<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
July 31, 1997
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PlayNet Technologies, Inc..
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-25296 11-2706304
- ------------------------- ------------------------------
(Commission File Number) (IRS Employer Identification No.)
One Maritime Plaza, San Francisco, California 94111
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code:
(415) 217-3600
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ITEM 5. Other Events
Response of the Nasdaq Hearing on Delisting the Company's Stock
On July 11, 1997, the Nasdaq Listing Qualifications Hearing Panel (the "Panel")
notified the Company that it had granted the Company a limited time exception to
the capital and surplus requirement as set forth in NASD Marketplace Rule
4310(c)(03) on the condition that on or before July 31, 1997 the Company must
make a public filing with the SEC (this Form 8-K) and Nasdaq which contains a
June 30, 1997 balance sheet with pro forma adjustments for any significant
transactions on or before the filing date and that such pro forma balance sheet
must evidence minimum capital and surplus of $15,000,000. Since the Company is
operating under the exception granted by the panel, its continued listing on the
Nasdaq SmallCap Market is conditional, and as such, effective July 16, 1997, the
trading symbol of the Company's Common Stock has been modified to add a fifth
character "C" and has changed from "PLNT" to "PLNTC". The Company's trading
symbol will contain this fifth character until the Company has demonstrated
compliance with the terms of the exception.
Completed Transactions
Financing Commitments:
A principal stockholder of the Company also acts as financial, investor and
strategic alliance consultants to the Company. In connection with these duties,
the stockholder has successfully assisted the Company in raising capital. In
calendar year 1995 the stockholder delivered capital investments in the amount
of $2,631,250; in calendar year 1996 $2,384,000 in capital investments was
raised, as well as $2,106,500 in convertible promissory note. The stockholder,
pursuant to an amended agreement, has undertaken the obligation to raise a
minimum of $7,500,000 in additional capital for the Company during calendar year
1997. In that regard, $1,750,000 has been raised in bridge financing
arrangements and an additional $2,250,000 in capital has been raised under other
financing arrangements. This stockholder has demonstrated its commitment as well
as its ability to successfully assist the Company in its endeavors to raise
capital sufficient to fund its cash needs during its development stage and until
it is able to generate sufficient revenues from the sale of its products. The
stockholder is highly confident that it will be able to successfully consummate
the capital investment transactions the Company may require or the stockholder
has committed to invest the capital in the Company.
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Equity Transactions:
In July 1997 the Company received a total of $600,000 in cash payments from a
third party for the purchase of 600,000 shares of PlayNet Common Stock at $1.00
per share.
On July 29, 1997 the Company entered into an agreement with Access America, Inc.
of New Orleans, Louisiana (the Network) to arrange for the broadcast of certain
advertising material promoting the sale of the Company's products and services
via television in exchange for the issuance of convertible preferred shares
convertible into shares of the Company's Common Stock amounting to $12,500,000.
The broadcast time will be devoted to promoting the Company's prize tournaments
for the benefit of operators of the Company's networked entertainment terminals
for public venues, and for the musical offerings that will be featured on these
terminals and the networked jukeboxes planned to be introduced into the market.
For this transaction, the Company's Common Stock has been valued at $7.00 per
share, which yields 1,785,714 shares of Common Stock issuable under this
agreement upon full conversion of the preferred shares. The Network shall
broadcast PlayNet's material for the number of hours or portions thereof of
broadcast time equivalent to the purchase price, calculated at the Network's
normal rates less any discounts offered to any other customers. PlayNet will
make a one-time payment equal to one-half of one percent of the total value of
the agreement to cover all administrative costs. The agreement shall continue
until termination or until the Company has used all of the broadcast time. The
Network may terminate the agreement if the Company's common stock is delisted
from the Nasdaq SmallCap Market and such order is in effect for more than sixty
(60) days. On or after August 31, 1998 and August 31, 1999, on ten (10) business
days written notice to the Company (the "Conversion Date") and subject to the
Company's right, upon receipt of the Notice of Conversion, to redeem the
preferred shares at a discount, Network has the right to convert twenty percent
(20%) and eighty percent (80%), respectively, of the Preferred Shares into
shares of newly issued Common Shares of the Company on the basis of Seven
Dollars ($7.00) per share (357,143 and 1,428,571 shares, respectively), provided
however, that if the closing price of the shares of Common Stock of the Company
for the Conversion Date is not equal to or greater than Seven Dollars ($7.00)
per share, then the Company will gross up the number of shares issued to Network
such that the then amount of shares equals $2,500,000 and $10,000,000 in value,
respectively, based on the closing price of common stock of the Company for the
Conversion Date. This agreement is assignable, subject to certain provisions, by
either party without prior written consent of the other.
Conversion of Certain Promissory Notes:
Effective July 30, 1997, holders of certain promissory notes, including certain
of the holders of Senior Secured Notes, issued by the Company agreed to
convert their notes into Common Stock of the Company subject to the following
terms. The face amount of the note plus any accrued and unpaid interest shall
convert into shares of PlayNet Common Stock on the basis of $1.275 per share,
which represents the average closing price for such shares on the Nasdaq
SmallCap Market for the five (5) trading days (July 18th through July 24th)
preceding the agreement date. The Company has agreed to use its best efforts to
register all shares issued pursuant to this conversion with Securities and
Exchange Commission on a Form S-3 Registration Statement. As additional
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consideration for the conversion, warrants issued in connection with the
issuance of these promissory notes to the Note Holders to purchase shares of the
Company's Common Stock shall be amended to reflect a reduction in the exercise
price per share of such warrants to $2.00 per share. Under this agreement the
Company is converting an aggregate principal amount of $4,840,000 of promissory
notes (including $1,750,000 of Senior Secured Notes) and an aggregate of
$348,817 in accrued and unpaid interest into a total of 4,039,337 share of
Common Stock. Of the total principal amount being converted $260,000 represents
one convertible term loan held by a stockholder and treated as a current
liability for balance sheet purposes; $1,330,000 represents three convertible
term loans held by stockholders and treated as non-current liabilities;
$1,750,000 represents four notes related to the bridge financing transactions;
and $1,500,000 represents four notes related to other short term financing
arrangements. In connection with the bridge financing notes and the other short
term notes, the Company issued warrants to purchase 500,000 shares of its Common
Stock and recorded deferred financing charges related to the value thereof. (As
reflected in the Pro Forma Balance Sheet in Item 7(b).)
Stock Subscription Agreement:
On July 30, 1997, the Company received a commitment from an unrelated third
party to raise the sum of $2,000,000 for PlayNet through the private sale of its
securities in a transaction or transactions exempt from the registration
requirements of the Securities Act of 1933. The third party has agreed to
advance the sum of $2,000,000 to the Company no later than five days from the
date of the agreement to be credited against sums to be paid to the Company with
respect to the securities sold by the Company through the third party. (As
reflected in the Pro Forma Balance Sheet in Item 7(b).)
Pending Transactions
Letters of Intent to Convert Debentures:
Effective July 30, 1997, the Company has received a commitment in principle from
the holder of its $4,000,000 10% Convertible Debenture confirming that it is
prepared to exchange the Debentures for convertible preferred stock of PlayNet
that shall have a dividend rate of 10% per annum. The parties are in the process
of negotiating definitive documentation with regard to this transaction. The
Debentures will be exchanged for a convertible preferred stock of PlayNet with a
face amount equal to the $4 million stated principal of the Debenture plus
accrued interest, penalties and other amounts due to the holder less the
$250,000 of initial funding that, in accordance with the Convertible Debenture
Purchase
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Agreement dated May 20, 1997, was not funded. (As reflected in the Pro Forma
Balance Sheet in Item 7(b).)
Pending Negotiations to Convert Additional Senior Secured Promissory Notes
The Company is currently in negotiations with Holders of the remaining Senior
Secured Notes, in the aggregate principal amount of $1,500,000, for the
repayment, conversion or restructuring of these Notes. (See "Conversion of
Certain Promissory Notes")
The Company is confident that it will successfully conclude negotiations on
these two pending transactions and consummate the conversions and exchange of
the Debentures and Notes.
Intercontinental Holding Company, Ltd.
On July 18, 1997 the Company engaged Intercontinental Holding Company, Ltd. for
a period of three weeks as a consultant to act as an advisor with respect to
existing and potential investors regarding a 7.5% Convertible Preferred Stock
offering. The term sheet related to this capital raising transaction reflects an
offering of up to $2,000,000 in Convertible Preferred Stock issuable pursuant to
Regulation D with registration rights. The dividends are to be paid quarterly
either in cash or in freely tradable Common Stock, at the option of the issuer
at each interest due date. If paid in Common Stock, the shares will be based
upon the then applicable conversion price on the interest due dates. The
conversion price will be the lower of either 100% of the closing bid price for
the five days immediately preceding the closing date of the transaction or 78%
of the average closing bid price for the five days immediately preceding the
interest due date. The securities will be convertible into shares of the
Company's Common Stock anytime commencing after 90 days from the closing date up
to one year from the closing date. At the end of one year the Convertible
Preferred shares will be automatically converted by the Company at the then
applicable conversion price.
Intercontinental is currently in discussion with several potential investors
regarding this transaction. The Company reasonably anticipates consummating a
transaction similar in nature to the one described above within the term of the
agreement.
Select Capital Advisors, Inc.
On July 25, 1997 the Company entered into an agreement with Select Capital
Advisors, Inc. to act on the Company's behalf in an offering of $3,000,000 of 8%
Convertible Debentures to close on or before August 10, 1997. The Debenture will
mature in two years and will be convertible within forty five days of the
closing date at a conversion price of the lesser of 80% of the average closing
bid
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price for the five trading days prior to the subscription or 75% of the closing
bid price prior to the conversion.
Security Ownership of Certain Beneficial Owners and Management: The following
table sets forth certain information on a pro forma basis, assuming the
consummation of all transactions described herein, with respect to the
beneficial ownership of the outstanding shares of the Company's Common Stock as
of July 31,1997 by (i) each person known by the Company to own more than five
percent (5%) of the outstanding shares of Common Stock, (ii) each director of
the Company, (iii) each of the executive officers named in the Summary
Compensation Table herein under "Executive Compensation", and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class(1)
- ------------------- ----------------------- -----------
<S> <C> <C>
Castellon Ltd.(2) 2,412,122(5) 11.44%
2, Clan William Terrace
Dublin 2, Republic of Ireland
Shmuel Cohen(2) 2,052,520(3) 9.73%
5 Cove Lane
Kings Point, New York 11024
KF Chemical Co., Inc. 1,981,197(10) 9.39%
P.O. Box 91
Jerusalem 91000 Israel
Ceres Advisors Ltd. 1,567,053(8) 7.43%
P.O. Box 91
Jerusalem 91000 Israel
Zeller Eblagon Leasing Ltd. 1,561,466(9) 7.40%
16 Aba Hillel Silver
Ramat Gan 52506 Israel
N.Y. Holdings, Ltd.(2) 1,115,258(6) 5.29%
c/o Hertzog, Fox & Neeman
4 Weizman Street
Tel Aviv 64239 Israel
Joseph Ettinger (2) (5) 2,412,122(5) 11.44%
c/o Castellon Ltd.
2, Clan William Terrace
Dublin 2, Republic of Ireland
Yael Cohen 0(4) 0.00%
5 Cove Lane
Kings Point, New York 11024
Ron Borta 1,052,273(7) 4.99%
14 Oak Lane
Sterling, Virginia 20165
Directors and executive officers as a group (4 persons) 4,464,642(3) 21.17%
</TABLE>
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(1) Calculations on a pro forma basis with 21,088,976 shares outstanding:
15,612,985 actual shares outstanding as of June 30, 1997and 600,000
shares were purchased in July 1997; 4,034,173 shares issued upon
conversion of debt; 841,818 shares issued assuming exercise of all
exercisable options and warrants as July 31, 1997 and for 60 days
thereafter.
(2) Pursuant to a ten year proxy agreement dated June 30, 1992, Mr. Cohen,
Castellon Limited and NY Holdings Ltd. have agreed that for so long as
each party is a stockholder of the Company, each party will vote his or
their shares of common stock, currently constituting approximately
26.46% of the Company's Common Stock, for the election of three
directors to be designated by Mr. Cohen, two directors to be designated
by Castellon Limited and one director to be designated by NY Holdings,
Ltd. The sole beneficial owner of Castellon Limited is Mr. Joseph
Ettinger.
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(3) Includes 200,000 shares of common stock issuable upon exercise of
currently exercisable stock options.
(4) Shmuel Cohen and Yael Cohen are husband and wife and each may be deemed
to be the beneficial owner of the shares owned by Mr. Cohen. Mrs. Cohen
disclaims beneficial ownership of such shares.
(5) Mr. Ettinger is the President and sole beneficial owner of Castellon
Limited and may therefore be deemed to be the beneficial owner of all
of the shares of common stock of the Company owned by Castellon Ltd..
(6) Includes 60,000 shares of common stock issuable upon the exercise of
currently exercisable stock options.
(7) Includes 181,818 shares of common stock owned by Leslie Davis, Mr.
Borta's wife.
(8) Includes 175,000 shares of common stock issuable upon the exercise of
currently exercisable warrants issued in connection with the promissory
note being converted.
(9) Includes 81,818 shares of common stock issuable upon the exercise of
stock options granted in connection with a promissory note previously
paid in full and 150,000 shares issuable upon the exercise of currently
exercisable warrants issued in connection with the promissory note
being converted.
(10) Includes 100,000 shares of common stock issuable upon the exercise of
currently exercisable warrants issued in connection with the promissory
note being converted.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Pro forma financial information.
PLAYNET TECHNOLOGIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
BASIS OF PRESENTATION
The accompanying unaudited Pro Forma Consolidated Balance Sheet as of June 30,
1997 has been prepared by the Company's management and has been based on
historical transactions through June 30, 1997 and certain pro forma adjustments
necessary to reflect significant transactions occurring on or before the date of
this filing. This balance sheet should be read in conjunction with the documents
incorporated herein by reference.
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PLAYNET TECHNOLOGIES, INC. AND SUBSIDIARIES
(FORMERLY ARISTO INTERNATIONAL CORPORATION)
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS JUNE 30, PRO FORMA PRO FORMA AS
1997 ADJUSTMENTS ADJUSTED
------------ ------------ ------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 43,063 $ (39,000)(a) $ 4,063
Proceeds due from equity transaction $ -- 2,000,00 (b) 2,000,000
Restricted cash 250,000 -- 250,000
Inventory 3,220,710 -- 3,220,710
Prepaid expenses and other current assets 52,914 -- 52,914
------------ ------------ ------------
Total current assets 3,566,687 1,961,000 6,327,687
Equipment, net 900,694 -- 900,694
Investment in Joint Venture 50,000 -- 50,000
Capitalized software, net 2,754,301 -- 2,754,301
Goodwill, net 876,721 -- 876,721
Restricted cash - noncurrent 89,039 -- 89,039
Other assets 353,426 -- 353,426
------------ ------------ ------------
Total assets $ 8,590,868 $ 1,961,000 $ 10,551,868
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 6,493,639 $ (632,056)(c) $ 5,861,583
Notes payable - bank 406,000 -- 406,000
Notes payable - bridge financing
(net of deferred financing charges) 2,357,933 (2,357,933)(d) -0-
Notes payable - all others
(net of deferred financing charges) 1,728,557 (1,185,403)(e) 543,154
Convertible term loans - stockholders 776,500 (260,000)(f) 516,500
Payable to stockholder -- -- --
Capital leases 31,384 -- 31,384
------------ ------------ ------------
Total current liabilities 11,794,013 (4,435,392) 7,358,621
10% Convertible Debenture 3,350,000 (3,350,000)(g) --
Convertible term loans - stockholders 1,330,000 (1,330,000)(h) --
Capital leases - long term 280,768 -- 280,768
Deferred rent 138,169 -- 138,169
------------ ------------ ------------
Total liabilities 16,892,950 (9.115,392) 7,777,558
Commitments and contingencies -- -- --
Stockholders' equity:
Preferred stock, $.001 par value; authorized
1,000,000 shares; issued and outstanding none at 6/30/97 and
2,973,848 on a pro forma basis -- 2,974 (i) 2,974
Common stock, $.001 par value; authorized
39,000,000 shares; issued and outstanding
14,980,319 and 26,636,457, respectively 14,980 11,657 (j) 26,637
Additional paid in-capital 33,942,927 26,781,674 (k) 60,724,601
Deficit accumulated during the development stage (42,259,989) (3,219,913)(l) (45,479,902)
------------ ------------ ------------
Total stockholders' equity (8,302,082) 23,576,392 15,274,310
------------ ------------ ------------
============ ============ ============
Total Prepaid Advertising (12,500,000)(m) (12,500,000)
============ ============ ============
Total liabilities and stockholders' equity $ 8,590,868 $ 1,961,000 $ 10,551,868
============ ============ ============
</TABLE>
Footnotes to Pro forma Adjustments:
(a) The $39,000 reduction in cash includes the receipt in July 1997 of $600,000
from third parties for the purchase of common stock and $94,000 related to
certain debt transactions less the projected outflows of cash totaling
$639,000 primarily for July payroll.
(b) The Proceeds due from equity transaction relate to a commitment from an
unrelated third party for the sale of $2,000,000 in common stock. Total
number of shares estimated to be issued is 3,368,421.
(c) Pro forma accounts payable and accrued expenses reduction of $632,056
includes the conversion to common stock of $420,055 in accrued interest
related to the converted notes plus $212,000 of reductions in accounts
payable through the use of proceeds.
(d) Of the full amount of the bridge financing notes totaling $3.25M to be
converted into common stock net of deferred financing charges of $892,076,
agreements for $1.75M have been consummated and agreements for $1.5M are
being negotiated.
(e) Agreements to convert Other notes payable totaling $1.5M into common stock
net of deferred financing charges of $220,597 have been consummated. In
July the Company incurred debt in consideration of cash received in the
amount of $94,000.
(f) The $260,000 of reduction represents the face amount of convertible term
loans to stockholders converted to common stock.
(g) The full amount of $3,750,000 of convertible debentures net of $400,000 in
deferred financing charges are projected to be converted into 2,973,848
shares of convertible preferred stock.
(h) Agreements have been consummated to convert promissory notes totaling
$1,330,000 into common stock.
(i) Represents par value of 2,973,848 shares of convertible preferred stock
issued in the conversion of the 10% debenture plus accrued interest, see
note (g).
(j) Represents par value of all common stock issued aggregating 5,869,333
shares in consideration for the conversion of notes and accrued interest,
1,785,715 related to prepaid advertising, 632,666 for consulting services
and 3,368,421 related to the commitment from a third party to arrange the
private purchase of $2,000,000 of common stock at current prices, see note
(b).
(k) Value of additional paid in capital related to the shares issued in note
(j).
(l) Additional charges to accumulated deficit consist of $1,512,664 in
amortized financing charges related to the converted notes, $1,186,249 for
the value of financial consulting services paid with common stock, and
$521,000 of estimated July payroll charges paid with proceeds from stock
transactions.
(m) Prepaid advertising consists of the equity value of shares to be issued in
connection with an agreement with Access America for the broadcast of the
Company's advertising material. As the Company consumes the broadcast hours
the prepaid advertising will be reduced and the stockholder equity value
will be increased.
(c) Exhibits.
99.1 Letter dated July 17, 1997 from Principal Stockholder of the Company.
99.2 Agreement with Access America, Inc. dated July 29, 1997.
99.3 Form of Letter Agreements with Holders of Promissory Notes evidencing
conversion of Promissory Notes into Common Stock of the Company and
Schedule of Note Holders who have executed such Agreements.
99.4 Commitment Letter from International Savings Portfolio Ltd., dated July
30, 1997.
99.5 Letter of Robinson Silverman Pearse Aronson & Berman LLP dated July 30,
1997.
99.6 Letter of Allen & Company Incorporated, dated July 31, 1997.
99.7 Term Sheet with Intercontinental Holding Company, Ltd., dated July 18,
1997.
99.8 Term Sheet with Select Capital Advisors, Inc., dated July 25, 1997.
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(c) Exhibits.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's (i) Annual Report on Form 10-KSB and 10-KSB/A for the fiscal year
ended October 31, 1996, and (ii) Quarterly Reports on Form 10-Q for the quarters
ended January 31, 1997 and April 30, 1997 are incorporated in and made a
constituent part of this Prospectus by reference. All reports and proxy
statements filed by the Company with the Commission pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and
prior to termination of the offering of the Shares of Common Stock to which the
Prospectus relates shall likewise be deemed incorporated herein and made a
constituent part hereof by reference from the respective dates of filing.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified and superceded for purposes
of this Prospectus to the extent that a statement contained herein or in any
subsequently filed document that is also incorporated herein modifies or
replaces such statement. Any statement so modified or superceded shall not be
deemed, except as so modified or superceded, to constitute a part of this
Prospectus.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PlayNet Technologies, Inc.
Dated: July 31, 1997 By: /s/ Shmuel Cohen
----------------------- ----------------------------
Shmuel Cohen
President and
Chief Executive Officer
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Exhibit Index
99.1 Letter dated July 17, 1997 from Principal Stockholder of the Company.
99.2 Agreement with Access America, Inc. dated July 29, 1997.
99.3 Form of Letter Agreements with Holders of Promissory Notes evidencing
conversion of Promissory Notes into Common Stock of the Company and
Schedule of Note Holders who have executed such Agreements.
99.4 Commitment Letter from International Savings Portfolio Ltd., dated July
30, 1997.
99.5 Letter of Robinson Silverman Pearse Aronson & Berman LLP dated July 30,
1997.
99.6 Letter of Allen & Company Incorporated, dated July 31, 1997.
99.7 Term Sheet with Intercontinental Holding Company, Ltd., dated July 18,
1997.
99.8 Term Sheet with Select Capital Advisors, Inc., dated July 25, 1997.
<PAGE> 1
Exhibit 99.1
CASTELLON LIMITED
2, CLAN WILLIAM TERRACE
DUBLIN 2, REPUBLIC OF IRELAND
July 17, 1997
Coopers & Lybrand L.L.P.
New York, New York
RE: PLAYNET TECHNOLOGIES, INC.
Dear Sirs:
As you are aware, we are a principal stockholder in PlayNet Technologies, Inc.
(the "Company"). In addition, we also act as financial, investor and strategic
alliance consultants to the Company pursuant to that certain Consulting
Agreement, originally dated July 1, 1995, as amended (the "Agreement").
One of our duties and obligations under the terms of the Agreement is to assist
the Company in the raising of capital, an endeavor at which we have been quite
successful. In calendar year 1995, our obligation under the terms of the
Agreement was to raise $750,000 in capital for the Company and we did in fact
deliver capital investments in the Company in the amount of $2,631,250. Then in
calendar year 1996, our obligation under the terms of the Agreement was raised
to require that we obtain during 1996 a minimum of $1,000,000 in additional
capital for and on behalf of the Company. As of December 31, 1996, we were
successful in raising an additional $2,384,000 in capital investments in the
Company, as well as $2,106,500 in convertible Promissory Notes on behalf of the
Company.
Furthermore, our Agreement with the Company has recently been amended to extend
the term through June 30, 1998 with a renewal of our obligation to continue to
raise additional capital for the Company. Under the amended Agreement we have
now undertaken the obligation to raise a minimum of $7,500,000 in additional
capital for the Company during calendar year 1997. In that regard, we have
already recently assisted the principal stockholders of the Company, in locating
purchasers for $1,750,000 in Senior Secured Notes as part of the initial stage
of the Company's Bridge Financing arrangement with Allen & Company Incorporated
and in otherwise locating an additional $2,250,000 in additional capital.
As can be seen by the above figures, we have clearly demonstrated our commitment
to and our ability to successfully assist the Company in its endeavors to raise
capital sufficient to fund its cash needs during its development stage and until
it is able to
<PAGE> 2
generate sufficient revenue from the sales of its products. We are committed to
continue to remain available to assist the Company in any manner possible in
raising additional capital investments which it may require. We are highly
confident that there are additional and/or returning investors who are able to
make further investments of capital in the Company and that when and if the
Company requires such capital, we will be able to successful consummate
transactions with those prospective investors, or we, Castellon Limited, will
invest in the capital of the Company.
If you require anything further, please do not hesitate to contact us.
Very truly yours,
CASTELLON LTD.
By: /S/Joseph Ettinger
----------------------------
Joseph Ettinger, President
<PAGE> 1
Exhibit 99.2
Access America Agreement
<PAGE> 2
EXHIBIT 99.2
AGREEMENT
This Agreement, dated this 29th day of July, 1997, is between ACCESS AMERICA,
INC.) 3200 Chartres Street, New Orleans, Louisiana (hereinafter called the
NETWORK) and PLAYNET TECHNOLOGIES, INC., 1 Maritime Plaza, San Francisco,
California (hereinafter called PLAYNET).
WHEREAS:
A. PLAYNET wishes to arrange for the broadcast of certain advertising material
promoting the sale of its products and services via television in exchange for
the issuance of shares of Convertible Preferred stock of PLAYNET.
B. NETWORK has advertising time on several Networks and is willing to sell
some of the time to PLAYNET for common stock shares in PLAYNET.
NOW, THEREFORE, in consideration of the mutual premises set out herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
1. In this Agreement:
A. "PLAYNET's Material" means the audio an video advertising
material provided by PLAYNET to the NETWORK for Broadcast;
B. "Agreement" means this agreement between PLAYNET and the
NETWORK acceptable and agreeable by the NETWORK;
C. "Broadcast Time" means the time during which the NETWORK will
Broadcast PLAYNET's Material;
D. "Broadcast" means the transmission of audio and video material
by the NETWORK to its cable subscribers of
-1-
<PAGE> 3
television viewers in such form as is normally transmitted by the NETWORK and
received and viewed by such subscribers or viewers;
E. "Commission" means the Securities and Exchange Commission;
F. "Preferred Shares" means newly created preferred stock convertible
into shares of common stock of PLAYNET pursuant to the terms set forth in this
agreement.
G. "Common Shares" means the authorized registered common shares of
PLAYNET;
H. "Effective Date" means the date of execution of this Agreement by
both parties.
I. "Network's Normal Rates" means normal rates charged by the NETWORK
to third parties at arm's length to the NETWORK for broadcasting audio and video
advertising material similar to PLAYNET's Material, less any frequency or other
discounts typically offered by the NETWORK, for broadcasting Time in the
amounts, at the times and according to the programming schedule that is sought
by PLAYNET.
J. "Purchase Price" means $12,500,000 of Network air time paid for
in the form of common shares of PLAYNET.
2. PURCHASE OF BROADCAST TIME
2.1 In consideration of the execution of this Agreement, the NETWORK shall
Broadcast PLAYNET's Material, subject to the conditions hereinafter set forth,
for the number of hours or portions thereof of Broadcast Time equivalent to the
Purchase Price, calculated at the NETWORK's Normal Rates less any discounts
offered by the network to any other customer.
2.2 Subject to the conditions of this Agreement, the Broadcast of
PLAYNET's Material shall be scheduled at such times and in proximity to such
other programming as PLAYNET may reasonably request.
3. BROADCAST APPROVAL
3.1 The NETWORK may approve or disapprove all material submitted for
broadcasts hereunder and to refuse to permit any individual to participate in
any broadcast. The NETWORK shall
- 2 -
<PAGE> 4
have the sole right to delete or omit any part of any such broadcast that in its
opinion contains objectionable matter of any nature.
3.2 In order to express certain minimum standards of the NETWORK for
accepting broadcast material, the following types of and practices are
prohibited. They do not purport to be a complete list of the NETWORK's
standards, and are set forth for example only. In appropriate situations, the
NETWORK may waive certain of the following requirements if good broadcasting in
the public interest will result. The Advertiser shall submit any questionable
matter to the NETWORK to determine its permissible use before contracting any
obligations or commitments in connection therewith.
(a) Infringements (including trademark or patents or copyrights) of
another advertiser's rights through plagiarism or unfair imitation of either
program idea or copy, or any other unfair competition.
(b) Lotteries or "drawing contents" or any other contest in which the
public is unfairly treated or where fair and competent judging is not provided.
(c) Presentation of slanderous, obscene, profane, vulgar, repulsive or
offensive matter, either in theme or in treatment.
(d) Unpleasantly rapid delivery of commercial announcements.
(e) Announcements or programs which are prejudicial to the public interest
or to the interest of the NETWORK or to honest advertising and reputable
business in general.
3.3 If the NETWORK determines that the materials submitted by the
Advertiser do not meet the NETWORK's requirements, it may either present a
substitute broadcast approved by the Company, which PLAYNET shall pay for
according to the terms of this Agreement, or edit the submitted materials.
4. BROADCAST CONDITIONS
4.1 Any failure, interruption, or delay in presenting the broadcasts
provided for, either in whole or in part, shall not constitute a breach of this
Agreement if such event results from
- 3 -
<PAGE> 5
any of the following causes: technical difficulties or mechanical failure of
any of the broadcasting equipment, provided the Broadcaster has taken
reasonable steps to avoid such difficulties or their recurrences, strikes, labor
disputes, boycotts, riots, civil insurrection, war or national emergencies,
governmental restrictions, acts of God, or any other cause beyond the
Broadcaster's control.
4.2 If an entire announcement is not presented, the Broadcaster and
company shall attempt to agree upon a mutually satisfactory time to reschedule
such an announcement. If such rescheduling cannot be agreed upon, the
Broadcaster shall grant a pro rata reduction in charges for the broadcasting
time lost by PLAYNET.
4.3 PLAYNET shall continue to be entitled to all discounts and rates
provided in this Agreement, notwithstanding any reduction in broadcasting time
used pursuant to this paragraph.
4.4 Subject to prior written agreement between PLAYNET and the NETWORK,
PLAYNET shall be responsible for all correspondence or telephone calls
concerning dealings with the public in connection with material provided by
PLAYNET and the network shall refer all such correspondence or telephone calls
to PLAYNET for response. Except where not expressly authorized by PLAYNET,
PLAYNET will assume the sole risk with regard to the network's correspondence
or telephone calls with the public in connection with any of the advertiser's
material.
4.5 The NETWORK will exercise normal precautions but assumes no liability
for loss or damage to commercial or other material furnished by NETWORK other
than as a direct result of negligence of the PLAYNET, its agents or contractors
or employees.
4.6 PLAYNET warrants that any commercial material supplied to the NETWORK
for telecast purposes contains no utilization of subliminal techniques.
4.7 If the NETWORK fails to receive PLAYNET schedules or material or both
within ten (10) working days prior to the schedule date on which services are
to be performed, the NETWORK shall have the right to refuse any revision
affecting commercial scheduling.
- 4 -
<PAGE> 6
4.8 All Company's Material shall be furnished by PLAYNET and all expenses
connected with delivery to and from the NETWORK shall be paid by PLAYNET. All
expenses connected with further delivery to any station or location of the
network other than the address set out on the first page hereof (a "Remote
Location") shall be paid by the Network except if any commercial announcement
is furnished by PLAYNET for the purpose of performing a cut-in local service at
any station or Remote Location of the NETWORK then, responsibility for delivery
and all expenses connected with delivery to and from such station shall be paid
by PLAYNET.
5. INDEMNIFICATION
5.1 PLAYNET agrees to indemnify the NETWORK, its agents, servants and
employees, against all or any liability for defamation or improper trade
practices, infringement of trademarks, trade names or pro-ram titles, violation
of rights of privacy infringements of copyrights and proprietary title and any
other wrongful conduct resulting from the broadcast of any materials furnished
by PLAYNET.
5.2 The NETWORK shall indemnify and hold harmless PLAYNET from and
against any and all claims, damage, or liability, including attorney's fees and
the costs and expenses of any legal action, for libel, slander, invasion of
privacy, improper trade practices, illegal competition, infringement of
trademark or trade name, unfair competition, infringement of copyright or
license, or any other wrongful conduct, resulting from the broadcasting of
material supplied or produced by the Broadcaster, including any musical
composition or performance thereof.
5.3 The provisions of this Article shall remain effective and inure to
the benefit of the respective parties notwithstanding the expiration,
cancellation, or termination of this Agreement.
6. DELIVERIES
(a) The NETWORK, will deliver to PLAYNET:
i) written confirmation of the receipt of the amount of Broadcast Time in
accordance with the NETWORK's Normal Rates applicable at that time.
- 5 -
<PAGE> 7
ii) a list of the NETWORK's Normal Rates then prevailing;
iii) any material reasonably requested by the advertiser;
iv) such other confirmation, assurances and documents as may be
applicable to the NETWORK or the Broadcast Time purchased
hereunder as may be required by any Broadcast Authority.
(b) PLAYNET will deliver to the NETWORK:
i) i) PLAYNET will make a one-time equal to one-half of one per cent
of the total value of the Agreement to cover all administrative
costs.
ii) Within Twenty (20) Business Days of the date of this agreement
certificates representing PLAYNET's Preferred Shares, registered
in the name of the NETWORK or its nominee(s) which when
converted to Common Shares shall have the Market value of
$12,500,000 and shall be in the denominations each term as set
forth in more detail in Section 10.4 hereof.
7. REPRESENTATIONS AND WARRANTEES OF PLAYNET
7.1 PLAYNET warrants and represents to the Network that, except as set out
expressly in any specific subsection below, as of the Effective Date
and at Closing:
(a) PLAYNET is a corporation duly organized and existing under the laws of
the State of DELAWARE and has the corporate power and authority to
enter into and perform this Agreement and to own lease its properties
and assets and to conduct its business as currently conducted;
(b) The execution, delivery and performance by PLAYNET of this Agreement
and the transaction herein contemplated;
(i) have been or will be prior to the Closing duly authorized by
all necessary corporate action of PLAYNET;
(ii) do not contravene conflict with or cause PLAYNET to be in
breach of its certificate of incorporation or by-laws, or any
resolution of its directors or shareholders, any trust deeds,
debentures, loan agreements or any of its other agreements or
undertaking or any judgment, or order to or by which it is
party to or is bound;
-6-
<PAGE> 8
8. ACKNOWLEDGEMENTS, REPRESENTATIONS AND WARRANTIES OF THE NETWORK
8.1 Acknowledgements
The Network acknowledges that:
(a) the Preferred Shares may not be transferred without the prior consent
of PLAYNET
(b) any Common Shares issued pursuant to section 10.5 hereof may be
subject to resale regulations under the Securities Act of 1933 and/or
the Securities Exchange Act of 1934, each as amended.
8.2 Representations and Warranties
The NETWORK warrants and represents:
(a) The NETWORK is qualified by reason of its knowledge and expertise to
evaluate the merits and risks of an investment in PLAYNET Preferred Shares and
Common Stock Shares when and if issued pursuant to section 10.4 hereof
(collectively the "Shares") and has obtained competent independent business,
legal, accounting and tax advice regarding the investment in the Shares, and the
NETWORK in making this investment, has made such inquiries, and has had access
to all such information, as the NETWORK deems necessary and the NETWORK is
relying solely upon the NETWORK's own professional advisors if any, for such
advice.
(b) PLAYNET has not provided any information or representation concerning
PLAYNET other than those contained in this Agreement. PLAYNET disclaims all
liability for any information or statements contained in any other communication
between PLAYNET and the NETWORK.
(c) The NETWORK has the legal capacity and competence to execute this
Agreement and to take all action required pursuant hereto and all necessary
approvals by its directors, shareholders, partners, members or otherwise, have
been given to authorize it to execute this Agreement and to take all actions
required pursuant thereto;
(d) The NETWORK is duly incorporated and validly existing under the laws
of Delaware.
-7-
<PAGE> 9
9. NOTICES
9.1 Any notice to be given by any party to another under this Agreement
will be deemed properly given when in writing and delivered by certified mail
with all postage and other charges fully prepaid, to the addresses above.
9.2 Any notice delivered on a business day will be deemed conclusively to
have been effectively given on the date notice was delivered.
9.3 Any notice sent by prepaid registered mail will be deemed
conclusively to have been effectively given on the third business day after
posting, but if at the time of posting or between the time of posting and the
third business day thereafter there is a strike, lockout or other labor
disturbance affecting postal service, then the notice will not be effectively
given unless delivered by hand or sent by Electronic Communication.
9.4 Any party may, by notice to other party, change its address for
notice to some other address.
10. TERMS AND TERMINATION
10.1 This Agreement is subject to receipt of acceptance from and approval
by the directors of PLAYNET. If such acceptance and approval are not obtained
by AUGUST 1, 1997, this Agreement shall be null and void and of no further
force and effect.
10.2 This Agreement shall continue until termination as hereinafter
provided, or until statements PLAYNET has used all of the Broadcast Time.
10.3 Notwithstanding anything herein contained, (a) this Agreement will
automatically terminate and the broadcast time and shares shall respectively
revert to NETWORK and PLAYNET respectively if the shares of common stock of
PLAYNET, par value $.001 per share, are delisted from trading on the NASDAQ
Smallcap Market, and (b) the Network may terminate its obligations hereunder by
notice in writing to PLAYNET if ordered to cease trading in the securities of
the Common Stock is made by a competent regulatory authority and such order is
in effect for more than sixty (60) days.
-8-
<PAGE> 10
10.4 (a) On or after August 31, 1998, on ten (10) business days written
notice to PlayNet (the "Conversion Date") and subject to Section 10.5, Network
shall have the right to convert twenty percent (20%) of the Preferred Shares
into shares of newly issued Common Shares of PlayNet on the basis of Seven
Dollars ($7.00) per share (357,143 shares), provided however, that if the
closing price of the shares of common stock of PlayNet for the Conversion Date
is not equal to or greater than Seven Dollars ($7.00) per share, than PlayNet
will gross up the number of shares issued to Network such that the amount of
shares issued to Network equals $2,500,000 in value based on the closing price
of common stock of PlayNet for the Conversion Date.
(b) On or after August 31, 1999, on ten (10) business days written
notice to PlayNet (the "Conversion Date") and subject to Section 10.5, Network
shall have the right to convert eighty percent (80%) of the Preferred Shares
into shares of newly issued Common Shares of PlayNet on the basis of Seven
Dollars ($7.00) per share (1,428,571 shares), provided however, that if the
closing price of the shares of common stock of PlayNet for the Conversion Date
is not equal to or greater than Seven Dollars ($7.00) per share, then PlayNet
will gross up the number of shares issued to Network such that the amount of
shares issued to Network equals $10,000,000 in value based on the closing price
of common stock of PlayNet for the Conversion Date.
10.5 Upon receipt of either notice of conversion from Network under
Sections 10.4(a) and 10.4(b) above, (a) PlayNet shall have the right to redeem
the Preferred Shares being tendered by Network for conversion on or after
August 31, 1998 in exchange for a cash payment of $2,500,000, less a discount
of Thirty Percent (30%), and (b) PlayNet shall have the right to redeem the
Preferred Shares being tendered by Network for conversion on or after August
31, 1999 in exchange for a cash payment of $10,000,000, less a discount of
twenty-Five Percent (25%).
10.6 Within thirty (30) days of the execution of this Agreement, Network
agrees to enter into a Voting rights and Proxy Agreement with PlayNet under
which it will agree to tender its proxy to vote all of its Preferred Shares and
Common Shares, when and if issued, in accordance with the direction and in the
discretion of the Board of Directors of PlayNet on all issues which are
submitted to the shareholders of PlayNet for approval.
11. GENERAL PROVISIONS
11.1 Interpretation
In this Agreement, a reference to:
(a) currency means United States Currency:
(b) a statute or code or a specific provision thereof includes every
regulation made pursuant; thereto, all amendments to the statute, code or to
any such regulation in force from time to time, and any statute, code or any
such regulation: and
(c) any entity includes any entity that is a successor of such entity.
11.2 Financing
Except as otherwise expressly herein provided, nothing in this Agreement
will prevent PLAYNET from carrying out any form of public or private financing
whether by the issuance of treasury shares or otherwise.
11.3 Assignment
Either party may assign any part of its rights or obligations, hereunder
without the prior written consent of the other and, PLAYNET may assign its
rights to the Broadcast Time to any corporate affiliate or subsidiary. Should
PLAYNET assign its right to the Broadcast Time (or any portion thereof) such
assignment shall incorporate by reference and be binding upon such assignee the
stated provisions of this Agreement and Article 3 Broadcast Approval and
Article 4 Broadcast Conditions and Article 5 Indemnification, in their
entirety respectively.
-9-
<PAGE> 11
11.4 Costs and Expenses
The NETWORK shall not be obligated to pay any of the fees or expenses
incurred by or on behalf of PLAYNET in connection with this Agreement, and
PLAYNET shall solely be responsible for the same, including, without limitation,
any commission or finder's fees hereunder, and any other costs and expenses
associated with the transactions herein contemplated, provided that nothing in
this Agreement shall be construed to impose on PLAYNET any obligations to pay
any fees, disbursements or expense incurred by or on behalf of the NETWORK for
professional advice or in connection with a due diligence review of the
NETWORK's affairs, or otherwise in connection with this Agreement except as
provided in paragraph 6.b.
11.5 Governing Law
This Agreement shall be governed by the laws of the State of Delaware and
contains the entire agreement between the parties relating to the subject matter
of this Agreement and supersedes any and all prior agreement, understandings,
negotiations and discussions, whether oral or written, between the parties
hereto and may be modified only by an instrument in writing signed by all
parties hereto.
11.7 Survival
The terms, provisions, representations, warranties and covenants of
PLAYNET, and the NETWORK, respectively, will survive the Closing, the payment of
the Purchase Price, the issue and delivery of the Securities, the Broadcast of
PLAYNET's materials and completion of the transactions contemplated herein with
respect thereto and all other transactions contemplated herein.
11.8 Counterparts
This Agreement may be executed in as many counterparts as may be necessary,
each of which so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.
-10-
<PAGE> 12
11.9 Further Assurances
The parties hereto each covenant and agree to execute and deliver such
further agreements, documents and writings and provide such further assurances
as may be required by the parties to give effect to this agreement and without
limiting the generality of the foregoing to do all acts and things, execute and
deliver all documents, agreements and writings and provide such assurances,
undertakings, information and investment letters as may be required from time
to time by all regulatory or governmental bodies or stock exchange having
jurisdiction over PLAYNET's affairs or as may be required from time to time
under any other applicable law.
14. Benefit
This Agreement shall inure to the benefit of and be binding upon
PLAYNET and the NETWORK and their respective successors and assigns. IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
PLAYNET NETWORK
- ------------------------------- -------------------------------
By: /s/ Shmuel Cohen By: /s/ C.E. Feltner, Jr.
--------------------------- ---------------------------
Shmuel Cohen
- ------------------------------- -------------------------------
Name and Title C.E. Feltner, Jr., Chairman
President & CEO
-11-
<PAGE> 1
Exhibit 99.3
CASTELLON LIMITED
2, CLAN WILLIAM TERRACE
DUBLIN 2, REPUBLIC OF IRELAND
July 30, 1997
PlayNet Technologies, Inc.
One Maritime Plaza
San Francisco, California 94111
RE: CONVERSION OF DEBT TO EQUITY
Dear Sirs:
As you are aware, we have successfully delivered to you documents representing
the agreement of Castellon Ltd., Ceres Advisors Ltd., KF Chemical Co., Ltd. and
Zeller Eblagon Leasing Ltd. to convert their existing debt and accrued but
unpaid interest into shares of common stock of PlayNet Technologies, Inc. (the
"Company") on the basis of $1.275 per share. This represents the conversion of
$4,010,000 of debt into equity of Company.
In addition to the above, we will also received the commitment of NY Holdings
Ltd. and Ehud Guth to convert their existing debt ($330,000 and $500,000,
respectively) and accrued but unpaid interest into common stock equity of the
Company. Unfortunately, we are unable to provide executed copies of the
documents reflecting these conversions, as the Chairman of NY Holdings (who must
execute the documents on their behalf) and Mr. Guth are both presently traveling
outside of Israel and will not be returning before Thursday, July 31, 1997.
We are highly confident that upon their respective return from their trips
outside of Israel, Mr. Guth and the Chairman of NY Holdings will execute the
necessary documents memorializing and consummating the conversion of the
Promissory Notes that they hold into common stock equity of the Company. We
will, at that time, be in a position to provide you with the final executed
documents.
If you require anything further, please do not hesitate to contact us.
Very truly yours,
CASTELLON LTD.
By: /S/ Joseph Ettinger
Joseph Ettinger, President
<PAGE> 2
July 30, 1997
PlayNet Technologies, Inc.
One Maritime Plaza, 14th Floor
San Francisco, California 94111
RE: CONVERSION OF PROMISSORY NOTE TO COMMON STOCK
Dear Sirs:
This letter agreement will serve to confirm my acceptance of your proposal to
convert the Promissory Note which is held by me, in the principal amount of
$______________, plus accrued and unpaid interest to the date of conversion (the
"Conversion Amount"), into shares of Common Stock of PlayNet Technologies, Inc.,
par value $.001 per share ("Common Stock"), on the basis of $1.275 per share.
I also agree and accept that PlayNet shall use its best efforts to register all
shares issued based on this conversion with the Securities and Exchange
Commission on a Form S-3 Registration Statement.
Furthermore, I accept PlayNet's agreement to reduce the price per share of the
options I hold to purchase ______________ additional shares of Common Stock of
PlayNet to $2.00 per share and to extend the exercise date of such Options to
December 31, 1998.
I will look forward to the receipt of the share certificates representing the
Conversion Amount.
Very truly yours,
_____________________________________
Name: _______________________________
Title: ______________________________
(if a corporation or partnership)
<PAGE> 3
July 30, 1997
PlayNet Technologies, Inc.
One Maritime Plaza, 14th Floor
San Francisco, California 94111
RE: CONVERSION OF PURCHASE ORDER FINANCING PROMISSORY
NOTE TO COMMON STOCK
Dear Sirs:
This letter agreement will serve to confirm my acceptance of your proposal to
convert the Purchase Order Financing Promissory Note which is held by me, in the
principal amount of $______________, plus accrued and unpaid interest to the
date of conversion (the "Conversion Amount"), into shares of Common Stock of
PlayNet Technologies, Inc., par value $.001 per share ("Common Stock"), on the
basis of $1.275 per share.
I also agree and accept that PlayNet shall use its best efforts to register all
shares issued based on this conversion with the Securities and Exchange
Commission on a Form S-3 Registration Statement.
Furthermore, I accept PlayNet's agreement to reduce the price per share of the
Warrants I hold to purchase ______________ additional shares of Common Stock of
PlayNet to $2.00 per share.
I will look forward to the receipt of the share certificates representing the
Conversion Amount.
Very truly yours,
____________________________________
Name: _____________________________
Title: ______________________________
(if a corporation or partnership)
<PAGE> 4
July 30, 1997
PlayNet Technologies, Inc.
One Maritime Plaza, 14th Floor
San Francisco, California 94111
RE: CONVERSION OF SENIOR SECURED PROMISSORY
NOTE TO COMMON STOCK
Dear Sirs:
This letter agreement will serve to confirm my acceptance of your proposal to
convert the Senior Secured Promissory Note which is held by me, in the principal
amount of $______________, plus accrued and unpaid interest to the date of
conversion (the "Conversion Amount"), into shares of Common Stock of PlayNet
Technologies, Inc., par value $.001 per share ("Common Stock"), on the basis of
$1.275 per share.
I also agree and accept that PlayNet shall use its best efforts to register all
shares issued based on this conversion with the Securities and Exchange
Commission on a Form S-3 Registration Statement.
Furthermore, I accept PlayNet's agreement to reduce the price per share of the
Warrants I hold to purchase ______________ additional shares of Common Stock of
PlayNet to $2.00 per share.
I will look forward to the receipt of the share certificates representing the
Conversion Amount.
Very truly yours,
____________________________________
Name: _____________________________
Title: ______________________________
(if a corporation or partnership)
<PAGE> 5
SCHEDULE OF NOTE HOLDERS EXECUTING CONVERSION LETTER AGREEMENTS
<TABLE>
<CAPTION>
NOTE HOLDER AMOUNT OF NOTE
----------- --------------
<S> <C>
CASTELLON LTD. $ 260,000
CERES ADVISORS LTD. $ 500,000
CERES ADVISORS LTD. $ 750,000
CERES ADVISORS LTD. $ 250,000
EHUD GUTH $ 250,000
EHUD GUTH $ 250,000
KF CHEMICAL $ 500,000
KF CHEMICAL $ 250,000
NY HOLDINGS $ 330,000
ZELLER EBLAGON LEASING LTD. $ 500,000
ZELLER EBLAGON LEASING LTD. $ 500,000
ZELLER EBLAGON LEASING LTD. $ 500,000
</TABLE>
<PAGE> 1
Exhibit 99.4
INTERNATIONAL SAVINGS PORTFOLIO LTD.
ST. ANNALGASSE 16
CH ZURICH
SWITZERLAND
July 30, 1997
PlayNet Technologies, Inc.
One Maritime Plaza
San Francisco, CA 94111
Attention: Mr. Shmuel Cohen
Dear Mr. Cohen:
This is to confirm that International Savings Portfolio Ltd. has commited
to raise the sum of $2,000,000 for PlayNet Technologies, Inc. ("PlayNet")
through the sale of PlayNet's securities in a transaction or transactions exempt
from the registration requirements of the Securities Act of 1933 upon terms
agreed by us and PlayNet.
It has been agreed that the sum of $2,000,000 will be advanced to the
Company by us no later than five (5) days from the date hereof to be credited
against sums to be paid to the Company in respect of securities sold by the
Company through us.
Very truly yours,
INTERNATIONAL SAVINGS PORTFOLIO LTD.
By: /S/ Larry Skolnik
<PAGE> 1
Exhibit 99.5
Robinson Silverman Letter
<PAGE> 2
[ROBINSON SILVERMAN--LETTERHEAD]
EXHIBIT 99.5
July 30, 1997
Playnet Technologies, Inc.
152 West 57th Street
New York, NY 10019
Attn.: Schmuel Cohen
Re: SOUTHBROOK INTERNATIONAL INVESTMENTS LIMITED
Gentlemen:
As you know, we are counsel to Southbrook International Investments Limited
("Southbrook"), the holder of $4 million principal amount of convertible
debentures (the "Debentures") issued by Playnet Technologies, Inc. ("Playnet").
This is to confirm that Southbrook is prepared in principle to exchange the
Debentures for convertible preferred stock of Playnet on substantially the
following terms, and that the parties are in the process of preparing and
negotiating definitive documentation with regard to this transaction.
This letter does not constitute a binding commitment on the part of
Southbrook. Any actual exchange of Debentures for preferred stock shall be
pursuant to definitive exchange and other agreements to be negotiated. The
following is a summary of certain of the principal terms that the parties have
discussed.
1. EXCHANGE OF DEBENTURES. The Debentures will be exchanged for a newly
created convertible preferred stock ("Preferred Stock") of Playnet with a face
amount/liquidation preference ("Preference Amount") equal to the $4 million
stated principal of the Debenture plus all accrued interest, penalties and
other amounts due to Southbrook in connection with the Debenture, less than
$250,000 of initial funding that in accordance with the relevant agreements was
not funded. It is understood that these amounts include interest at the rate of
10% on the $3.75 million funded principal balance of the debentures through the
date of the closing of the exchange plus any other penalties and other amounts
due pursuant to the Convertible Debenture Purchase Agreement dated May 20, 1997,
between Southbrook and Playnet (the "Original Purchase Agreement") or the
Debentures.
<PAGE> 3
[ROBINSON SILVERMAN -- LETTERHEAD]
Playnet Technologies, Inc.
July 30, 1997
Page 2
2. TERMS OF PREFERRED STOCK. The Preferred Stock shall be senior in rights
to dividends and liquidation proceeds to all other preferred stock, common stock
and other equity of Playnet. The Preferred Stock shall have a dividend rate of
10% per annum, which amount, if not paid in cash, shall be added to the
Preference Amount. The Preferred Stock shall be convertible at the option of the
holder at any time or from time to time into Playnet common stock at a
conversion price equal to the lessee of (a) the market price at the time of
the closing of the exchange, and (b) 65% of the market price at the time of
conversion. For these purposes, "market price" shall mean the average closing
bid price of the Playnet common stock for the five trading days preceding the
closing of the exchange or the time of conversion, as the case may be. The
Preferred Stock shall have such other provisions and rights, including without
limitation anti-dilution protection, as are typical in such an instrument or as
may be required by the Purchaser (as defined below) or by Southbrook.
3. REGISTRATION RIGHTS. Playnet shall cause the shares of underlying common
stock underlying the Preferred Stock to be registered for resale under the
Securities Act of 1933, as amended, within 90 days after the closing of the
exchange of the Debentures for the Preferred Stock. If such registration
statement is not effective within such 90 day period, then the Preference Amount
shall be increased by 2% on account of the first 30 days or any portion thereof
after such 90 day period during which such registration statement is not
effective and an additional 1% for any additional 30 day period (or portion
thereof) thereafter during which such registration statement is not effective.
The relevant parties will negotiate an appropriate registration rights
agreement, the general terms of which (other than those set out in this letter)
shall be similar in all material respects to the existing Registration Rights
Agreement between Playnet and Southbrook.
4. SALE OF A PORTION OF PREFERRED STOCK. Playnet has located a purchaser or
purchasers (the "Purchaser") who are to purchase from Southbrook for a price of
$1.5 million a number of shares of the Preferred Stock with a Preference Amount
of $1.5 million. Such Purchaser may be a non-United States person who shall
acquire the Preferred Stock under SEC Regulation S, or may be a United States
person who shall acquire the Preferred Stock under another exemption from
registration. The closing of the sale by Southbrook of the $1.5 million of
Preferred Stock is a
<PAGE> 4
[ROBINSON SILVERMAN -- LETTERHEAD]
Playnet Technologies, Inc.
July 30, 1997
Page 3
condition to the closing of the exchange of the Debentures for Preferred Stock,
and Southbrook is under no obligation to effect any conversion or exchange
unless the sale to the Purchaser has been consummated simultaneously. Southbrook
may also sell any or all of its remaining Preferred Stock to such other parties
as it may identify on such terms as it may determine in its sole discretion to
be appropriate, and such sales may be under Regulation S or under another
exemption from registration. Playnet shall cooperate with Southbrook in
connection with any such transfer.
5. REPRESENTATION WARRANTIES AND COVENANTS. Playnet shall make such
representations, warranties and covenants as may be required by Southbrook and
the Purchaser in connection with these transactions. Playnet shall deliver to
Southbrook and to the Purchaser such legal opinions as may be required by them
in connection with these transactions by Southbrook and the Purchaser.
6. ORIGINAL PURCHASE AGREEMENT. The parties will review the Original
Purchase Agreement and determine which of the provisions thereof shall continue
to be applicable after the closing of the exchange. Southbrook shall have no
obligations to Playnet under or in connection with the purchase of the
Debentures or arising under or in connection with the Original Purchase
Agreement, including without limitation any obligation to provide to Playnet any
funding initially withheld in accordance with the Original Purchase Agreement.
7. CONTRACTUAL LOCK UP. Other than any restrictions arising by virtue of
United States securities laws, there shall be no contractual restrictions on the
ability of Southbrook, the Purchaser, or any other transferee of the Preferred
Stock, to sell, transfer or otherwise dispose of the common stock underlying
the Preferred Stock.
As noted above, the foregoing is a statement of the principal terms of the
transaction that has been discussed among Playnet, Southbrook and a
representative of the Purchaser, and which Southbrook is prepared to move
forward to consummate. Any actual transaction will be subject to negotiation and
execution of definitive documentation to the satisfaction of all relevant
parties. Southbrook has no obligation to effect any exchange except subject to
definitive documentation that contains such terms and conditions as Southbrook
shall determine to be necessary or appropriate.
<PAGE> 5
[ROBINSON SILVERMAN -- LETTERHEAD]
Playnet Technologies, Inc.
July 30, 1997
Page 4
If the foregoing correctly sets forth your understanding of the status of
the discussions between Playnet and Southbrook, please execute the enclosed
copy of this letter to evidence the name.
Very truly yours,
/s/ Kenneth L. Henderson
------------------------------------
Kenneth L. Henderson
Confirmed:
PLAYNET TECHNOLOGIES, INC.
/s/ Shmuel Cohen
By: ________________________
cc. Philip K. Yachmetz, Esq.
<PAGE> 1
Exhibit 99.6
Allen & Company Letter
<PAGE> 2
[ALLEN & COMPANY -- LETTERHEAD]
Exhibit 99.6
July 31, 1997
Via Telecopier
- --------------
Playnet Technologies, Inc.
One Maritime Plaza
San Francisco, California 94111
Attention: Mr. Shmuel Cohen
Dear Mr. Cohen,
At the request of PlayNet Technologies, Inc. ("PlayNet"), the undersigned,
Allen & Company Incorporated ("Allen"), hereby confirms that PlayNet and Allen
are currently engaged in discussions regarding the potential repayment or
restructuring of Senior Secured Notes in the aggregate amount of $1.5 million
issued by PlayNet to Allen and certain other investors since December 1996.
Very truly yours,
Allen & Company Incorporated
/s/ James W. Quinn
By:___________________________
James W. Quinn
<PAGE> 1
Exhibit 99.7
Term Sheet Intercontinental Holdings
<PAGE> 2
EXHIBIT 99.7
THE INTERCONTINENTAL HOLDING COMPANY LTD.
July 19, 1997
Attention: Philip Yachemtz, Esq.
From: Gerald Alexander
Reference: Suggested capital raise structure
CONFIDENTIAL
TERM SHEET
7.5% CONVERTIBLE PREFERRED STOCK
Issuer: PlayNet technologies, Inc. (NASDAQ: PLNT)
Amount: Up to $2,000,000.00 Convertible Preferred Stock, Series ___ per
value $______ (the "Securities") convertible into shares of
common stock (the "Common Stock"), issued pursuant to Regulation
D with registration rights.
Coupon: 7.5% (APR) payable quarterly in arrears, cash or freely tradable
Common Stock, at the option of the Issue at each conversion. If
paid in stock the interest shares will be based on the then
applicable "Conversion Price" on interest due dates.
Closing: Business day of signing the purchase agreement, which shall occur
on or before 10 banking days from the signing of a consulting
agreement and subject to documentation acceptable to all parties.
Underlying: Convertible into common shares of PLNT
Conversion Terms: The Securities are convertible into shares of Common Stock as
follows: The Securities may be convertible anytime after 90 days from the
closing date. The Securities are convertible up to One (1) year from the
closing date.
Conversion Price: The principal amount, together with accrued interest thereon,
of the Security shall be eligible for conversion at the Conversion Price equal
to the lower of (1) 100% of the closing Bid price for the 5 days trading
immediately preceding the closing date (the "Ceiling") or (2) 78.0% of the
average closing Bid price for the 5 days immediately preceding the conversion
notice.
<PAGE> 3
CONVERSION DATE: The date of which the investor notifies the Company via
facsimile of its intent to convert some or all of its holdings, provided
however, that the Company receives from the investor the original Preferred
Shares to be converted within five (5) days of such notice.
TERM: 1 year. At the end of the 1 year term the Convertible Preferred will
be automatically converted by the issuer at the then applicable Conversion
Price.
REGISTRATION: The Issuer shall file with the SEC the S-3 registration for the
common stock available for conversion under the Convertible Preferred and the
shares underlying the warrants. The Issuer shall use its best efforts to ensure
that the Registration Statement is filed as soon as possible, but in no event
later than 30 days from closing. The Issuer warrants that it qualifies for an
S-3 short form filing. The effectiveness of the registration shall be
maintained for 1 year following the date when the registration is first
declared effective by the SEC.
REDEMPTION: The Convertible Preferred is automatically redeemable at the
Issuer's option and upon 5 banking day's trading notice to the Investor. If the
redemption is prior to the 90th day from closing the Convertible Preferred will
be redeemable in whole or in part at a price equal to 122% of the principal
amount plus any accrued and unpaid interest. If the redemption occurs after 90
days from the closing date, the Convertible Debenture shall be redeemable in
whole or in part with 5 banking days notice at a price equal to the amount that
the Investor would receive had the Investor converted all such outstanding
shares into common stock at the then applicable Conversion Price.
CONSULTANTS FEE: Issuer shall authorize from the closing proceeds and per
Consultants instructions a fee equal to 8.0% of the gross amount funded.
CONSULTANT'S WARRANTS: At closing, the Issuer shall deliver to the investor
100,000 warrants (based on a $2.0 Million Dollar closing). The warrants shall
be issued to the Consultant and assignees at the closing and shall expire five
years from the date of issuance with a strike price of 150% of the Bid price
day of closing.
CERTAIN FEES: The Issuer shall pay a fee of 2.0% (for the first month and 3%
per month thereafter) of the principal amount of the Convertible Preferred in
cash for each amount or portion thereof while the following obligations remain
unsatisfied:
1) If the registration ceases to remain effective
2) if the S-3 is not declared effective on or before the 90th day from closing
The above fee(s) shall continue until the obligation is fulfilled, subject to a
maximum of 12 months.
<PAGE> 4
Representations Warranties and Covernants: Usual and customary for this type of
financing, including as to any material adverse changes since the last SEC
filings and that date hereof and from the date hereof from the closing date.
If the foregoing terms are acceptable please indicate by signing below. Upon
receipt of this term sheet we will forward a copy of our consulting agreement
for your review.
By: /s/ SAMUEL COHEN date 7-18-97
--------------------------------------------- ----------
Samuel Cohen
Title President & CEO
-------------------------------------------
8351 Roswell Rd. #239, Atlanta, Ga. 30350, 770-551-9570 fx. 551-9503
<PAGE> 1
Exhibit 99.8
Term Sheet Capital Advisors
<PAGE> 2
[SELECT CAPITAL LOGO] EXHIBIT 99.8
Term Sheet
Playnet Technologies, Inc.
July 25, 1997
Amount: U.S. $3 million ($3,000,000) of eight percent (8%) convertible
debentures offered under Regulation S.
Type: Convertible debenture, maturing in two (2) years and convertible
in 45 days.
Coupon: Eight percent (8%) per annum (cash or stock) at the company's
discretion.
Conversion The lesser of 80% of the 5-day average closing bid prior to
Price subscription or 75% of the closing bid price prior to
conversion.
Lock Up: From the date of this term sheet until the closing of the
& Right contemplated transaction, Playnet Technologies, Inc., agrees
not to pursue a transaction of the nature already
contemplated hereby with any other person unless and until
Select has been informed that good faith negotiations have been
terminated. Following the closing of the proposed transaction,
for ninety (90) days, Playnet Technologies, Inc., will not,
without the written consent Of the investors, fund any
"Regulation S" or "Regulation D" financing and/or equity private
placement with common stock registration rights. Thereafter, for
three hundred and sixty (360) days, the investors will have the
right of first refusal in respect of any equity financing on the
same terms and conditions as offered by any third party.
Placement: Select shall receive a fee of 10% of the amount of the placement
direct from escrow.
Warrants: Select shall receive three hundred thousand dollars ($300,000)
of non-dilutive warrants at the closing with a strike price of
one hundred twenty percent (120%) above the closing bid price on
the day of the closing.
<PAGE> 3
Closing: The closing will occur by on or before August 10, 1997.
The parties hereby acknowledge their mutual agreement to the above terms and
their intention to negotiate the contemplated transaction in an expedited manner
and in good faith. This term sheet represents our current agreement with respect
to the subject matter hereof and supersedes any prior agreement or understanding
with the respect of such subject matter. If this term sheet is not executed by
both parties at the close of business by August 1, 1997, then this term sheet
will be considered void. By executing the term sheet Playnet Technologies, Inc.,
represents and warrants that it has obtained or within seven (7) calendar days
will obtain the necessary, Board of Directors and/or other approvals to cause
this term sheet to be duly authorized, executed and delivered by Playnet
Technologies, Inc.
PLAYNET TECHNOLOGIES, INC. AGREES TO KEEP THIS TERM SHEET CONFIDENTIAL AND NOT
DISTRIBUTE IT TO OR DISCUSS IT WITH ANY THIRD PARTY WITHOUT THE EXPRESS CONSENT
OF SELECT CAPITAL ADVISORS, INC.
Agreed and Accepted by: Agreed and Accepted by:
Playnet Technologies, Inc. Select Capital Advisors, Inc.
/s/ Shmuel Cohen /s/ Ronald G. Williams
Officer:_________________________ Officer:_________________________
7/28/97 7/25/97
Date:____________________________ Date:____________________________
