrant Shares shall be registered for resale pursuant to the
Registration Rights Agreement.
2.5 Due Diligence Review. The Company shall make
available for inspection and review by the Investor (the "Due
Diligence Review"), advisors to and representatives of the
Investor (who may or may not be affiliated with the Investor and
who are reasonably acceptable to the Company), any underwriter
participating in any disposition of Common Stock on behalf of the
Investor pursuant to the Registration Statement, any Supplemental
Registration Statement, or amendments or supplements thereto or
any blue sky, NASD or other filing, all financial and other
records, all filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably
necessary for the purpose of such review, and cause the Company's
officers, directors and employees to supply all such information
reasonably requested by the Investor or any such representative,
advisor or underwriter in connection with such Registration
Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any
of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose
of enabling the Investor and such representatives, advisors and
underwriters and their respective accountants and attorneys to
conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
2.5.1 Treatment of Nonpublic Information. The
Company shall not disclose nonpublic information to the Investor
or to its advisors or representatives unless prior to disclosure
of such information the Company identifies such information as
being nonpublic information and provides the Investor and such
advisors and representatives with the opportunity to accept or
refuse to accept such nonpublic information for review. The
Company may, as a condition to disclosing any nonpublic
information hereunder, require the Investor and its advisors and
representatives to enter into a confidentiality agreement
(including an agreement with such advisors and representatives
prohibiting them from trading in Common Stock during such period
of time as they are in possession of nonpublic information) in
form reasonably satisfactory to the Company and the Investor.
Nothing herein shall require the Company to disclose
nonpublic information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate nonpublic information to any investors who purchase
stock in the Company in a public offering, to money managers or
to securities analysts, provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove
provided, immediately notify the advisors and representatives of
the Investor and, if any, underwriters, of any event or the
existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware,
constituting nonpublic information (whether or not requested of
the Company specifically or generally during the course of due
diligence by and such persons or entities), which, if not
disclosed in the Prospectus included in the Registration
Statement, would cause such Prospectus to include a material
misstatement or to omit a material fact required to be stated
therein in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. Nothing
contained in this Section 2.5 shall be construed to mean that
such persons or entities other than the Investor (without the
written consent of the Investor prior to disclosure of such
information) may not obtain nonpublic information in the course
of conducting due diligence in accordance with the terms of this
Agreement; provided, however, that in no event shall the
Investor's advisors or representatives disclose to the Investor
the nature of the specific event or circumstances constituting
any nonpublic information discovered by such advisors or
representatives in the course of their due diligence without the
written consent of the Investor prior to disclosure of such
information.
2.5.2 Disclosure of Misstatements and Omissions.
The Investor's advisors or representatives shall make complete
disclosure to the Investor's counsel of all events or
circumstances constituting nonpublic information discovered by
such advisors or representatives in the course of their due
diligence upon which such advisors or representatives form the
opinion that the Registration Statement contains an untrue
statement of a material fact or omits a material fact required to
be stated in the Registration Statement or necessary to make the
statements contained therein, in the light of the circumstances
in which they were made, not misleading. Upon receipt of such
disclosure, the Investor's counsel shall consult with the
Company's independent counsel in order to address the concern
raised as to the existence of a material misstatement or omission
and to discuss appropriate disclosure with respect thereto;
provided, however, that such consultation shall not constitute
the advice of the Company's independent counsel to the Investor
as to the accuracy of the Registration Statement and related
Prospectus.
2.5.3 Procedure if Material Facts are Reasonably
Believed to be Untrue or are Omitted. In the event after such
consultation the Investor or the Investor's counsel reasonably
believes that the Registration Statement contains an untrue
statement of a material fact or omits a material fact required to
be stated in the Registration Statement or necessary to make the
statements contained therein, in light of the circumstances in
which they were made, not misleading,
(a) the Company shall file with the SEC
an amendment to the Registration Statement responsive to such
alleged untrue statement or omission and provide the Investor, as
promptly as practicable, with copies of the Registration
Statement and related Prospectus, as so amended, or
(b) if the Company disputes the
existence of any such material misstatement or omission, (i) the
Company's independent counsel shall provide the Investor's
counsel with a Registration Opinion and (ii) in the event the
dispute relates to the adequacy of financial disclosure and the
Investor shall reasonably request, the Company's independent
auditors shall provide to the Company a letter ("Agreed Upon
Procedures Report") outlining the performance of such "agreed
upon procedures" as shall be reasonably requested by the Investor
and the Company shall provide the Investor with a copy of such
letter.
2.6 Commitment Payments.
On the last Business Day of each six (6) Calendar Month
period following the Effective Date (each such period a
"Commitment Evaluation Period"), if the Company has not Put at
least $1,000,000 in aggregate Put Dollar Amount during that
Commitment Evaluation Period, the Company, in consideration of
Investor's commitment costs, including, but not limited to, due
diligence expenses, shall pay to the Investor an amount (the
"Semi-Annual Non-Usage Fee") equal to the difference of (i)
$100,000, minus (ii) 10% of the aggregate Put Dollar Amount of
the Put Shares put to Investor during that Commitment Evaluation
Period. In the event that the Company delivers a Termination
Notice to the Investor or an Automatic Termination occurs, the
Company shall pay to the Investor (the "Termination Fee") the
greater of (i) the Semi-Annual Non-Usage Fee for the applicable
Commitment Evaluation Period, or (ii) the difference of (x)
$200,000, minus (y) 10% of the aggregate Put Dollar Amount of the
Put Shares put to Investor during all Puts to date, and the
Company shall not be required to pay the Semi-Annual Non-Usage
Fee thereafter.
Each Semi Annual Non-Usage Fee or Termination Fee is
payable, in cash, within five (5) business days of the date it
accrued. The Company shall not be required to deliver any
payments to Investor under this subsection until Investor has
paid all Put Dollar Amounts that are then due.
3. Representations, Warranties and Covenants of Investor.
Investor hereby represents and warrants to and agrees with the
Company as follows:
3.1 Accredited Investor. Investor is an accredited
investor ("Accredited Investor"), as defined in Rule 501 of
Regulation D, and has checked the applicable box set forth in
Section 10 of this Agreement.
3.2 Investment Experience; Access to Information;
Independent Investigation.
3.2.1 Access to Information. Investor or
Investor's professional advisor has been granted the opportunity
to ask questions of and receive answers from representatives of
the Company, its officers, directors, employees and agents
concerning the terms and conditions of this Offering, the Company
and its business and prospects, and to obtain any additional
information which Investor or Investor's professional advisor
deems necessary to verify the accuracy and completeness of the
information received.
3.2.2 Reliance on Own Advisors. Investor has
relied completely on the advice of, or has consulted with,
Investor's own personal tax, investment, legal or other advisors
and has not relied on the Company or any of its affiliates,
officers, directors, attorneys, accountants or any affiliates of
any thereof and each other person, if any, who controls any of
the foregoing, within the meaning of Section 15 of the Act for
any tax or legal advice (other than reliance on information in
the Disclosure Documents as defined in Section 3.2.4 below and on
the Opinion of Counsel). The foregoing, however, does not limit
or modify Investor's right to rely upon covenants,
representations and warranties of the Company in this Agreement.
3.2.3 Capability to Evaluate. Investor has such
knowledge and experience in financial and business matters so as
to enable such Investor to utilize the information made available
to it in connection with the Offering in order to evaluate the
merits and risks of the prospective investment, which are
substantial, including without limitation those set forth in the
Disclosure Documents (as defined in Section 3.2.4 below).
3.2.4 Disclosure Documents. Investor, in making
Investor's investment decision to subscribe for the Investment
Agreement hereunder, represents that (a) Investor has received
and had an opportunity to review (i) the Company's business plan
dated March 14, 1999 (ii) the Company's purchase agreements of
Voyager International Entertainment Inc., Bacchus Entertainment
and Street Solid Records; (iii) the Joint Venture Agreement
between the Company and ITV.Net; (iv) the Company's most recent
Annual Report on Form 10-KSB, (v) the Company's two most recent
quarterly reports on Form 10-QSB, (vi) the Risk Factors, attached
as Exhibit J, (the "Risk Factors") (vii) the Capitalization
Schedule, attached as Exhibit K, (the "Capitalization Schedule")
and (viii) the Use of Proceeds Schedule, attached as Exhibit L,
(the "Use of Proceeds Schedule"); (b) Investor has read,
reviewed, and relied solely on the documents described in (a)
above, the Company's representations and warranties and other
information in this Agreement, including the exhibits, documents
prepared by the Company which have been specifically provided to
Investor in connection with this Offering (the documents
described in this Section 3.2.4 (a) and (b) are collectively
referred to as the "Disclosure Documents"), and an independent
investigation made by Investor and Investor's representatives, if
any; (c) Investor has, prior to the date of this Agreement, been
given an opportunity to review material contracts and documents
of the Company which have been filed as exhibits to the Company's
filings under the Act and the Exchange Act and has had an
opportunity to ask questions of and receive answers from the
Company's officers and directors; and (d) is not relying on any
oral representation of the Company or any other person, nor any
written representation or assurance from the Company other than
those contained in the Disclosure Documents or incorporated
herein or therein. The foregoing, however, does not limit or
modify Investor's right to rely upon covenants, representations
and warranties of the Company in Sections 5 and 6 of this
Agreement. Investor acknowledges and agrees that the Company has
no responsibility for, does not ratify, and is under no
responsibility whatsoever to comment upon or correct any reports,
analyses or other comments made about the Company by any third
parties, including, but not limited to, analysts' research
reports or comments (collectively, "Third Party Reports"), and
Investor has not relied upon any Third Party Reports in making
the decision to invest.
3.2.5 Investment Experience; Fend for Self.
Investor has substantial experience in investing in securities
and it has made investments in securities other than those of the
Company. Investor acknowledges that Investor is able to fend for
Investor's self in the transaction contemplated by this
Agreement, that Investor has the ability to bear the economic
risk of Investor's investment pursuant to this Agreement and that
Investor is an "Accredited Investor" by virtue of the fact that
Investor meets the investor qualification standards set forth in
Section 3.1 above. Investor has not been organized for the
purpose of investing in securities of the Company, although such
investment is consistent with Investor's purposes.
3.3 Exempt Offering Under Regulation D.
3.3.1 No General Solicitation. The Investment
Agreement was not offered to Investor through, and Investor is
not aware of, any form of general solicitation or general
advertising, including, without limitation, (i) any
advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio, and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising.
3.3.2 Restricted Securities. Investor
understands that the Investment Agreement is, the Common Stock
and Warrants issued at each Put Closing will be, and the Warrant
Shares will be, characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired
from the Company in a transaction exempt from the registration
requirements of the federal securities laws and that under such
laws and applicable regulations such securities may not be
transferred or resold without registration under the Act or
pursuant to an exemption therefrom. In this connection, Investor
represents that Investor is familiar with Rule 144 under the Act,
as presently in effect, and understands the resale limitations
imposed thereby and by the Act.
3.3.3 Disposition. Without in any way limiting
the representations set forth above, Investor agrees that until
the Securities are sold pursuant to an effective Registration
Statement or an exemption from registration, they will remain in
the name of Investor and will not be transferred to or assigned
to any broker, dealer or depositary. Investor further agrees
not to sell, transfer, assign, or pledge the Securities (except
for any bona fide pledge arrangement to the extent that such
pledge does not require registration under the Act or unless an
exemption from such registration is available and provided
further that if such pledge is realized upon, any transfer to the
pledgee shall comply with the requirements set forth herein), or
to otherwise dispose of all or any portion of the Securities
unless and until:
(a) There is then in effect a registration
statement under the Act and any applicable state securities laws
covering such proposed disposition and such disposition is made
in accordance with such registration statement and in compliance
with applicable prospectus delivery requirements; or
(b) (i) Investor shall have notified the
Company of the proposed disposition and shall have furnished the
Company with a statement of the circumstances surrounding the
proposed disposition to the extent relevant for determination of
the availability of an exemption from registration, and (ii) if
reasonably requested by the Company, Investor shall have
furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not
require registration of the Securities under the Act or state
securities laws. It is agreed that the Company will not require
the Investor to provide opinions of counsel for transactions made
pursuant to Rule 144 provided that Investor and Investor's
broker, if necessary, provide the Company with the necessary
representations for counsel to the Company to issue an opinion
with respect to such transaction.
The Investor is entering into this Agreement for its
own account and the Investor has no present arrangement (whether
or not legally binding) at any time to sell the Common Stock to
or through any person or entity; provided, however, that by
making the representations herein, the Investor does not agree to
hold the Common Stock for any minimum or other specific term and
reserves the right to dispose of the Common Stock at any time in
accordance with federal and state securities laws applicable to
such disposition.
3.4 Due Authorization.
3.4.1 Authority. The person executing this
Investment Agreement, if executing this Agreement in a
representative or fiduciary capacity, has full power and
authority to execute and deliver this Agreement and each other
document included herein for which a signature is required in
such capacity and on behalf of the subscribing individual,
partnership, trust, estate, corporation or other entity for whom
or which Investor is executing this Agreement. Investor has
reached the age of majority (if an individual) according to the
laws of the state in which he or she resides.
3.4.2 Due Authorization. Investor is duly and
validly organized, validly existing and in good standing as a
limited liability company under the laws of Georgia with full
power and authority to purchase the Securities to be purchased by
Investor and to execute and deliver this Agreement.
3.4.3 Partnerships. If Investor is a
partnership, the representations, warranties, agreements and
understandings set forth above are true with respect to all
partners of Investor (and if any such partner is itself a
partnership, all persons holding an interest in such partnership,
directly or indirectly, including through one or more
partnerships), and the person executing this Agreement has made
due inquiry to determine the truthfulness of the representations
and warranties made hereby.
3.4.4 Representatives. If Investor is purchasing
in a representative or fiduciary capacity, the representations
and warranties shall be deemed to have been made on behalf of the
person or persons for whom Investor is so purchasing.
4. Acknowledgments. Investor is aware that:
4.1 Risks of Investment. Investor recognizes that an
investment in the Company involves substantial risks, including
the potential loss of Investor's entire investment herein.
Investor recognizes that the Disclosure Documents, this Agreement
and the exhibits hereto do not purport to contain all the
information, which would be contained in a registration statement
under the Act;
4.2 No Government Approval. No federal or state
agency has passed upon the Securities, recommended or endorsed
the Offering, or made any finding or determination as to the
fairness of this transaction;
4.3 No Registration, Restrictions on Transfer. As of
the date of this Agreement, the Securities and any component
thereof have not been registered under the Act or any applicable
state securities laws by reason of exemptions from the
registration requirements of the Act and such laws, and may not
be sold, pledged (except for any limited pledge in connection
with a margin account of Investor to the extent that such pledge
does not require registration under the Act or unless an
exemption from such registration is available and provided
further that if such pledge is realized upon, any transfer to the
pledgee shall comply with the requirements set forth herein),
assigned or otherwise disposed of in the absence of an effective
registration of the Securities and any component thereof under
the Act or unless an exemption from such registration is
available;
4.4 Restrictions on Transfer. Investor may not
attempt to sell, transfer, assign, pledge or otherwise dispose of
all or any portion of the Securities or any component thereof in
the absence of either an effective registration statement or an
exemption from the registration requirements of the Act and
applicable state securities laws;
4.5 No Assurances of Registration. There can be no
assurance that any registration statement will become effective
at the scheduled time, or ever, or remain effective when
required, and Investor acknowledges that it may be required to
bear the economic risk of Investor's investment for an indefinite
period of time;
4.6 Exempt Transaction. Investor understands that the
Securities are being offered and sold in reliance on specific
exemptions from the registration requirements of federal and
state law and that the representations, warranties, agreements,
acknowledgments and understandings set forth herein are being
relied upon by the Company in determining the applicability of
such exemptions and the suitability of Investor to acquire such
Securities.
4.7 Legends. The certificates representing the Put
Shares shall not bear a legend restricting the sale or transfer
thereof ("Restrictive Legend"). The certificates representing the
Warrant Shares shall not bear a Restrictive Legend unless they
are issued at a time when the Registration Statement is not
effective for resale. It is understood that the certificates
evidencing any Warrant Shares issued at a time when the
Registration Statement is not effective for resale, subject to
legend removal under the terms of Section 6.8 below, shall bear
the following legend (the "Legend"):
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or applicable
state securities laws, nor the securities laws of any other
jurisdiction. They may not be sold or transferred in the
absence of an effective registration statement under those
securities laws or pursuant to an exemption therefrom."
5. Representations and Warranties of the Company. The
Company hereby makes the following representations and warranties
to Investor (which shall be true at the signing of this
Agreement, and as of any such later date as contemplated
hereunder) and agrees with Investor that, except as set forth in
the "Schedule of Exceptions" attached hereto as Exhibit C:
5.1 Organization, Good Standing, and Qualification.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada, USA and
has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on the business or
properties of the Company and its subsidiaries taken as a whole.
The Company is not the subject of any pending, threatened or, to
its knowledge, contemplated investigation or administrative or
legal proceeding (a "Proceeding") by the Internal Revenue
Service, the taxing authorities of any state or local
jurisdiction, or the Securities and Exchange Commission, The
National Association of Securities Dealer, Inc., The Nasdaq Stock
Market, Inc. or any state securities commission, or any other
governmental entity, which have not been disclosed in the
Disclosure Documents. None of the disclosed Proceedings, if any,
will have a material adverse effect upon the Company or the
market for the Common Stock. The Company has the following
subsidiaries:
5.2 Corporate Condition. The Company's condition is,
in all material respects, as described in the Disclosure
Documents (as further set forth in any subsequently filed
Disclosure Documents, if applicable), except for changes in the
ordinary course of business and normal year-end adjustments that
are not, in the aggregate, materially adverse to the Company.
Except for continuing losses, there have been no material adverse
changes to the Company's business, financial condition, or
prospects since the dates of such Disclosure Documents. The
financial statements as contained in the 10-KSB and 10-QSB have
been prepared in accordance with generally accepted accounting
principles, consistently applied (except as otherwise permitted
by Regulation S-X of the Exchange Act), subject, in the case of
unaudited interim financial statements, to customary year end
adjustments and the absence of certain footnotes, and fairly
present the financial condition of the Company as of the dates of
the balance sheets included therein and the consolidated results
of its operations and cash flows for the periods then ended,.
Without limiting the foregoing, there are no material
liabilities, contingent or actual, that are not disclosed in the
Disclosure Documents (other than liabilities incurred by the
Company in the ordinary course of its business, consistent with
its past practice, after the period covered by the Disclosure
Documents). The Company has paid all material taxes that are
due, except for taxes that it reasonably disputes. There is no
material claim, litigation, or administrative proceeding pending
or, to the best of the Company's knowledge, threatened against
the Company, except as disclosed in the Disclosure Documents.
This Agreement and the Disclosure Documents do not contain any
untrue statement of a material fact and do not omit to state any
material fact required to be stated therein or herein necessary
to make the statements contained therein or herein not misleading
in the light of the circumstances under which they were made. No
event or circumstance exists relating to the Company which, under
applicable law, requires public disclosure but which has not been
so publicly announced or disclosed.
5.3 Authorization. All corporate action on the part
of the Company by its officers, directors and stockholders
necessary for the authorization, execution and delivery of this
Agreement, the performance of all obligations of the Company
hereunder and the authorization, issuance and delivery of the
Common Stock being sold hereunder and the issuance (and/or the
reservation for issuance) of the Warrants and the Warrant Shares
have been taken, and this Agreement and the Registration Rights
Agreement constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, except
insofar as the enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, or other similar laws
affecting creditors' rights generally or by principles governing
the availability of equitable remedies. The Company has obtained
all consents and approvals required for it to execute, deliver
and perform each agreement referenced in the previous sentence.
5.4 Valid Issuance of Common Stock. The Common Stock
and the Warrants, when issued, sold and delivered in accordance
with the terms hereof, for the consideration expressed herein,
will be validly issued, fully paid and nonassessable and, based
in part upon the representations of Investor in this Agreement,
will be issued in compliance with all applicable U.S. federal and
state securities laws. The Warrant Shares, when issued in
accordance with the terms of the Warrants, shall be duly and
validly issued and outstanding, fully paid and nonassessable, and
based in part on the representations and warranties of Investor,
will be issued in compliance with all applicable U.S. federal and
state securities laws. The Put Shares, the Warrants and the
Warrant Shares will be issued free of any preemptive rights.
5.5 Compliance with Other Instruments. The Company is
not in violation or default of any provisions of its Certificate
of Incorporation or Bylaws, each as amended and in effect on and
as of the date of the Agreement, or of any material provision of
any material instrument or material contract to which it is a
party or by which it is bound or of any provision of any federal
or state judgment, writ, decree, order, statute, rule or
governmental regulation applicable to the Company, which would
have a material adverse effect on the Company's business or
prospects, or on the performance of its obligations under this
Agreement or the Registration Rights Agreement. The execution,
delivery and performance of this Agreement and the other
agreements entered into in conjunction with the Offering and the
consummation of the transactions contemplated hereby and thereby
will not (a) result in any such violation or be in conflict with
or constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument or
contract or an event which results in the creation of any lien,
charge or encumbrance upon any assets of the Company, which would
have a material adverse effect on the Company's business or
prospects, or on the performance of its obligations under this
Agreement, the Registration Rights Agreement, or (b) violate the
Company's Certificate of Incorporation or By-Laws or (c) violate
any statute, rule or governmental regulation applicable to the
Company which violation would have a material adverse effect on
the Company's business or prospects.
5.6 Reporting Company. The Company is subject to the
reporting requirements of the Exchange Act, has a class of
securities registered under Section 12 of the Exchange Act, and
has filed all reports required by the Exchange Act since the date
the Company first became subject to such reporting obligations.
The Company undertakes to furnish Investor with copies of such
reports as may be reasonably requested by Investor prior to
consummation of this Offering and thereafter, to make such
reports available, for the full term of this Agreement, including
any extensions thereof, and for as long as Investor holds the
Securities. The Common Stock is duly listed or approved for
quotation on the O.T.C. Bulletin Board. The Company is not in
violation of the listing requirements of the O.T.C. Bulletin
Board and does not reasonably anticipate that the Common Stock
will be delisted by the O.T.C. Bulletin Board for the foreseeable
future. The Company has filed all reports required under the
Exchange Act. The Company has not furnished to the Investor any
material nonpublic information concerning the Company.
5.7 Capitalization. The capitalization of the Company
as of the date hereof is, and the capitalization as of the
Closing, subject to exercise of any outstanding warrants and/or
exercise of any outstanding stock options, after taking into
account the offering of the Securities contemplated by this
Agreement and all other share issuances occurring prior to this
Offering, will be, as set forth in the Capitalization Schedule as
set forth in Exhibit K. There are no securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities. Except as disclosed
in the Capitalization Schedule, as of the date of this Agreement,
(i) there are no outstanding options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or
exercisable or exchangeable for, any shares of capital stock of
the Company or any of its subsidiaries, or arrangements by which
the Company or any of its subsidiaries is or may become bound to
issue additional shares of capital stock of the Company or any of
its subsidiaries, and (ii) there are no agreements or
arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of its or their
securities under the Act (except the Registration Rights
Agreement).
5.8 Intellectual Property. The Company has valid,
unrestricted and exclusive ownership of or rights to use the
patents, trademarks, trademark registrations, trade names,
copyrights, know-how, technology and other intellectual property
necessary to the conduct of its business. Exhibit M lists all
patents, trademarks, trademark registrations, trade names and
copyrights of the Company. The Company has granted such licenses
or has assigned or otherwise transferred a portion of (or all of)
such valid, unrestricted and exclusive patents, trademarks,
trademark registrations, trade names, copyrights, know-how,
technology and other intellectual property necessary to the
conduct of its business as set forth in Exhibit M. The Company
has been granted licenses, know-how, technology and/or other
intellectual property necessary to the conduct of its business as
set forth in Exhibit M. To the best of the Company's knowledge
after due inquiry, the Company is not infringing on the
intellectual property rights of any third party, nor is any third
party infringing on the Company's intellectual property rights.
There are no restrictions in any agreements, licenses,
franchises, or other instruments that preclude the Company from
engaging in its business as presently conducted.
5.9 Use of Proceeds. As of the date hereof, the
Company expects to use the proceeds from this Offering (less fees
and expenses) for the purposes and in the approximate amounts set
forth on the Use of Proceeds Schedule set forth as Exhibit L
hereto. These purposes and amounts are estimates and are subject
to change without notice to any Investor.
5.10 No Rights of Participation. No person or entity,
including, but not limited to, current or former stockholders of
the Company, underwriters, brokers, agents or other third
parties, has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the
financing contemplated by this Agreement which has not been
waived.
5.11 Company Acknowledgment. The Company hereby
acknowledges that Investor may elect to hold the Securities for
various periods of time, as permitted by the terms of this
Agreement, the Warrants, and other agreements contemplated
hereby, and the Company further acknowledges that Investor has
made no representations or warranties, either written or oral, as
to how long the Securities will be held by Investor or regarding
Investor's trading history or investment strategies.
5.12 No Advance Regulatory Approval. The Company
acknowledges that this Investment Agreement, the transaction
contemplated hereby and the Registration Statement contemplated
hereby have not been approved by the SEC, or any other regulatory
body and there is no guarantee that this Investment Agreement,
the transaction contemplated hereby and the Registration
Statement contemplated hereby will ever be approved by the SEC or
any other regulatory body. The Company is relying on its own
analysis and is not relying on any representation by Investor
that either this Investment Agreement, the transaction
contemplated hereby or the Registration Statement contemplated
hereby has been or will be approved by the SEC or other
appropriate regulatory body.
5.13 Underwriter's Fees and Rights of First Refusal.
The Company is not obligated to pay any compensation or other
fees, costs or related expenditures in cash or securities to any
underwriter, broker, agent or other representative other than the
Investor in connection with this Offering.
5.14 Availability of Suitable Form for Registration.
The Company is currently eligible and agrees to maintain its
eligibility to register the resale of its Common Stock on a
registration statement on a suitable form under the Act.
5.15 No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of
any of the Company's securities or solicited any offers to buy
any security under circumstances that would prevent the parties
hereto from consummating the transactions contemplated hereby
pursuant to an exemption from registration under Regulation D of
the Act or would require the issuance of any other securities to
be integrated with this Offering under the Rules of the SEC. The
Company has not engaged in any form of general solicitation or
advertising in connection with the offering of the Common Stock
or the Warrants.
5.16 Foreign Corrupt Practices. Neither the Company,
nor any of its subsidiaries, nor any director, officer, agent,
employee or other person acting on behalf of the Company or any
subsidiary has, in the course of its actions for, or on behalf
of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official
or employee from corporate funds; violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic
government official or employee.
5.17 Key Employees. Each "Key Employee" (as defined
in Exhibit N) is currently serving the Company in the capacity
disclosed in Exhibit N. No Key Employee, to the best knowledge of
the Company and its subsidiaries, is, or is now expected to be,
in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or
any restrictive covenant, and the continued employment of each
Key Employee does not subject the Company or any of its
subsidiaries to any liability with respect to any of the
foregoing matters. No Key Employee has, to the best knowledge of
the Company and its subsidiaries, any intention to terminate his
employment with, or services to, the Company or any of its
subsidiaries.
5.18 Representations Correct. The foregoing
representations, warranties and agreements are true, correct and
complete in all material respects, and shall survive any Put
Closing and the issuance of the shares of Common Stock thereby.
5.19 Tax Status. The Company has made or filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company has set aside on
its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and as
set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
5.20 Transactions With Affiliates. Except as set
forth in the Disclosure Documents, none of the officers,
directors, or employees of the Company is presently a party to
any transaction with the Company (other than for services as
employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from
any officer, director or such employee or, to the knowledge of
the Company, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or
partner.
5.21 Application of Takeover Protections. The Company
and its board of directors have taken all necessary action, if
any, in order to render inapplicable any control share
acquisition, business combination or other similar anti-takeover
provision under Nevada law which is or could become applicable to
the Investor as a result of the transactions contemplated by this
Agreement, including, without limitation, the issuance of the
Common Stock, any exercise of the Warrants and ownership of the
Common Shares and Warrant Shares. The Company has not adopted
and will not adopt any "poison pill" provision that will be
applicable to Investor as a result of transactions contemplated
by this Agreement.
5.22 Other Agreements. The Company has not, directly
or indirectly, made any agreements with the Investor under a
subscription in the form of this Agreement for the purchase of
Common Stock, relating to the terms or conditions of the
transactions contemplated hereby or thereby except as expressly
set forth herein, respectively, or in exhibits hereto or thereto.
5.23 Major Transactions. There are no other Major
Transactions currently pending or contemplated by the Company.
5.24 Financings. There are no other financings
currently pending or contemplated by the Company.
5.25 Shareholder Authorization. The Company shall, at
its next annual shareholder meeting following its listing on
either the Nasdaq Small Cap Market or the Nasdaq National Market,
or at a special meeting to be held as soon as practicable
thereafter, use its best efforts to obtain approval of its
shareholders to (i) authorize the issuance of the full number of
shares of Common Stock which would be issuable under this
Agreement and eliminate any prohibitions under applicable law or
the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with
jurisdiction over the Company or any of its securities with
respect to the Company's ability to issue shares of Common Stock
in excess of the Cap Amount (such approvals being the "20%
Approval") and (ii) the increase in the number of authorized
shares of Common Stock of the Company (the "Share Authorization
Increase Approval") such that at least 20,000,000 shares can be
reserved for this Offering. In connection with such shareholder
vote, the Company shall use its best efforts to cause all
officers and directors of the Company to promptly enter into
irrevocable agreements to vote all of their shares in favor of
eliminating such prohibitions. As soon as practicable after the
20% Approval and the Share Authorization Increase Approval, the
Company agrees to use its best efforts to reserve 20,000,000
shares of Common Stock for issuance under this Agreement.
5.26 Acknowledgment of Limitations on Put Amounts.
The Company understands and acknowledges that the amounts
available under this Investment Agreement are limited, among
other things, based upon the liquidity of the Company's Common
Stock traded on its Principal Market.
6. Covenants of the Company
6.1 Independent Auditors. The Company shall, until at
least the Termination Date, maintain as its independent auditors
an accounting firm authorized to practice before the SEC.
6.2 Corporate Existence and Taxes; Change in Corporate
Entity. The Company shall, until at least the Termination Date,
maintain its corporate existence in good standing and, once it
becomes a "Reporting Issuer" (defined as a Company which files
periodic reports under the Exchange Act), remain a Reporting
Issuer and shall pay all its taxes when due except for taxes
which the Company disputes. The Company shall not, at any time
after the date hereof, enter into any merger, consolidation or
corporate reorganization of the Company with or into, or transfer
all or substantially all of the assets of the Company to, another
entity unless the resulting successor or acquiring entity in such
transaction, if not the Company (the "Surviving Entity"), (i) has
Common Stock listed for trading on Nasdaq or on another national
stock exchange and is a Reporting Issuer, (ii) assumes by written
instrument the Company's obligations with respect to this
Investment Agreement, the Warrants, and the other agreements
referred to herein, including but not limited to the obligations
to deliver to the Investor shares of Common Stock and/or
securities that Investor is entitled to receive pursuant to this
Investment Agreement and upon exercise of the Warrants and agrees
by written instrument to reissue, in the name of the Surviving
Entity, any Commitment Warrants and Purchase Warrants (each in
the same terms, including but not limited to the same reset
provisions, as the Commitment Warrants and/or Purchase Warrants
originally issued or required to be issued by the Company) that
are outstanding immediately prior to such transaction, making
appropriate proportional adjustments to the number of shares
represented by such Warrants and the exercise prices of such
Warrants to accurately reflect the exchange represented by the
transaction.
6.3 Registration Rights. The Company will enter into
a registration rights agreement covering the resale of the Common
Shares and the Warrant Shares substantially in the form of the
Registration Rights Agreement attached as Exhibit A.
6.4 Asset Transfers. The Company shall not (i)
transfer, sell, convey or otherwise dispose of any of its
material assets to any subsidiary except for a cash or cash
equivalent consideration and for a proper business purpose or
(ii) transfer, sell, convey or otherwise dispose of any of its
material assets to any Affiliate, as defined below, during the
Term of this Agreement. For purposes hereof, "Affiliate" shall
mean any officer of the Company, director of the Company or owner
of twenty percent (20%) or more of the Common Stock or other
securities of the Company.
6.5 Rights of First Refusal.
6.5.1 Capital Raising Limitations. During the
period from the date of this Agreement until the date that is one
year after the Termination Date, the Company shall not issue or
sell, or agree to issue or sell Equity Securities (as defined
below), for cash in private capital raising transactions without
obtaining the prior written approval of the Investor of the
Offering (the limitations referred to in this subsection 6.5.1
are collectively referred to as the "Capital Raising
Limitations"). For purposes hereof, the following shall be
collectively referred to herein as, the "Equity Securities": (i)
Common Stock or any other equity securities, (ii) any debt or
equity securities which are convertible into, exercisable or
exchangeable for, or carry the right to receive additional shares
of Common Stock or other equity securities, or (iii) any
securities of the Company pursuant to an equity line structure or
format similar in nature to this Offering.
6.5.2 Investor's Right of First Refusal. For any private
capital raising transactions of Equity Securities which close
after the date hereof and on or prior to the date that is one (1)
year after the Termination Date of this Agreement, not including
any warrants issued in conjunction with this Investment
Agreement, the Company agrees to deliver to Investor, at least
ten (10) days prior to the closing of such transaction, written
notice describing the proposed transaction, including the terms
and conditions thereof, and providing the Investor and its
affiliates an option (the "Right of First Refusal") during the
ten (10) day period following delivery of such notice to purchase
the securities being offered in such transaction on the same
terms as contemplated by such transaction.
6.5.3 Exceptions to Capital Raising Limitations
and Rights of First Refusal. Notwithstanding the above, neither
the Capital Raising Limitations nor the Rights of First Refusal
shall apply to any transaction involving issuances of securities
in connection with a merger, consolidation, acquisition or sale
of assets, or in connection with any strategic partnership or
joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or
acquisition of a business, product or license by the Company or
exercise of options by employees, consultants or directors, or a
primary underwritten offering of the Company's Common Stock. The
Capital Raising Limitations and Rights of First Refusal also
shall not apply to (a) the issuance of securities upon exercise
or conversion of the Company's options, warrants or other
convertible securities outstanding as of the date hereof, (b) the
grant of additional options or warrants, or the issuance of
additional securities, under any Company stock option or
restricted stock plan for the benefit of the Company's employees,
directors or consultants, or (c) the issuance of debt securities,
with no equity feature, incurred solely for working capital
purposes. If the Investor, at any time, is more than five (5)
business days late in paying any Put Dollar Amounts that are then
due, the Investor shall not be entitled to the benefits of
Sections 6.5.1 and 6.5.2 above until the date that the Investor
has paid all Put Dollar Amounts that are then due.
6.6 Financial 10-KSB Statements, Etc. and Current
Reports on Form 8-K. The Company shall deliver to the Investor
copies of its annual reports on Form 10-KSB, and quarterly
reports on Form 10-QSB and shall deliver to the Investor current
reports on Form 8-K within two (2) days of filing for the Term of
this Agreement.
6.7 Opinion of Counsel. Investor shall, concurrent
with the Investment Commitment Closing, receive an opinion letter
from the Company's legal counsel, in the form attached as Exhibit
B, or in such form as agreed upon by the parties, and shall,
concurrent with each Put Date, receive an opinion letter from the
Company's legal counsel, in the form attached as Exhibit I or in
such form as agreed upon by the parties.
6.8 Removal of Legend. If the certificates
representing any Securities are issued with a restrictive Legend
in accordance with the terms of this Agreement, the Legend shall
be removed and the Company shall issue a certificate without such
Legend to the holder of any Security upon which it is stamped,
and a certificate for a security shall be originally issued
without the Legend, if (a) the sale of such Security is
registered under the Act, or (b) such holder provides the Company
with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions (the
reasonable cost of which shall be borne by the Investor), to the
effect that a public sale or transfer of such Security may be
made without registration under the Act, or (c) such holder
provides the Company with reasonable assurances that such
Security can be sold pursuant to Rule 144. Each Investor agrees
to sell all Securities, including those represented by a
certificate(s) from which the Legend has been removed, or which
were originally issued without the Legend, pursuant to an
effective registration statement and to deliver a prospectus in
connection with such sale or in compliance with an exemption from
the registration requirements of the Act.
6.9 Listing. Subject to the remainder of this Section
6.9, the Company shall ensure that its shares of Common Stock
(including all Warrant Shares and Put Shares) are listed and
available for trading on the O.T.C. Bulletin Board. Thereafter,
the Company shall (i) use its best efforts to continue the
listing and trading of its Common Stock on the O.T.C. Bulletin
Board or to become eligible for and listed and available for
trading on the Nasdaq Small Cap Market, the NMS, or the New York
Stock Exchange ("NYSE"); and (ii) comply in all material respects
with the Company's reporting, filing and other obligations under
the By-Laws or rules of the National Association of Securities
Dealers ("NASD") and such exchanges, as applicable.
6.10 The Company's Instructions to Transfer Agent.
The Company will instruct the Transfer Agent of the Common Stock
(the "Transfer Agent"), by delivering instructions in the form of
Exhibit T hereto, to issue certificates, registered in the name
of each Investor or its nominee, for the Put Shares and Warrant
Shares in such amounts as specified from time to time by the
Company upon any exercise by the Company of a Put and/or exercise
of the Warrants by the holder thereof. Such certificates shall
not bear a Legend unless issuance with a Legend is permitted by
the terms of this Agreement and Legend removal is not permitted
by Section 6.8 hereof and the Company shall cause the Transfer
Agent to issue such certificates without a Legend. Nothing in
this Section shall affect in any way Investor's obligations and
agreement set forth in Sections 3.3.2 or 3.3.3 hereof to resell
the Securities pursuant to an effective registration statement
and to deliver a prospectus in connection with such sale or in
compliance with an exemption from the registration requirements
of applicable securities laws. If (a) an Investor provides the
Company with an opinion of counsel, which opinion of counsel
shall be in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that the
Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from registration or (b) an Investor
transfers Securities, pursuant to Rule 144, to a transferee which
is an accredited investor, the Company shall permit the transfer,
and, in the case of Put Shares and Warrant Shares, promptly
instruct its transfer agent to issue one or more certificates in
such name and in such denomination as specified by such Investor.
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to an Investor by vitiating
the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Section 6.10 will be
inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 6.10,
that an Investor shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity
of showing economic loss and without any bond or other security
being required.
6.11 Stockholder 20% Approval. Prior to the closing
of any Put that would cause the Aggregate Issued Shares to exceed
the Cap Amount, if required by the rules of NASDAQ because the
Company's Common Stock is listed on NASDAQ, the Company shall
obtain approval of its stockholders to authorize (i) the issuance
of the full number of shares of Common Stock which would be
issuable pursuant to this Agreement but for the Cap Amount and
eliminate any prohibitions under applicable law or the rules or
regulations of any stock exchange, interdealer quotation system
or other self-regulatory organization with jurisdiction over the
Company or any of its securities with respect to the Company's
ability to issue shares of Common Stock in excess of the Cap
Amount (such approvals being the "Stockholder 20% Approval").
6.12 Press Release. The Company agrees that the
Investor shall have the right to review and comment upon any
press release issued by the Company in connection with the
Offering which approval shall not be unreasonably withheld by
Investor.
6.13 Change in Law or Policy. In the event of a
change in law, or policy of the SEC, as evidenced by a No-Action
letter or other written statements of the SEC or the NASD which
causes the Investor to be unable to perform its obligations
hereunder, this Agreement shall be automatically terminated and
no Termination Fee shall be due, provided that notwithstanding
any termination under this section 6.13, the Investor shall
retain full ownership of the Commitment Warrant as partial
consideration for its commitment hereunder.
6.14. Notice of Certain Events Affecting Registration;
Suspension of Right to Make a Put. The Company shall immediately
notify the Investor, but in no event later than two (2) business
days by facsimile and by overnight courier, upon the occurrence
of any of the following events in respect of a Registration
Statement or related prospectus in respect of an offering of
Registrable Securities: (i) receipt of any request for additional
information by the SEC or any other federal or state governmental
authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration
Statement or related prospectus; (ii) the issuance by the SEC or
any other deferral or state governmental authority of any stop
order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose; (iii) receipt
of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(iv) the happening of any event that makes any statement made in
such Registration Statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or
documents so that, in the case of a Registration Statement, it
will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that
in the case of the related prospectus, it will not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; (v) the declaration by the SEC of
the effectiveness of a Registration Statement; and (vi) the
Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate, and
the Company shall promptly make available to the Investor any
such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Put Notice during
the continuation of any of the foregoing events.
7. Investor Covenant/Miscellaneous.
7.1 Representations and Warranties Survive the
Closing; Severability. Investor's and the Company's
representations and warranties shall survive the Investment Date
and any Put Closing contemplated by this Agreement
notwithstanding any due diligence investigation made by or on
behalf of the party seeking to rely thereon. In the event that
any provision of this Agreement becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable or void,
or is altered by a term required by the Securities Exchange
Commission to be included in the Registration Statement, this
Agreement shall continue in full force and effect without said
provision; provided that if the removal of such provision
materially changes the economic benefit of this Agreement to the
Investor, this Agreement shall terminate.
7.2 Successors and Assigns. This Agreement shall not
be assignable without the Company's written consent. If
assigned, the terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors
and assigns of the parties. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason
of this Agreement, except as expressly provided in this
Agreement. Investor may assign Investor's rights hereunder, in
connection with any private sale of the Common Stock of such
Investor, so long as, as a condition precedent to such transfer,
the transferee executes an acknowledgment agreeing to be bound by
the applicable provisions of this Agreement in a form acceptable
to the Company and provides an original copy of such
acknowledgment to the Company.
7.3 Execution in Counterparts Permitted. This
Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing
such counterparts, and all of which together shall constitute one
(1) instrument.
7.4 Titles and Subtitles; Gender. The titles and
subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this
Agreement. The use in this Agreement of a masculine, feminine or
neuter pronoun shall be deemed to include a reference to the
others.
7.5 Written Notices, Etc. Any notice, demand or
request required or permitted to be given by the Company or
Investor pursuant to the terms of this Agreement shall be in
writing and shall be deemed given when delivered personally, or
by facsimile or upon receipt if by overnight or two (2) day
courier, addressed to the parties at the addresses and/or
facsimile telephone number of the parties set forth at the end of
this Agreement or such other address as a party may request by
notifying the other in writing; provided, however, that in order
for any notice to be effective as to the Investor such notice
shall be delivered and sent, as specified herein, to all the
addresses and facsimile telephone numbers of the Investor set
forth at the end of this Agreement or such other address and/or
facsimile telephone number as Investor may request in writing.
7.6 Expenses. Except as set forth in the Registration
Rights Agreement, each of the Company and Investor shall pay all
costs and expenses that it respectively incurs, with respect to
the negotiation, execution, delivery and performance of this
Agreement.
7.7 Entire Agreement; Written Amendments Required.
This Agreement, including the Exhibits attached hereto, the
Common Stock certificates, the Warrants, the Registration Rights
Agreement, and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and
thereof, and no party shall be liable or bound to any other party
in any manner by any warranties, representations or covenants,
whether oral, written, or otherwise except as specifically set
forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any
such amendment, waiver, discharge or termination is sought.
7.8 Actions at Law or Equity; Jurisdiction and Venue.
The parties acknowledge that any and all actions, whether at law
or at equity, and whether or not said actions are based upon this
Agreement between the parties hereto, shall be filed in any state
or federal court sitting in Atlanta, Georgia. Georgia law shall
govern both the proceeding as well as the interpretation and
construction of the Transaction Documents and the transaction as
a whole. In any litigation between the parties hereto, the
prevailing party, as found by the court, shall be entitled to an
award of all attorney's fees and costs of court. Should the
court refuse to find a prevailing party, each party shall bear
its own legal fees and costs.
7.9 Reporting Entity for the Common Stock. The
reporting entity relied upon for the determination of the trading
price or trading volume of the Common Stock on the Principal
Market on any given Trading Day for the purposes of this
Agreement shall be the Bloomberg L.P. The written mutual
consent of the Investor and the Company shall be required to
employ any other reporting entity.
8. Subscription and Wiring Instructions; Irrevocability.
(a) Wire transfer of Subscription Funds. Investor
shall deliver Put Dollar Amounts (as payment
towards any Put Share Price) by wire transfer, to
the Company pursuant to a wire instruction letter
to be provided by the Company, and signed by the
Company.
(b) Irrevocable Subscription. Investor hereby
acknowledges and agrees, subject to the provisions
of any applicable laws providing for the refund of
subscription amounts submitted by Investor, that
this Agreement is irrevocable and that Investor is
not entitled to cancel, terminate or revoke this
Agreement or any other agreements executed by such
Investor and delivered pursuant hereto, and that
this Agreement and such other agreements shall
survive the death or disability of such Investor
and shall be binding upon and inure to the benefit
of the parties and their heirs, executors,
administrators, successors, legal representatives
and assigns. If the Securities subscribed for are
to be owned by more than one person, the
obligations of all such owners under this
Agreement shall be joint and several, and the
agreements, representations, warranties and
acknowledgments herein contained shall be deemed
to be made by and be binding upon each such person
and his heirs, executors, administrators,
successors, legal representatives and assigns.
9. Indemnification and Reimbursement.
(a) Indemnification. In consideration of the
Investor's execution and delivery of the Investment Agreement,
the Registration Rights Agreement and the Warrants (the
"Transaction Documents") and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under
the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless Investor and all of its stockholders,
officers, directors, employees and direct or indirect investors
and any of the foregoing person's agents, members, partners or
other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this
Agreement) (collectively, the "Indemnitees") from and against any
and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is
sought), and including reasonable attorney's fees and
disbursements (the "Indemnified Liabilities"), incurred by any
Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty
made by the Company in the Transaction Documents or any other
certificate, instrument or documents contemplated hereby or
thereby, (b) any breach of any covenant, agreement or obligation
of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or
thereby, (c) any cause of action, suit or claim, derivative or
otherwise, by any stockholder of the Company based on a breach or
alleged breach by the Company or any of its officers or directors
of their fiduciary or other obligations to the stockholders of
the Company, or (d) claims made by third parties against any of
the Indemnitees based on a violation of Section 5 of the
Securities Act caused by the integration of the private sale of
common stock to the Investor and the public offering pursuant to
the Registration Statement.
To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which it would be required to make if
such foregoing undertaking was enforceable which is permissible
under applicable law.
Promptly after receipt by an Indemnified Party of notice of
the commencement of any action pursuant to which indemnification
may be sought, such Indemnified Party will, if a claim in respect
thereof is to be made against the other party (hereinafter
"Indemnitor") under this Section 9, deliver to the Indemnitor a
written notice of the commencement thereof and the Indemnitor
shall have the right to participate in and to assume the defense
thereof with counsel reasonably selected by the Indemnitor,
provided, however, that an Indemnified Party shall have the right
to retain its own counsel, with the reasonably incurred fees and
expenses of such counsel to be paid by the Indemnitor, if
representation of such Indemnified Party by the counsel retained
by the Indemnitor would be inappropriate due to actual or
potential conflicts of interest between such Indemnified Party
and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
Indemnitor within a reasonable time of the commencement of any
such action, if prejudicial to the Indemnitor's ability to defend
such action, shall relieve the Indemnitor of any liability to the
Indemnified Party under this Section 9, but the omission to so
deliver written notice to the Indemnitor will not relieve it of
any liability that it may have to any Indemnified Party other
than under this Section 9 to the extent it is prejudicial.
(b) Reimbursement. If (i) Purchaser, other than
by reason of its gross negligence or willful misconduct, becomes
involved in any capacity in any action, proceeding or
investigation brought by any stockholder of the Company, in
connection with or as a result of the consummation of the
transactions contemplated by the Transaction Documents, or if
Purchaser is impleaded in any such action, proceeding or
investigation by any Person, or (ii) Purchaser, other than by
reason of its gross negligence or willful misconduct or by reason
of its trading of the Common Stock in a manner that is illegal
under applicable securities laws, becomes involved in any
capacity in any action, proceeding or investigation brought by
the SEC against or involving the Company or in connection with or
as a result of the consummation of the transactions contemplated
by the Transaction Documents, or if Purchaser is impleaded in any
such action, proceeding or investigation by any Person, then in
any such case, the Company will reimburse Purchaser for its
reasonable legal and other expenses (including the cost of any
investigation and preparation ) incurred in connection therewith,
as such expenses are incurred. In addition, other than with
respect to any matter in which Purchaser is a named party, the
Company will pay Purchaser the charges, as reasonably determined
by Purchaser, for the time of any officers or employees of
Purchaser devoted to appearing and preparing to appear as
witnesses, assisting in preparation for hearing, trials or
pretrial matters, or otherwise with respect to inquiries,
hearing, trials, and other proceedings relating to the subject
matter of this Agreement. The reimbursement obligations of the
Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon
the same terms and conditions to any Affiliates of Purchaser who
are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and controlling
persons (if any), as the case may be, of Purchaser and any such
Affiliate, and shall be binding upon and inure to the benefit of
any successors, assigns, heirs and personal representatives of
the Company, Purchaser and any such Affiliate and any such
Person. The Company also agrees that neither any Purchaser nor
any such Affiliate, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or
any person asserting claims on behalf of or in right of the
Company in connection with or as a result of the consummation of
the Transaction Documents except to the extent that any losses,
claims, damages, liabilities or expenses incurred by the Company
result from the gross negligence or willful misconduct of
Purchaser or any inaccuracy in any representation or warranty of
Purchaser contained herein or any breach by Purchaser of any of
the provisions hereof.
[INTENTIONALLY LEFT BLANK]
10. Accredited Investor. Investor is an "accredited investor"
because (check all applicable boxes):
(a) [ ] it is an organization described in Section
501(c)(3) of the Internal Revenue Code, or a
corporation, limited duration company, limited
liability company, business trust, or partnership
not formed for the specific purpose of acquiring
the securities offered, with total assets in
excess of $5,000,000.
(b) [ ] any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase
is directed by a sophisticated person who has such
knowledge and experience in financial and business
matters that he is capable of evaluating the
merits and risks of the prospective investment.
(c) [ ] a natural person, who
[ ] is a director, executive officer or general
partner of the issuer of the securities being
offered or sold or a director, executive officer
or general partner of a general partner of that
issuer.
[ ] has an individual net worth, or joint net worth
with that person's spouse, at the time of his
purchase exceeding $1,000,000.
[ ] had an individual income in excess of $200,000 in
each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in
each of those years and has a reasonable
expectation of reaching the same income level in
the current year.
(d) [ ] an entity each equity owner of which is an entity
described in a - b above or is an individual who
could check one (1) of the last three (3) boxes
under subparagraph (c) above.
(e) [ ] other [specify]__________________________________
__________________________________.
The undersigned hereby subscribes the Maximum Offering
Amount and acknowledges that this Agreement and the subscription
represented hereby shall not be effective unless accepted by the
Company as indicated below.
IN WITNESS WHEREOF, the undersigned Investor does represent
and certify under penalty of perjury that the foregoing
statements are true and correct and that Investor by the
following signature(s) executed this Agreement.
Dated this 31st day of August, 2000.
SWARTZ PRIVATE EQUITY, LLC
By: ____________________________________
Eric S. Swartz, Manager
SECURITY DELIVERY INSTRUCTIONS:
Swartz Private Equity, LLC
C/o Eric S. Swartz
200 Roswell Summit, Suite 285
1080 Holcomb Bridge Road
Roswell, GA 30076
Telephone: (770) 640-8130
THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF THE
MAXIMUM OFFERING AMOUNT ON THE 31st DAY OF AUGUST, 2000.
PAYFORVIEW.COM CORPORATION
By: _______________________________
Marc Pitcher, President
Address: Attn: Marc Pitcher, President
509 Madison Avenue, Ste. 1610
New York, New York 10022
Telephone (212) 605-0150
Facsimile (212) 605-0151
ADVANCE PUT NOTICE
PAYFORVIEW.COM CORPORATION (the "Company") hereby intends,
subject to the Individual Put Limit (as defined in the Investment
Agreement), to elect to exercise a Put to sell the number of
shares of Common Stock of the Company specified below, to
_____________________________, the Investor, as of the Intended
Put Date written below, all pursuant to that certain Investment
Agreement (the "Investment Agreement") by and between the Company
and Swartz Private Equity, LLC dated on or about August 31, 2000.
Date of Advance Put Notice: ______________________
Intended Put Date: _______________________________
Intended Put Share Amount: _______________________
Company Designation Maximum Put Dollar Amount
(Optional):______________________________________.
Company Designation Minimum Put Share Price
(Optional):______________________________________.
PAYFORVIEW.COM CORPORATION
By:________________________________
Marc Pitcher, President
Address: Attn: Marc Pitcher, President
509 Madison Avenue, Ste. 1610
New York, New York 10022
Telephone (212) 605-0150
Facsimile (212) 605-0151
CONFIRMATION of ADVANCE PUT NOTICE
_________________________________, the Investor, hereby confirms
receipt of PAYFORVIEW.COM CORPORATION's (the "Company") Advance
Put Notice on the Advance Put Date written below, and its
intention to elect to exercise a Put to sell shares of common
stock ("Intended Put Share Amount") of the Company to the
Investor, as of the intended Put Date written below, all pursuant
to that certain Investment Agreement (the "Investment Agreement")
by and between the Company and Swartz Private Equity, LLC dated
on or about August 31, 2000.
Date of Confirmation: _______________________
Date of Advance Put Notice: _________________
Intended Put Date: __________________________
Intended Put Share Amount: __________________
Company Designation Maximum Put Dollar Amount
(Optional):_________________________________.
Company Designation Minimum Put Share Price
(Optional):_________________________________.
INVESTOR(S)
___________________________________
Investor's Name
By:________________________________
(Signature)
Address: ___________________________________
___________________________________
___________________________________
Telephone No.:_______________________________
Facsimile No.:_______________________________
PUT NOTICE
PAYFORVIEW.COM CORPORATION (the "Company") hereby elects to
exercise a Put to sell shares of common stock ("Common Stock") of
the Company to _____________________________, the Investor, as of
the Put Date, at the Put Share Price and for the number of Put
Shares written below, all pursuant to that certain Investment
Agreement (the "Investment Agreement") by and between the Company
and Swartz Private Equity, LLC dated on or about August 31, 2000.
Put Date: _________________
Intended Put Share Amount (from Advance Put
Notice): _________________ Common Shares
Company Designation Maximum Put Dollar Amount
(Optional):_________________________________.
Company Designation Minimum Put Share Price
(Optional):_________________________________.
Note: Capitalized terms shall have the meanings ascribed to them
in this Investment Agreement.
PAYFORVIEW.COM CORPORATION
By:________________________________
Marc Pitcher, President
Address: Attn: Marc Pitcher, President
509 Madison Avenue, Ste. 1610
New York, New York 10022
Telephone (212) 605-0150
Facsimile (212) 605-0151
CONFIRMATION of PUT NOTICE
_________________________________, the Investor, hereby confirms
receipt of Payforview.com Corporation (the "Company") Put Notice
and election to exercise a Put to sell___________________________
shares of common stock ("Common Stock") of the Company to
Investor, as of the Put Date, all pursuant to that certain
Investment Agreement (the "Investment Agreement") by and between
the Company and Swartz Private Equity, LLC dated on or about
August 31, 2000.
Date of this
Confirmation: _____________________
Put Date: _________________________
Number of Put Shares
of Common Stock to
be Issued: ________________________
Volume Evaluation Period:
_____ Business Days
Pricing Period: _____ Business Days
INVESTOR(S)
___________________________________
Investor's Name
By:________________________________
(Signature)
Address: ___________________________________
___________________________________
___________________________________
Telephone No.:_______________________________
Facsimile No.:_______________________________
PUT CANCELLATION NOTICE
PAYFORVIEW.COM CORPORATION (the "Company") hereby cancels the Put
specified below, pursuant to that certain Investment Agreement
(the "Investment Agreement") by and between the Company and
Swartz Private Equity, LLC dated on or about August 31, 2000, as
of the close of trading on the date specified below (the
"Cancellation Date," which date must be on or after the date that
this notice is delivered to the Investor), provided that such
cancellation shall not apply to the number of shares of Common
Stock equal to the Truncated Put Share Amount (as defined in the
Investment Agreement).
Cancellation Date:_________________
Put Date of Put
Being Canceled: ___________________
Number of Shares Put
on Put Date: ______________________
Reason for Cancellation
(check one):
[ ] Material Facts,
Ineffective Registration
Period.
[ ] Delisting Event
The Company understands that, by canceling this Put, it must give
twenty (20) Business Days advance written notice to the Investor
before effecting the next Put.
PAYFORVIEW.COM CORPORATION
By:________________________________
Marc Pitcher, President
Address: Attn: Marc Pitcher, President
509 Madison Avenue, Ste. 1610
New York, New York 10022
Telephone (212) 605-0150
Facsimile (212) 605-0151
PUT CANCELLATION NOTICE CONFIRMATION
The undersigned Investor to that certain Investment Agreement
(the "Investment Agreement") by and between the Payforview.com
Corporation's, and Swartz Private Equity, LLC dated on or about
August 31, 2000, hereby confirms receipt of Payforview.com
Corporation's (the "Company") Put Cancellation Notice, and
confirms the following:
Date of this
Confirmation: _____________________
Put Cancellation
Date: _____________________________
INVESTOR(S)
___________________________________
Investor's Name
By:________________________________
(Signature)
Address: ___________________________________
___________________________________
___________________________________
Telephone No.:_______________________________
Facsimile No.:_______________________________
<PAGE>
Exhibit D to Investment Agreement
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH
SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND
ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET FORTH
UNDER THAT CERTAIN INVESTMENT AGREEMENT BY AND BETWEEN THE
COMPANY AND HOLDER REFERENCED THEREIN AS EXHIBIT J.
Warrant to Purchase
"N" shares Warrant Number ____
Warrant to Purchase Common Stock
of
Payforview.com Corporation
THIS CERTIFIES that Swartz Private Equity, LLC or any
subsequent holder hereof ("Holder"), has the right to purchase
from Payforview.com Corporation, a Nevada corporation (the
"Company"), up to "N" fully paid and nonassessable shares,
wherein "N" is defined below, of the Company's common stock,
$0.01 par value per share ("Common Stock"), subject to adjustment
as provided herein, at a price equal to the Exercise Price as
defined in Section 3 below, at any time beginning on the Date of
Issuance (defined below) and ending at 5:00 p.m., New York, New
York time the date that is five (5) years after the Date of
Issuance (the "Exercise Period"); provided, that, with respect to
each "Put," as that term is defined in that certain Investment
Agreement (the "Investment Agreement") by and between the initial
Holder and Company, dated on or about August 21, 2000, "N" shall
equal ten percent (10%) of the number of shares of Common Stock
purchased by the Holder in that Put.
Holder agrees with the Company that this Warrant to Purchase
Common Stock of the Company (this "Warrant") is issued and all
rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance and Term.
This Warrant shall be deemed to be issued on _____________,
______ ("Date of Issuance"). The term of this Warrant is five
(5) years from the Date of Issuance.
Notwithstanding anything to the contrary herein, the applicable
portion of this Warrant shall not be exercisable during any time
that, and only to the extent that, the number of shares of Common
Stock to be issued to Holder upon such exercise, when added to
the number of shares of Common Stock, if any, that the Holder
otherwise beneficially owns at the time of such exercise, would
equal or exceed 4.99% of the number of shares of Common Stock
then outstanding, as determined in accordance with Section 13(d)
of the Exchange Act (the "4.99% Limitation"). The 4.99%
Limitation shall be conclusively satisfied if the applicable
Exercise Notice includes a signed representation by the Holder
that the issuance of the shares in such Exercise Notice will not
violate the 4.99% Limitation, and the Company shall not be
entitled to require additional documentation of such
satisfaction.
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this
Warrant may be exercised as to all or any lesser number of full
shares of Common Stock covered hereby (the "Warrant Shares") upon
surrender of this Warrant, with the Exercise Form attached hereto
as Exhibit A (the "Exercise Form") duly completed and executed,
together with the full Exercise Price (as defined below) for each
share of Common Stock as to which this Warrant is exercised, at
the office of the Company, Attention: Marc A. Pitcher, President,
Payforview.com Corporation, 509 Madison Avenue, Suite 1610, New
York, New York 10022; Telephone: (212) 605-0150, Facsimile: (212)
605-0151, or at such other office or agency as the Company may
designate in writing, by overnight mail, with an advance copy of
the Exercise Form sent to the Company and its Transfer Agent by
facsimile (such surrender and payment of the Exercise Price
hereinafter called the "Exercise of this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant
shall be defined as the date that the advance copy of the
completed and executed Exercise Form is sent by facsimile to the
Company, provided that the original Warrant and Exercise Form are
received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date
the original Exercise Form is received by the Company, if Holder
has not sent advance notice by facsimile. The Company shall not
be required to deliver the shares of Common Stock to the Holder
until the requirements of Section 2(a) above are satisfied.
(c) Delivery of Shares of Common Stock Upon Exercise. Upon
any exercise of this Warrant, the Company shall deliver, or shall
cause its transfer agent to deliver, a stock certificate or
certificates representing the number of shares of Common Stock
into which this Warrant was exercised, within three (3) trading
days of the Date of Exercise (as defined above). Such stock
certificates shall not contain a legend restricting transfer if a
registration statement covering the resale of such shares of
Common Stock is in effect at the time of such exercise or if such
shares of Common Stock may be resold pursuant to Rule 144 under
the Securities Act of 1933. If the Company has not delivered
stock certificates representing the requisite number of shares of
Common Stock (unlegended, if so required per the above) within
three (3) trading days of the Date of Exercise, the Company shall
pay to the Holder liquidated damages equal to $1,000 per day
until such share certificates (unlegended, if so required per the
above) are received by the Holder.
(d) Cancellation of Warrant. This Warrant shall be canceled
upon the Exercise of this Warrant, and, as soon as practical
after the Date of Exercise, Holder shall be entitled to receive
Common Stock for the number of shares purchased upon such
Exercise of this Warrant, and if this Warrant is not exercised in
full, Holder shall be entitled to receive a new Warrant
(containing terms identical to this Warrant) representing any
unexercised portion of this Warrant in addition to such Common
Stock.
(e) Holder of Record. Each person in whose name any Warrant
for shares of Common Stock is issued shall, for all purposes, be
deemed to be the Holder of record of such shares on the Date of
Exercise of this Warrant, irrespective of the date of delivery of
the Common Stock purchased upon the Exercise of this Warrant.
Nothing in this Warrant shall be construed as conferring upon
Holder any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price ("Exercise Price"), shall initially equal
$Y per share ("Initial Exercise Price"), where "Y" shall equal
110% of the Market Price for the applicable Put (as both are
defined in the Investment Agreement) or, if the Date of Exercise
is more than six (6) months after the Date of Issuance, the
lesser of (i) the Initial Exercise Price or (ii) the "Lowest
Reset Price," as that term is defined below. The Company shall
calculate a "Reset Price" on each six-month anniversary date of
the Date of Issuance which shall equal the lowest Closing Bid
Price of the Common Stock for the five (5) trading days ending on
such six-month anniversary date of the Date of Issuance. The
"Lowest Reset Price" shall equal the lowest Reset Price
determined on any six-month anniversary date of the Date of
Issuance preceding the Date of Exercise, taking into account, as
appropriate, any adjustments made pursuant to Section 5 hereof.
For purposes hereof, the term "Closing Bid Price" shall mean
the closing bid price on the O.T.C. Bulletin Board, the National
Market System ("NMS"), the New York Stock Exchange, the Nasdaq
Small Cap Market, or if no longer traded on the O.T.C. Bulletin
Board, the NMS, the New York Stock Exchange, the Nasdaq Small Cap
Market, the "Closing Bid Price" shall equal the closing price on
the principal national securities exchange or the
over-the-counter system on which the Common Stock is so traded
and, if not available, the mean of the high and low prices on the
principal national securities exchange on which the Common Stock
is so traded.
Payment of the Exercise Price may be made by either of the
following, or a combination thereof, at the election of Holder:
(i) Cash Exercise: cash, bank or cashiers check or wire
transfer; or
(ii) Cashless Exercise: surrender of this Warrant at the
principal office of the Company together with notice of cashless
election, in which event the Company shall issue Holder a number
of shares of Common
Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued
to Holder.
Y = the number of shares of Common Stock for which this
Warrant is being exercised.
A = the Market Price of one (1) share of Common Stock
(for purposes of this Section 3(ii), the "Market Price"
shall be defined as the average closing price of the
Common Stock for the five (5) trading days prior to the
Date of Exercise of this Warrant (the "Average Closing
Price"), as reported by the O.T.C. Bulletin Board,
National Association of Securities Dealers Automated
Quotation System ("Nasdaq") Small Cap Market, or if the
Common Stock is not traded on the Nasdaq Small Cap
Market, the Average Closing Price in any other
over-the-counter market; provided, however, that if the
Common Stock is listed on a stock exchange, the Market
Price shall be the Average Closing Price on such
exchange for the five (5) trading days prior to the
date of exercise of the Warrants. If the Common Stock
is/was not traded during the five (5) trading days
prior to the Date of Exercise, then the closing price
for the last publicly traded day shall be deemed to be
the closing price for any and all (if applicable) days
during such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii)
thereof, it is intended, understood and acknowledged that the
Common Stock issuable upon exercise of this Warrant in a cashless
exercise transaction shall be deemed to have been acquired at the
time this Warrant was issued. Moreover, it is intended,
understood and acknowledged that the holding period for the
Common Stock issuable upon exercise of this Warrant in a cashless
exercise transaction shall be deemed to have commenced on the
date this Warrant was issued.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8
of this Warrant, this Warrant may be transferred on the books of
the Company, in whole or in part, in person or by attorney, upon
surrender of this Warrant properly completed and endorsed. This
Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the
portion of this Warrant transferred, and Holder shall be entitled
to receive a new Warrant as to the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon
the exercise of this Warrant constitutes "Registrable Securities"
under that certain Registration Rights Agreement dated on or
about August 21, 2000 between the Company and certain investors
and, accordingly, has the benefit of the registration rights
pursuant to that agreement.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time
declare a dividend payable in shares of Common Stock, then
Holder, upon Exercise of this Warrant after the record date for
the determination of holders of Common Stock entitled to receive
such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as
to which this Warrant is exercised, such additional shares of
Common Stock as such Holder would have received had this Warrant
been exercised immediately prior to such record date and the
Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company
shall at any time effect a recapitalization, reclassification or
other similar transaction of such character that the shares of
Common Stock shall be changed into or become exchangeable for a
larger or smaller number of shares, then upon the effective date
thereof, the number of shares of Common Stock which Holder shall
be entitled to purchase upon Exercise of this Warrant shall be
increased or decreased, as the case may be, in direct proportion
to the increase or decrease in the number of shares of Common
Stock by reason of such recapitalization, reclassification or
similar transaction, and the Exercise Price shall be, in the case
of an increase in the number of shares, proportionally decreased
and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give Holder the same
notice it provides to holders of Common Stock of any transaction
described in this Section 5(b).
(c) Distributions. If the Company shall at any time
distribute for no consideration to holders of Common Stock cash,
evidences of indebtedness or other securities or assets (other
than cash dividends or distributions payable out of earned
surplus or net profits for the current or preceding years) then,
in any such case, Holder shall be entitled to receive, upon
Exercise of this Warrant, with respect to each share of Common
Stock issuable upon such exercise, the amount of cash or
evidences of indebtedness or other securities or assets which
Holder would have been entitled to receive with respect to each
such share of Common Stock as a result of the happening of such
event had this Warrant been exercised immediately prior to the
record date or other date fixing shareholders to be affected by
such event (the "Determination Date") or, in lieu thereof, if the
Board of Directors of the Company should so determine at the time
of such distribution, a reduced Exercise Price determined by
multiplying the Exercise Price on the Determination Date by a
fraction, the numerator of which is the result of such Exercise
Price reduced by the value of such distribution applicable to one
share of Common Stock (such value to be determined by the Board
of Directors of the Company in its discretion) and the
denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. The Company shall
not, at any time after the date hereof, effect a merger,
consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which
shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class or
classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the
Company's assets (a "Corporate Change"), unless the resulting
successor or acquiring entity (the "Resulting Entity") assumes by
written instrument the Company's obligations under this Warrant,
including but not limited to the Exercise Price reset provisions
as provided herein during the term of the resultant warrants, and
agrees in such written instrument that this Warrant shall be
exercisable into such class and type of securities or other
assets of the Resulting Entity as Holder would have received had
Holder exercised this Warrant immediately prior to such Corporate
Change, and the Exercise Price of this Warrant shall be
proportionately increased (if this Warrant shall be changed into
or become exchangeable for a warrant to purchase a smaller number
of shares of Common Stock of the Resulting Entity) or shall be
proportionately decreased (if this Warrant shall be changed or
become exchangeable for a warrant to purchase a larger number of
shares of Common Stock of the Resulting Entity); provided,
however, that Company may not affect any Corporate Change unless
it first shall have given thirty (30) days notice to Holder
hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the
term "Exercise Price" shall mean the purchase price per share
specified in Section 3 of this Warrant, until the occurrence of
an event stated in subsection (a), (b), (c) or (d) of this
Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of this Warrant.
No such adjustment under this Section 5 shall be made unless such
adjustment would change the Exercise Price at the time by $0.01
or more; provided, however, that all adjustments not so made
shall be deferred and made when the aggregate thereof would
change the Exercise Price at the time by $0.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall
have the net effect of increasing the Exercise Price in relation
to the split adjusted and distribution adjusted price of the
Common Stock. The number of shares of Common Stock subject
hereto shall increase proportionately with each decrease in the
Exercise Price.
(f) Adjustments: Additional Shares, Securities or Assets.
In the event that at any time, as a result of an adjustment made
pursuant to this Section 5, Holder shall, upon Exercise of this
Warrant, become entitled to receive shares and/or other
securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares
and/or other securities or assets shall be subject to adjustment
from time to time in a manner and upon terms as nearly equivalent
as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional
shares shall be issuable upon the Exercise of this Warrant, but
on Exercise of this Warrant, Holder may purchase only a whole
number of shares of Common Stock. If, on Exercise of this
Warrant, Holder would be entitled to a fractional share of Common
Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon exercise shall be the next
higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance
such number of authorized and unissued shares of Common Stock (or
other securities substituted therefor as herein above provided)
as shall be sufficient for the Exercise of this Warrant and
payment of the Exercise Price. The Company covenants and agrees
that upon the Exercise of this Warrant, all shares of Common
Stock issuable upon such exercise shall be duly and validly
issued, fully paid, nonassessable and not subject to preemptive
rights, rights of first refusal or similar rights of any person
or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant
has been issued in a transaction exempt from the registration
requirements of the Act by virtue of Regulation D and exempt from
state registration under applicable state laws. The Warrant and
the Common Stock issuable upon the Exercise of this Warrant may
not be pledged, transferred, sold or assigned except pursuant to
an effective registration statement or an exemption to the
registration requirements of the Act and applicable state laws.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above
regarding registration or exemption have been satisfied, Holder
may sell, transfer, assign, pledge or otherwise dispose of this
Warrant, in whole or in part. Holder shall deliver a written
notice to Company, substantially in the form of the Assignment
attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of
warrants to be assigned to each assignee. The Company shall
effect the assignment within ten (10) days, and shall deliver to
the assignee(s) designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer
upon any person other than the Company and Holder any legal or
equitable right, remedy or claim under this Warrant and this
Warrant shall be for the sole and exclusive benefit of the
Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes
be governed by and construed in accordance with the laws of the
state of Georgia, without giving effect to conflict of law
provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss,
theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Company, and upon surrender and
cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made
by Holder to or on the Company shall be sufficiently given or
made if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed, until another address
is designated in writing by the Company, to the address set forth
in Section 2(a) above. Notices or demands pursuant to this
Warrant to be given or made by the Company to or on Holder shall
be sufficiently given or made if sent by certified or registered
mail, return receipt requested, postage prepaid, and addressed,
to the address of Holder set forth in the Company's records,
until another address is designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this
Warrant as of the ______ day of _________, 200_.
PAYFORVIEW.COM CORPORATION
By: ________________________________
Marc A. Pitcher, President
EXHIBIT A
EXERCISE FORM FOR WARRANT
TO: PAYFORVIEW.COM CORPORATION
The undersigned hereby irrevocably exercises the right to
purchase ____________ of the shares of Common Stock (the "Common
Stock") of Payforview.com Corporation, a corporation (the
"Company"), evidenced by the attached warrant (the "Warrant"),
and herewith makes payment of the exercise price with respect to
such shares in full, all in accordance with the conditions and
provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or
otherwise dispose of any of the Common Stock obtained on exercise
of the Warrant, except in accordance with the provisions of
Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such
shares be issued free of any restrictive legend, if appropriate,
and a warrant representing any unexercised portion hereof be
issued, pursuant to the Warrant in the name of the undersigned
and delivered to the undersigned at the address set forth below:
Dated:
_________________________________________________________________
Signature
_________________________________________________________________
Print Name
_________________________________________________________________
Address
_________________________________________________________________
NOTICE
The signature to the foregoing Exercise Form must correspond to
the name as written upon the face of the attached Warrant in
every particular, without alteration or enlargement or any change
whatsoever.
_________________________________________________________________
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached
warrant (the "Warrant") hereby sells, assigns and transfers unto
the person or persons below named the right to purchase _______
shares of the Common Stock of Payforview.com Corporation,
evidenced by the attached Warrant and does hereby irrevocably
constitute and appoint _______________________ attorney to
transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.
Dated:_____________ ____________________________
Signature
Fill in for new registration of Warrant:
___________________________________
Name
___________________________________
Address
___________________________________
Please print name and address of assignee
(including zip code number)
_________________________________________________________________
NOTICE
The signature to the foregoing Assignment must correspond to the
name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
_________________________________________________________________
<PAGE>
Exhibit T to Investment Agreement
August 31, 2000
Ms. Lori Livingston
Transfer On Line
227 Pine Street, Suite 300
Portland, OR 97204
Telephone: (503) 227-2950
Facsimile: (503) 227-6874
Dear Ms. Lori Livingston:
Reference is made to that certain Investment Agreement (the
"Investment Agreement"), dated on or about August 31, 2000, by
and among Payforview.com Corporation, a Nevada corporation (the
"Company"), and the other signatories thereto (the "Holders")
pursuant to which the Company, at times and amounts chosen by the
Company, as further described in the Investment Agreement, may
issue to the Holder up to Forty Million Dollars ($40,000,000) in
aggregate principal amount of Common Stock of the Company (the
"Put Shares"), and warrants (the "Warrants") to purchase Common
Stock (the "Warrant Shares") of the Company's.
A. Issuance of Put Shares. This letter shall serve as our
irrevocable authorization and direction to you (provided that you
are the transfer agent of the Company at such time) to issue
unlegended Put Shares in the name of the Holder (or in the name
of its nominee, at the Holder's request) from time to time upon
surrender to you of (i) a letter from the Company, instructing
you to issue a specified number of Put Shares to the Holder, (ii)
a properly completed and duly executed Put Notice, in the form
attached hereto as Exhibit 1, which has been properly agreed and
acknowledged by the Company as indicated by the signature of a
duly authorized officer of the Company thereon, (iii)
Confirmation (as defined below) and (iv) an opinion of counsel
("Put Opinion of Counsel") in substantially the form of the Put
Opinion of Counsel in Composite Exhibit 2.
B. Issuance of Warrant Shares. This letter shall serve as
our irrevocable authorization and direction to you (provided that
you are the transfer agent of the Company at such time) to issue
unlegended Warrant Shares in the name of the Holder (or in the
name of its nominee, at the Holder's request) from time to time
upon surrender to you of (i) a letter from the Company,
instructing you to issue a specified number of Warrant Shares to
the Holder, (ii) a properly completed and duly executed Warrant
Exercise Form, in the form attached hereto as Exhibit 3, which
has been properly agreed and acknowledged by the Company as
indicated by the signature of a duly authorized
officer of the Company thereon, (iii) Confirmation (as defined
below) and (iv) an opinion of counsel ("Warrant Opinion of
Counsel") in substantially the form of the Commitment Opinion of
Counsel (in the case of the Commitment Warrant) or the Put
Opinion of Counsel (in the case of the Purchase Warrant), each in
Composite Exhibit 4.
C. Legend Free Certificates. So long as you have previously
received either: (A)(i) written confirmation from counsel to the
Company (which counsel may be in-house legal counsel) that a
registration statement covering resales of the Put Shares and
Warrant Shares has been declared effective by the Securities and
Exchange Commission under the Securities Act of 1933, as amended,
and (ii) a copy of such registration statement, or (B) written
confirmation from counsel to the Company (which counsel may be
in-house legal counsel) that a public sale or transfer of such
Security may be made without registration under the Act, ((A) or
(B) above, as applicable, is referred to as a "Confirmation"),
certificates representing the Put Shares and Warrant Shares shall
not bear any legend restricting transfer of the Put Shares or
Warrant Shares and should not be subject to any stop-transfer
restriction.
If you have not previously received Confirmation, then the
Put Shares shall not be issued, and the certificates representing
the Warrant Shares shall be issued, but shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, THE SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR
TRANSFERRED UNDER AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS."
provided, however, that the Company may from time to time notify
you to place a stop-transfer restriction on the certificates for
outstanding Put Shares and Warrant Shares in the event a
registration statement covering resales of the Put Shares and the
Warrant Shares is subject to amendment for events then current.
Please be advised that the Holders are relying upon this letter
as an inducement to enter into the Investment Agreement.
Please execute this letter in the space indicated to acknowledge
your agreement to act in accordance with these instructions.
Should you have any questions concerning this matter, please
contact me at (604) 609-6181.
Very truly yours,
PAYFORVIEW.COM CORPORATION
By:__________________________
Marc Pitcher, President
Agreed and Acknowledged: HOLDER
TRANSFER AGENT SWARTZ PRIVATE EQUITY, LLC
By: __________________________ By: /s/ Eric Swartz
Lori Livingston Eric S. Swartz, Manager
Date: August 31, 2000 Date: August 31, 2000
Enclosures
ATTACHED EXHIBITS 1 - 4
<PAGE>
<PAGE>
EXHIBIT 10.10 ACKNOWLEDGMENT AND AGREEMENT WITH SWARTZ PRIVATE
EQUITY, LLC, dated August 31, 2000
ACKNOWLEDGMENT AND AGREEMENT
With respect to the Investment Agreement entered into as of
August 31, 2000, by and among Payforview.com Corporation, a
corporation duly incorporated and existing under the laws of the
State of Nevada (the "Company") and Swartz Private Equity, LLC
(hereinafter referred to as "Swartz"), the Company hereby agrees
and acknowledges the following:
The Company acknowledges that the Investor may sell the Put
Shares any time, and from time to time, after the Put Date
for such shares, and that such sales may occur during a
Pricing Period or Pricing Periods and may have the effect of
reducing the Purchase Price.
Furthermore, the Company agrees to present the proposed
final registration statement to be filed pursuant to the terms of
the Registration Rights Agreement entered into in conjunction
with the Investment Agreement to Swartz for its review at least
five (5) business days prior to the proposed filing date, and to
obtain Swartz's final comments to the registration statement
before filing it with the SEC.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of this 31st day of August, 2000.
PAYFORVIEW.COM CORPORATION INVESTOR:
SWARTZ PRIVATE EQUITY, LLC.
By: /s/ Marc Pitcher By: /s/ Eric Swartz
Marc Pitcher, President Eric S. Swartz, Manager
Payforview.com Corporation 1080 Holcomb Bridge Road
300-1055 West Hastings Street Bldg. 200, Suite 285
Vancouver, BC V6E 2E9 Roswell, GA 30076
Telephone: (604) 609-6181 Telephone: (770) 640-8130
Facsimile: (604) 609-6183 Facsimile: (770) 640-7150
<PAGE>
EXHIBIT 23.2 CONSENT OF GRANT THORNTON LLP.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated July 7, 2000, accompanying the
financial statements of PayForView.com Corp. as of and for the
year ended December 31, 1999, contained in the Registration
Statement and Prospectus. We consent to the use of the
aforementioned report in the Registration Statement and
Prospectus, and to the use of our name as it appears under the
caption "Experts."
GRANT THORNTON LLP
New York, New York
November 20, 2000
<PAGE>
EXHIBIT 23.3 CONSENT OF DAVIDSON & COMPANY.
CONSENT OF INDEPENDENT AUDITORS
We have issued our report dated July 21, 1999 accompanying the
financial statements of Voyager International Entertainment, Inc.
appearing in the Current Report on Form 8K/A, filed with the
Securities and Exchange Commission on October 25, 2000, which
are incorporated by reference in this Registration
Statement/Reoffer Prospectus. We consent to the incorporation by
reference in the Registration Statement/Reoffer Prospectus of the
aforementioned report and to the use of our name as it appears
under the caption "Experts".
/s/ Davidson & Company
Davidson & Company
Vancouver, Canada
November 7, 2000
