As filed with the Securities and Exchange
Commission on , 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GRAFF PAY-PER-VIEW INC.
(Exact name of Registrant as specified in its charter)
Delaware 11-2917462
(State (I.R.S. employer
of incorporation) identification number)
536 Broadway, 7th Floor
New York, New York 10012
(212) 941-1434
(Address and telephone number of Registrant's principal executive offices)
J. Roger Faherty, Chairman
Graff Pay-Per-View Inc.
536 Broadway, 7th Floor
New York, New York 10012
(212) 941-1434
(Name, address and telephone number of agent for service)
Copies to:
Michael D. DiGiovanna, Esq.
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
Approximate date of commencement of proposal sale: As soon as practicable after
the effective date of this Registration Statement.
<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
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 this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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(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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- ------------------------ -------------------- ----------------------- ------------------------ ----------------------
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Offering Price Per Aggregate Offering Registration Fee
Registered Unit1 Price1
- ------------------------ -------------------- ----------------------- ------------------------ ----------------------
<S> <C> <C> <C> <C>
Shares of Common 1,391,440 $2.6875 $3,739,495 $1,289
Stock, par value, $.01
per share
- ------------------------ -------------------- ----------------------- ------------------------ ----------------------
<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c). Based on the average of the high and low price
of the Common Stock as reported on The Nasdaq National Market on April
26, 1996.
</FN>
</TABLE>
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 l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
GRAFF PAY-PER-VIEW INC.
Cross Reference Sheet
Required by Item 501(b) of Regulation S-K
Item No. & Caption Location in Prospectus
1. Forepart of Registration Outside Front Cover Page
Statement and Outside Front
Cover of Prospectus
2. Inside Front and Outside Inside Front Cover Page; Available
Back Cover Pages of Prospectus Information; Incorporation of
Certain Documents by Reference
3. Summary Information, Risk Factors Prospectus Summary; Risk Factors
and Ratio of Earnings to Fixed
Charges
4. Use of Proceeds Prospectus Summary; Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Outside Front Cover Page; Selling
Stockholders
9. Description of Securities to be Not Applicable
Registered
10. Interests of Named Experts and Not Applicable
Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Information Incorporation of Certain Documents
by Reference by Reference
13. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities
<PAGE>
- --------------------------------------------------------------------------------
P R O S P E C T U S
- --------------------------------------------------------------------------------
GRAFF PAY-PER-VIEW INC.
1,391,440 Shares of Common Stock
This Prospectus relates to 1,391,440 shares (the "Selling Stockholder
Shares") of Common Stock, par value $.01 per share ("Common Stock"), of Graff
Pay-Per-View Inc., a Delaware corporation (the "Company"), which shares are
being offered for sale by the persons named herein under the caption "Selling
Stockholders" (the "Selling Stockholders"). The Selling Stockholder Shares were
issued or will be issued in connection with (i) the merger of Spector
Entertainment Group, Inc. ("SEG") with a wholly-owned subsidiary of the Company,
(ii) the exercise of options issued in settlement of an action commenced against
the Company (the "Option"), (iii) services rendered to the Company by a
consultant, (iv) the modification of an existing license agreement, (v) the
merger of CPV with a wholly-owned subsidiary of the Company, (vi) the exercise
of warrants issued to Imperial Bank (the "Imperial Warrant") and (v) the
exercise of warrants issued to Midlantic Bank N.A. (the "Midlantic Warrant").
The Company will not receive any of the proceeds from the sale of Common
Stock by the Selling Stockholders. See "SELLING STOCKHOLDERS."
The Selling Stockholders, or their pledgees, donees, transferees or
other successors, may sell the Common Stock in any of three ways: (i) through
broker-dealers; (ii) through agents or (iii) directly to one or more purchasers.
The distribution of the Common Stock may be effected from time to time in one or
more transactions (which may involve crosses or block transactions) (A) on The
Nasdaq Stock Market or on other markets where the Common Stock is traded, or (B)
in transactions not on such markets. Any of such transactions may be effected at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices. The Selling
Stockholders may effect such transactions by selling the Common Stock to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholders
and/or commissions from purchasers of the Common Stock for whom they may act as
agent (which discounts, concessions or commissions will not exceed those
customary in the types of transactions involved). The Selling Stockholders and
any broker-dealers or agents that participate in the distribution of the Common
Stock might be deemed to be underwriters, and any profit on the sale of the
Common Stock by them and any discounts, commissions or concessions received by
any such broker-dealers or agents might be deemed to be underwriting discounts
and commissions under the Securities Act of 1933, as amended (the "Securities
Act").
The Company has agreed to bear all expenses (other than selling discounts,
concessions and commissions) in connection with the registration and sale of the
Common Stock being offered by the Selling Stockholders. The Company has agreed
to indemnify certain of the Selling Stockholders against certain liabilities,
including liabilities under the Securities Act.
The Common Stock being offered hereby by the Selling Stockholders has
not been registered for sale under the securities laws of any state or
jurisdiction as of the date of this Prospectus. Brokers or dealers effecting
transactions in the Common Stock should confirm the registration thereof under
the securities law of the state in which such transactions occur, or the
existence of any exemption from registration.
The Common Stock is traded on The Nasdaq National Market under the
symbol GPPV.
See "RISK FACTORS" on page of this Prospectus for certain
information which should be considered by prospective
purchasers of the Selling Stockholder Shares offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of the Prospectus is , 1996.
<PAGE>
TABLE OF CONTENTS
Page
Available Information
Incorporation of Certain Documents by Reference
Prospectus Summary
Risk Factors
Use of Proceeds
Selling Stockholders
Legal Matters
Experts
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the registered securities to which it
relates. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information of the Company can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at its Northeast Regional
Office, 7 World Trade Center, 13th Floor, New York, New York 10048 and Midwest
Regional Office, Suite 1400, 500 West Madison Street, Chicago, Illinois
60661-2511. Copies can be obtained by mail at prescribed rates. Requests should
be directed to the Commission's Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information reference
is made to the Registration Statement, copies of which can be obtained from the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are the following documents filed by
the Company with the Commission (File No. 0-21150) under the Exchange Act:
(a) The Company's Annual Report on Form 10-K, as amended by
the Annual Report on Form 10-K/A-1, for its fiscal year ended December 31, 1995.
(b) The description of the Company's Common Stock contained in
the Registration Statement on Form 8-A.
All documents filed by the Company with the Commission pursuant to
Sections 13, 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus, but prior to the termination of this offering, shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the date
of filing of such documents.
The Company undertakes to provide without charge to each person to whom
a copy of this Prospectus has been delivered copies of the above documents,
other than exhibits thereto, upon written or oral request of any such person to
the Secretary of the Company, 536 Broadway, New York, New York 10012 (telephone
number (212) 941-1434).
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus or incorporated herein by
reference. Each prospective investor is urged to read this Prospectus in its
entirety.
THE COMPANY
Graff Pay-Per-View Inc. and its subsidiaries (collectively "Graff" or
the "Company") is a diversified world-wide entertainment company which owns and
operates transaction based television networks in North America and Europe,
provides telecommunications and television production services principally to
the pari-mutuel wagering industry, produces and licenses television programs and
motion pictures and together with a partner, is developing the use of emerging
video delivery systems.
Formed in 1987, the Company is a leading provider of premium
entertainment networks. The Company operates and distributes SPICE and THE ADAM
& EVE CHANNEL (collectively, the "SPICE Networks"), two domestic pay-per-view
programming networks with access to over 18.3 million cable, C-band
direct-to-home ("DTH") and DIRECTV(R) direct broadcast satellite ("DBS")
subscribers. The SPICE Networks feature "cable version" adult films. Cable
version adult films (as contrasted with the explicit or hard core versions) are
specially produced and edited to conform to strict, internally developed
guidelines which are generally accepted as the standard in the industry. The
SPICE Networks have affiliation agreements with 9 of the top 10 multiple system
operators.
In Europe, the Company operates and distributes two adult subscription
networks, THE ADULT CHANNEL and EUROTICA which have approximately 172,000 and
7,000 subscribers, respectively. THE ADULT CHANNEL, originated in the United
Kingdom, is a satellite delivered subscription network. THE ADULT CHANNEL
features cable version adult movies similar to those exhibited on the SPICE
Networks. In February 1995, the Company launched EUROTICA, a European satellite
delivered subscription network based in Denmark which features explicit version
adult movies and adult entertainment. EUROTICA is marketed to the DTH market
satellite dish owners and cable systems throughout Europe and has subscribers in
over 15 countries.
The Company holds a majority interest in CVS Partners, a partnership
which owns and operates CABLE VIDEO STORE, a domestic hit movie pay-per-view
network. CABLE VIDEO STORE is available to approximately 2.5 million addressable
households in the United States. CABLE VIDEO STORE licenses motion pictures from
all of the major film studios and several independent production companies. CVS
Partners plans to transition the network from a single channel satellite
delivered network to an enhanced pay-per-view network employing video file
server technology.
The Company also owns and operates THE HOME VIDEO CHANNEL, a
taped delivered subscription movie service distributed in the United Kingdom
through cable systems. THE HOME VIDEO CHANNEL, which is offered in the evening
hours, features action, horror and other "B" movies licensed from independent
producers. THE HOME VIDEO CHANNEL has approximately 71,000 subscribers.
Through its wholly owned subsidiary Spector Entertainment Group,
Inc.("SEG"), the Company is a full service provider of telecommunications,
television production and related services to the pari-mutuel wagering, sports,
entertainment, and other industries. SEG also brokers unused satellite
transponder capacity and provides satellite transmission services to third
parties. SEG and an affiliate have also undertaken research and development
efforts to provide interactive television programming featuring live broadcasts
of horse races and other gaming events complemented with broadcast distributed
information.
The Company is continuing to adapt its content for new media such as
CYBERSPICE, the Company's Internet website, and is developing new transactional
services for the evolving two-way interactive networks. In addition, the Company
is currently deploying emerging video delivery systems such as file server based
enhanced pay-per-view and is utilizing other delivery systems to achieve the
widest distribution of the Company's networks and programming.
The Company is instituting a strategy to globalize its adult networks
and programming. The Company has an extensive library of adult films which it
licenses to its European affiliates and to third parties. This programming may
also be used to create new SPICE branded services or other adult networks. The
Company is also exploring the possibility of reuplinking its SPICE Networks
signal to satellites that service different geographical areas for rebroadcast
in other locations such as South America.
The Company incurred a $2.7 million operating loss for 1995 before a
non-recurring restructuring charge and write down of investments totaling
approximately $10.5 million. The Company's liquidity has been affected as a
result of these losses. The Company responded to these problems with a
multi-faceted restructuring plan. The Company has curtailed unprofitable and
capital intensive initiatives, reduced the number of employees, accepted the
resignations of certain members of senior management and renegotiated its credit
facility with its principal lender.
The Company is incorporated under the laws of the State of Delaware.
The principal executive offices of the Company are at 536 Broadway, New York,
New York 10012 and its telephone number is (212) 941-1434.
<PAGE>
The Offering
Securities Offered: 1,391,440 shares of Common Stock being offered for
sale by certain stockholders (the "Selling
Stockholders").
Use of Proceeds: The Company will receive no portion of the
proceeds from the sale of Common Stock by the
Selling Stockholders. The Company will receive
$134,000 from the exercise of the Option, $62,500
from exercise of the Imperial Warrant and
$300,000 from exercise of the Midlantic Warrant,
if and when exercised which amounts, when paid,
will be used for working capital.
Risk Factors: Investment in the Common Stock is speculative and
involves a high degree of risk. Prospective
purchasers should carefully review the factors set
forth under "RISK FACTORS."
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus and
incorporated herein by reference, the following factors should be considered
carefully in evaluating an interest in the Common Stock offered hereby:
1. Loss for Year; Violation of Financial Covenants:
The Company reported a loss for 1995 of approximately of $15.1
million which includes an operating loss of approximately $2.7 million before a
non-recurring restructuring charge and write downs of investments of
approximately $10.5 million. No assurances can be given when the Company will
return to profitability.
As a result of the loss and violations of its financial covenants, the
Company has renegotiated its credit facility with Midlantic Bank, N.A.
("Midlantic"). Pursuant to a Third Amendatory Agreement dated March 29, 1996,
Midlantic has (i) extended the term of the loan until January 2, 1997, (ii)
waived certain financial covenant violations through the date of the agreement,
(iii) eliminated all of the financial covenants for the balance of the loan's
term except for the net worth covenant which was revised in accordance with the
Company's projections and a covenant requiring the Company to maintain specified
levels of cash flows and (iv) consented to certain transactions. When the loan
matures, the Company will be required to obtain replacement financing or
alternative sources of capital. There is no assurance that the Company will be
able to obtain such financing or, if obtained, that the terms of any such
financing or alternative sources of capital will be acceptable to the Company.
2. Possible Need for Additional Financing:
The Company drew down its entire available line of credit to
fund its operating losses, as well as to finance its investments in fixed assets
and various joint ventures. The Company has restructured its operations, reduced
its staff, suspended certain operations and curtailed capital intensive projects
in an effort to reduce operating expenses. These steps are designed to enable
the Company to fund its operations from cash flow. While the Company now
believes that it is in a position to fund its normal day-to-day operations from
operating cash flow, the Company may need additional capital for operations and
for other business opportunities. If the Company requires additional capital, it
will be required to obtain an alternate source of funding. No assurances can be
given that any such sources, if needed, can be obtained, or if obtained, that
the terms of any such funding will be acceptable to the Company.
3. Possible Delisting of the Company's Common Stock:
As a result of the Company's 1995 loss, the Company's net
worth does not meet the listing requirements for The Nasdaq National Market
("Nasdaq"). The Company is currently exploring alternate sources of equity to
augment its net worth. No assurances can be given that the Company will be able
to maintain its Nasdaq listing. If the Company's Common Stock is not traded on
Nasdaq, the Company would apply to The Nasdaq Stock Market, Inc. to have its
Common Stock quoted on The Nasdaq SmallCap Market. There is no assurance that
the Company will be able to have its Common Stock quoted on The Nasdaq SmallCap
Market. If the Company is unable to have its Common Stock quoted on The Nasdaq
SmallCap Market, its Common Stock would be quoted in the "pink sheets" or, if
then available, the National Association of Securities Dealers' ("NASD")
"Electronic Bulletin Board."
Subject to certain exceptions, it is unlawful for a broker or
dealer to sell any equity security that has a price less than $5.00 per share (a
"penny stock") unless prior to the transaction, the broker or dealer has (i)
approved the person's account for transactions in penny stocks in accordance
with certain procedures and (ii) received from the person a written agreement to
the transaction. Excepted from the definition of the term "penny stock" include,
among others, (i) securities authorized for quotation on The Nasdaq Stock
Market, (ii) securities of a company that has net tangible asserts (i.e. total
assets less intangible assets and liabilities) in excess of $2 million or (iii)
securities of a company that has average revenues of at least $6 million for the
last three years.
Were the Company's Common Stock to become subject to the
regulations applicable to penny stocks, the market liquidity for the securities
would be severely affected, limiting the ability of brokers or dealers to sell
the securities and the ability of the Selling Stockholders and persons acquiring
shares from Selling Stockholders to sell securities in the secondary market.
There is no assurance that trading in the Company's securities will not be
subject to these or other regulations that would adversely affect the market for
such securities.
4. Potential Reduction in Revenues from Change in Law:
The Communications Decency Act (the "CDA") contains a
provision which requires cable system operators to fully scramble the audio and
ideo of channels primarily featuring sexually explicit programming. If this
provision takes effect, the revenues from the SPICE Networks will be adversely
affected. Under the provision, a cable system must block the signal of a channel
featuring sexually explicit programming if a channel cannot fully scramble the
audio and video signal during the hours when a substantial number of children
may be viewing. The Federal Communications Commission ("FCC") issued an order
which provides that theses hours are between 6:00 AM and 10:00 PM. Many of the
SPICE Network affiliates do not fully scramble the audio portion of the signal
and would be required to block the signal during the hours of 6:00 AM until
10:00 PM if this provision takes effect.
The new provision was to take effect on March 9, 1996. The Company
challenged the constitutionality of this provision, seeking to enjoin its
enforcement. On March 7, 1996 the Court granted the Company's application for a
temporary restraining order prohibiting enforcement of the provision.
Substantially all of the SPICE Networks' cable system affiliates did not curtail
their distribution of the SPICE Networks.
A hearing on the Company's application for a preliminary injunction is
scheduled for June 21, 1996 with a hearing on the merits thereafter. The CDA
provides for automatic review by the Supreme Court of any decisions concerning
the constitutionality of any provision of the CDA. While the Company believes
that it is likely that the provision will not take effect until the Supreme
Court ultimately decides the constitutionality of the provision, which the
Company anticipates will likely not occur until 1997, there are no assurances
that the CDA may take effect earlier should the District Court refuse to
continue the stay. If the provision does take effect, the Company's revenues may
be adversely affected; the amount of the reduction depends on several factors
and is impossible to predict at this point in time.
5. Arrangements with Cable Systems:
The Company's primary source of revenues is derived through
cable systems which transmit the Company's programming to their subscribers. As
a result of consolidation in the cable industry, the ten largest domestic
multiple system operators ("MSO's") (by the number of addressable subscribers)
control access to approximately 75% of the addressable subscribers in the
country. In 1995 the two largest MSO's, Tele-Communications, Inc. ("TCI") and
Time Warner each accounted for 12% and 9%, respectively, of the Company's
revenues. This concentration in the cable industry coupled with competing
programming services has resulted in the large MSO's having significant
bargaining power over the terms and conditions of the Company's affiliation
agreements. This has resulted in the reduction of the Company's share of
revenues from cable sales of the SPICE Networks which may adversely affect
future revenues. Moreover many of the Company's affiliation agreements with
these cable systems are generally terminable by either party on 30 days' prior
notice. The Company's revenues would be adversely effected if any of these
agreements were terminated.
6. Controversial Programming:
A substantial portion of the Company's revenues are generated
by its SPICE Networks. The SPICE Networks feature adult cable version movies and
programs. The Company determines, from time to time, not to broadcast the SPICE
Networks into certain states. While the Company believes its programming does
not violate current federal, state or local laws with respect to adult content,
and it has never been so charged, there can be no assurance that any such
charges will not be made in the future or that future laws will not be enacted
under which the Company's programming is alleged to be in violation. Should this
occur, the Company's ability to sell its SPICE Networks would be substantially
impaired which would adversely impact the Company's revenues.
See also "Risk Factors- Potential Reduction in Revenue from Change in Law."
7. Changes in Technology:
The Company believes its current satellite delivery system
represents the most efficient current technology for delivering its networks.
Technological advancements in home television/cable delivery systems including
digital compression of video information, video file servers, compression of
satellite signals and fiber-optic delivery of video and video dialtone continue
at a rapid pace. It is unclear which, if any, of the competing technologies or
combination thereof will prove cost effective and be adopted by the industry. To
remain competitive, the Company may be forced to decide among competing
technologies before any industry standard becomes apparent or may be required to
incur material capital expenditures to adapt to new technology. There can be no
assurance that the Company will correctly select the "appropriate" technology or
will have sufficient capital to fund the requisite capital expenditures.
8. Competition - Adult Content:
The SPICE Networks, the largest domestic adult pay-per-view
networks, have one principal pay television competitor in the cable market,
Playboy. Playboy recently launched a second movie-oriented network which
competes directly with the SPICE Networks. Other competitive services may be
launched in the near future. In the cable market, the Company believes that many
cable operators who currently carry adult programming make programming decisions
based on revenues splits and buy rates. In certain instances, this has resulted
in a reduction in the Company's share of revenues.
In the C-band direct to home market, there are several
networks which exhibit "explicit" adult entertainment and compete with the SPICE
Networks in this market only. The Company's revenue from the SPICE Networks in
the C-band direct to home market have declined as a result of the new explicit
adult services. It is not anticipated that this trend will reverse. Domestic
cable operators do not currently carry the explicit adult services. If they do
so, the Company's revenues from the SPICE Networks could be adversely affected.
Two adult networks were recently launched in the United
Kingdom which compete with THE ADULT CHANNEL. Since the launch of these two
services, THE ADULT CHANNEL's subscriber base has been adversely affected.
Currently EUROTICA has two principal competitors. Other competitors may enter
the market in the United Kingdom and continental Europe which may adversely
affect THE ADULT CHANNEL and/or EUROTICA.
9. Competition - Hit Movies, Hotel Pay-Per-View and
Programming:
CABLE VIDEO STORE, now operated by CVS Partners, a partnership in
which the Company holds a 75% interest, competes with all other segments of the
entertainment industry. In television viewing, the Company must compete with
network, independent and cable television, as well as other pay-per-view
programming services. The hit movie pay-per-view business also competes with the
home video sales and rentals businesses. CABLE VIDEO STORE has two primary
television pay-per-view competitors, Request Television and Viewer's Choice, as
well as stand alone hit movie pay-per-view networks operated by various cable
operators. The Company believes that Viewer's Choice and Request Television have
substantially greater financial resources, staffs and facilities than the
Company.
THE HOME VIDEO CHANNEL is one of several movie channels available to
U.K. cable operators. BSkyB has three such networks and substantially more
subscribers and greater resources than THE HOME VIDEO CHANNEL.
Prior to the recent restructuring, the Company produced TV
programming, feature films and interactive CD-ROMs. The Company continues to
distribute these products but has suspended its production activities. There are
many dependent and independent production companies that compete in these market
segments and have greater resources than the Company.
10. Competition - Telecommunications, Television
Production and Related Services:
The Company believes that SEG is the only company which
markets a full and integrated array of telecommunications, television
production, data broadcast and related services to the pari-mutuel wagering
industry. The Company believes that competition in the industry, as a whole, is
fragmented. However the Company believes that the industry is consolidating from
acquisitions of smaller companies by companies with greater resources.
11. Availability of Satellite Capacity:
The Company's domestic pay-per-view networks are delivered to
cable operators and C-band DIRECT TO HOME customers via satellite transponders
owned by AT&T on its Telstar 402R satellite. The Company's service agreement
continues for the satellite's useful life. If the satellite goes out of service
prematurely, the Company will be required to make alternate transponder or
satellite arrangements when such transponders or satellites may be in short
supply.
The Company has a contract with Societe Europeenne des
Satellites S.A. the owner of the Astra satellites, providing transmission
services for THE ADULT CHANNEL, through January, 1997. The footprint of the
satellite is Western Europe. The Company entered into an agreement with TELECOM
Denmark A/S on December 20, 1994 for satellite and uplink services on its
Eutelsat II F1 Satellite for EUROTICA. The footprint of the satellites is also
Western Europe. This agreement continues through May 31, 1996 and the Company is
negotiating with TELECOM to extend this agreement. If an extension cannot be
obtained, the Company will be forced to obtain alternate transponder services.
No assurances can be given that the Company will be able to obtain such services
or if obtained, the cost thereof.
12. Risk of Piracy:
In North America, the Company uses the VideoCipher II+
encoding system manufactured by General Instruments Corporation to scramble its
signal for delivery to the cable headend and to the C-Band DTH market. Cable
systems then descramble the signal and rescramble the signal using scrambling
technology compatible with the set-top boxes utilized by the cable system.
Although the Company expects VideoCipher II+ to significantly reduce the
unauthorized reception of scrambled satellite signals (i.e., "piracy"), the
Company believes that piracy nevertheless occurs both in the C-Band DTH market
and more significantly in the cable market where many cable systems use less
secure scrambling technology than the Video Cipher II+ encoding system used by
the Company. There can be no assurance that the Company will not continue to be
deprived of income as a result of piracy.
In Europe, THE ADULT CHANNEL and EUROTICA use the Videocrypt system
developed by News Datacom Limited.
13. Regulation:
The field of cable television programming is subject to
regulation by the federal and by the various state and local governments.
Changes to such regulations could adversely affect the market for the Company's
programming. As noted above the CDA contains a provision requiring full audio
and video scrambling of channels such as the SPICE Networks. The Company is
currently seeking to delay this provision from taking effect or having the
provision declared unconstitutional. If the provision takes effect as enacted,
the Company's revenues from the SPICE Networks may be adversely affected.
The Company also provides telecommunications, television
production and related services primarily to the pari-mutuel wagering industry.
The Company's activities in this area are regulated by the FCC and subject to
other federal, state and local government rules and regulations. A change in the
regulation of this activity could adversely affect the Company's business.
CYBERSPICE, the Company's adult oriented on-line service, also
may be materially affected by the CDA. The CDA makes it a criminal offense to
transmit to minors "indecent" content on-line and over the Internet. However a
person providing adult content on-line will not be subject to prosecution under
the CDA if the provider has taken good faith reasonable efforts to prevent or
restrict access to minors. Promptly following enactment, the constitutionality
of this provision was challenged by unrelated third parties and a District Court
has issued a temporary restraining order enjoining enforcement of this
provision.
While it is the Company's belief that this portion of the CDA will be
enjoined from enforcement and ultimately struck down on constitutional grounds,
if the challenges are unsuccessful, CYBERSPICE may be subject to the provision.
The Company has converted CYBERSPICE to a site which is cross-promotional of the
SPICE Networks and the Company believes that it does not contain "indecent"
material. CYBERSPICE is linked to a site which provides adult content and which
is a subscription service. As part of the subscription process, the site
operator has installed safeguards limiting access to the site to persons who are
not minors which should satisfy the statutory safe haven. No assurances can be
given that the CDA will not adversely affect the revenues from CYBERSPICE which
have been nominal to date.
14. Control by Principal Stockholders:
Four members of the Company's Board of Directors, one of whom
was the Company's founder, and their families beneficially own approximately 18%
of the Company's Common Stock. Accordingly, such individuals will, under most
circumstances, retain the practical power to elect all of the directors of, and
otherwise control, the Company.
15. No Dividends:
The Company has never declared or paid any cash dividends on
its capital stock. The Company currently anticipates that all of its earnings,
if any, will be retained for development of the Company's business, and does not
anticipate paying any cash dividends in the near future. The Company's credit
line with Midlantic and SEG's notes payable with Imperial prohibit the payment
of dividends.
USE OF PROCEEDS
Except as described below, the Company will receive none of the
proceeds from the sale of the Selling Stockholders Shares offered hereby. The
Company will receive $134,000 upon exercise of the Option if and when exercised
(the exercise price currently exceeds the market price of the Company's common
stock on October 30,1995). The Company will receive $62,500 from the exercise of
the Imperial warrant if that warrant is exercised and $300,000 from the exercise
of the Midlantic Warrant. Any such proceeds will be used for working capital.
In certain circumstances, the Company may realize proceeds from the
sale of up to 125,000 shares of Common Stock held by two Selling Stockholders,
Messrs. Greenberg and Goldberg. An affiliate of such Selling Stockholders is
indebted to the Company in the amount of $518,231; Messrs. Greenberg and
Goldberg have guaranteed that obligation. Such Selling Stockholders have entered
into an Escrow and Agency Agreement ("Escrow Agreement") with the Company and an
escrow agent pursuant to which, in certain circumstances, if Messrs. Greenberg
and Goldberg default on their guaranty to the Company, the 125,000 shares
deposited with the escrow agent will be sold. Messrs. Greenberg and Goldberg are
obligated to use the proceeds from such sale in satisfaction of their guaranty.
<PAGE>
SELLING STOCKHOLDERS
The Selling Stockholders are hereby offering a total of 1,391,440
shares of Common Stock (including 16,000 shares to be issued upon exercise of
the Option, 20,000 shares to be issued upon the exercise of the Imperial Warrant
and 100,000 shares to be issued upon exercise of the Midlantic Warrant). The
shares of Common Stock are being registered pursuant to registration rights
agreements between the Company and the Selling Stockholders except for the
shares to be issued upon exercise of the Midlantic Warrant. The following table
sets forth the name of each person who is a Selling Stockholder and the number
of Selling Stockholder Shares owned by such person prior to the proposed sale as
at April 30, 1996.
<TABLE>
<CAPTION>
NO. OF GPPV NO. & % OF GPPV
NAME OF SELLING STOCKHOLDER SHARES OWNED NO. OF GPPV SHARES TO BE OWNED
& RELATIONSHIP TO COMPANY PRIOR TO SHARES OFFERED AFTER GIVING EFFECT
OFFERING TO OFFERING
<S> <C> <C> <C>
EDWARD M. SPECTOR AND ILENE H. SPECTOR, 666.000 616,000 50,000
CO-TRUSTEES OF THE SPECTOR REVOCABLE FAMILY
TRUST (1)
Eric M. Spector (2) 29,340 28,000 1,340
Evan M. Spector(3) 28,000 28,000
Staci M. Spector(3) 28,000 28,000
TX Media, Inc (4). 18,940 18,940
Coastline Films, Inc (5) 15,000 15,000
Paul Kestenbaum(6) 16,000 16,000
Marc Greenberg(7) 312,400 312,400
Richard Goldberg(7) 209,100 209,100
Imperial Bank (8) 20,000 20,000
Midlantic Bank N.A.(9) 100,000 100,000 ______
------- -------
TOTAL 1,442,130 1,391,440 51,340
========= ========= ======
<FN>
(1) Edward M. Spector is a Director of the Company and the Trustee of the
Spector Revocable Family Trust (the "Trust") . Six hundred and sixteen
thousand of the Trust's shares were obtained in connection with the
merger of SEG with a wholly-owned subsidiary of the Company (the "SEG
Merger").
(2) Eric M. Spector is the son of Edward M. Spector and the Trustee of
the Eric M. Spector Revocable Trust. Eric M. Spector received
28,000 shares of Common Stock in connection with the SEG Merger and
owns 1,340 shares through his trust.
(3) Evan M. and Staci Spector are the children of Edward M. Spector. Each
received 28,000 shares of Common Stock in connection with the SEG
Merger.
(4) TX Media, Inc. was issued shares of Common Stock as a finder's fee in
connection with the SEG Merger.
(5) Paul Kestenbaum was issued an Option to acquire 16,000 shares of the
Company's common stock at an exercise price of $8.50 in settlement of
an action commenced by Mr. Kestenbaum against the Company. Such shares
are included herein pursuant to the Company's commitment to register
the resale of such shares. Mr. Kestenbaum has not exercised the Option
as of the date of this Prospectus.
(6) Coastline Films, Inc. was issued shares of Common Stock in connection
with the modification of an existing license agreement with the
Company.
(7) Marc Greenberg and Richard Goldberg are the former shareholders of CPV
and acquired their shares in connection with the Company's acquisition
of CPV by merger with a wholly-owned subsidiary of the Company in
exchange for Common Stock. Pursuant to the Escrow Agreement, 125,000
shares of their Common Stock have been deposited with the escrow agent.
See, "USE OF PROCEEDS."
(8) SEG violated certain of the financial covenants in its loan agreement
with Imperial. As part of Imperial's agreement to waive these violation
through December 31, 1995, the Company issued Imperial a warrant to
acquire 20,000 shares of the Company's common stock at an exercise
price of $3.125 per share.
Imperial has not exercised the Imperial Warrant as of the date of this
Prospectus.
(9) The Company violated certain of the financial covenants in its loan
agreement with Midlantic Bank. As part of Midlantic's agreement to
waive these violation through March 29, 1996, the Company agreed to
replace a warrant previously issued to Midlantic with a new warrant
containing substantially identical terms except for the exercise price
which was reduced from $12.03 per share to $3.00 per share. The Company
is obligated to register the shares underlying the Midlantic Warrant
upon Midlantic's demand. The Company has agreed to register the
transfer of theses shares in exchange for Midlantic's agreement to not
exercise its demand registration rights while the shares remain
transferable pursuant to this Prospectus. Midlantic has not exercised
the Midlantic Warrant as of the date of this Prospectus.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The Selling Stockholders, or their pledgees, donees, transferees or
other successors, may sell the Common Stock in any of three ways: (i) through
broker-dealers; (ii) through agents, or (iii) directly to one or more
purchasers. The distribution of the Common Stock may be effected from time to
time in one or more transactions (which may involve crosses or block
transactions) (A) on The Nasdaq Stock Market or on other markets where the
Common Stock is traded, or (B) in transactions not on such markets. Any of such
transactions may be effected at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices or at
fixed prices. The Selling Stockholders may effect such transactions by selling
the Common Stock to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholders and/or commissions from purchasers of the Common Stock
for whom they may act as agent (which discounts, concessions or commissions will
not exceed those customary in the types of transactions involved). The Selling
Stockholders and any broker-dealers or agents that participate in the
distribution of the Common Stock might be deemed to be underwriters, and any
profit on the sale of the Common Stock by them and any discounts, commissions or
concessions received by any such broker-dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act of 1933, as
amended (the "Securities Act").
Messrs. Greenberg and Goldberg have deposited 125,000 shares of Common
Stock pursuant to the Escrow Agreement and have opened an account with a
brokerage firm. Under the Escrow Agreement, if Messrs. Greenberg and Goldberg
default on their guaranty of an affiliate's obligation to the Company, the
shares deposited with the escrow agent will be sold through the brokerage firm.
Messrs. Greenberg and Goldberg are obligated to use that portion of the proceeds
as are necessary to satisfy their guaranty.
The Company has agreed to bear all expenses (other than selling
discounts, concessions and commissions) in connection with the registration and
sale of the Common Stock being offered by the Selling Stockholders. The Company
has agreed to indemnify certain of the Selling Stockholders against certain
liabilities, including liabilities under the Securities Act.
The Common Stock being offered hereby by the Selling Stockholders has
not been registered for sale under the securities laws of any state or
jurisdiction as of the date of this Prospectus. Brokers or dealers effecting
transactions in the Common Stock should confirm the registration thereof under
the securities law of the state in which such transactions occur, or the
existence of any exemption from registration.
LEGAL MATTERS
The legality of the securities being offered hereby will be passed upon
for the Company by Parker Duryee Rosoff & Haft, New York, New York.
EXPERTS
The consolidated financial statements of Graff Pay-Per-View Inc. as of
December 31, 1995 and 1994 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1995 incorporated by reference in this prospectus,
have been incorporated herein in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
The balance sheet of Spector Entertainment Group, Inc. as of December
31, 1994 and the related statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1994 and 1993 incorporated in this
Prospectus by reference to Form 8-K/A of Graff Pay-Per-View Inc. dated October
25, 1995, have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
<PAGE>
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered (other than
broker's discounts or commissions to be paid by the Selling Stockholders) are as
follows:
Amount
SEC Registration Fee $1,289
Printing and Engraving Expenses*
Accounting Fees and Expenses*
Legal Fees and Expenses*
Blue Sky Fees and Expenses*
Miscellaneous Expenses*
Total*
- ------------
* To be completed by amendment.
Item 15. Indemnification of Directors and Officers
Under Section 145 of the Delaware General Corporation Law, subject to
various exceptions and limitations, the Company may indemnify its directors or
officers if such director or officer 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 Company by reason of the fact that he is or was a
director or officer of the Company, or is or was serving at the request of the
Company as a director or officer of another 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 if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding had no reasonable cause to believe his conduct
was unlawful, except, in the case of an action by or in the right of the Company
to procure a judgment in its favor, as to any matter which such person shall
have been adjudged to be liable for negligence or misconduct in the performance
of his duty. The Company shall indemnify its directors or officers to the extent
that they have been successful on the merits or otherwise in defense of any such
action, suit or proceeding, or in the defense of any claim, issue or matter
therein, against expenses (including attorneys' fees) actually and reasonably
incurred by them in connection therewith. In addition, Delaware law permits a
corporation to limit or eliminate the liability of a director to the corporation
and its shareholders for negligent breaches of such directors' fiduciary duties
in certain circumstances. The foregoing statement is qualified in its entirety
by the detailed provisions of Sections 145 and 102 of the Delaware General
Corporation Law.
The Company's Certificate of Incorporation and By-laws contain
provisions with respect to the indemnification of directors and officers which
provide for indemnification and limitation or elimination of liabilities to the
full extent provided by Delaware law as described above.
Reference is made to the Agreements filed as Exhibits 10.43 and 10.44
hereto for certain indemnification arrangements between the Company and the
Selling Stockholders.
Item 16. Exhibits
(a) Exhibits
2.01 - Merger Agreement and Plan of Reorganization dated
as of January 17, 1992 among Jericap, Inc., Jericap
Merger Corp., Graff Pay-Per-View Inc., J. Roger
Faherty, Mark Graff and Leland H. Nolan.
Incorporated by reference to Exhibit 2.1 of the
Company's Current Report on Form 8-K dated March 9,
1992.
2.02 - Merger Agreement and Plan of Reorganization dated
as of May 14, 1992 between Jericap, Inc. and the
Company. Incorporated by reference to Exhibit 2.3
of the Company's Registration Statement on Form 8-A
dated January 26, 1993 (the "8-A").
2.03 - Investment and Option Agreement dated as of January
22, 1993 between R. C. Yates, A. D. Wren, S. P.
Kay, the Company and The Home Video Channel Limited.
Incorporated by reference to Exhibit 2.1 of the
Company's Current Report on Form 8-K dated February
22, 1993.
2.04 - Merger Agreement and Plan of Reorganization dated
December 14, 1993 by and PSP Holding, Inc., Stefan
Herrmann, Paul T. Kestenbaum, Peter Heidenfelder
and Alfred D. Crowell and Graff Pay-Per-View Inc.
and Guest Cinema, Inc. Incorporated by reference
to Exhibit 2.2 of the Company's Current Report on
Form 8-K dated January 17, 1994.
2.05 - Merger Agreement and Plan of Reorganization dated
as of May 26, 1994 by and among CPV, Magic Hour
Productions, Inc., Marc Greenberg Richard Goldberg,
Registrant and Graff Merger Corp. Incorporated by
reference to Exhibit 2.01 of the Company's Current
Report on Form 8-K filed June 10, 1994 (the "June,
1994 8-K").
2.06 - Merger Agreement and Plan of Reorganization dated
as of April 15, 1994 by and among PSP Communica-
tions, Inc., Stefan Herrmann, Peter Heidenfelder,
Paul T. Kestenbaum, Alfred D. Crowell, Registrant
and Guest Cinema, Inc. Incorporated by reference
to Exhibit 2.02 of the June, 1994 8-K.
2.07 - Merger Agreement and Plan of Reorganization,
between SPICE, Inc., and Graff-Pay-Per-View Inc.,
Adam & Eve Communications, Inc., PHE, Inc. VCA
Labs, Inc., Nolan Quan, John J. Gallagher, Philip
Harvey and Russell J. Hampshire dated April 7,
1995. Incorporated by reference to Exhibit 2.03 of
the April 27, 1995 Form 8-K.
2.08 - Merger Agreement and Plan of Reorganization
dated August 9, 1995 by and among Spector
Entertainment Group, Inc., Edward Spector and
the Registrant and Newco SEG, Inc. Incorporated
by reference to Exhibit 2.04 of the
September 12, 1995 Form 8-K.
3.01 - Certificate of Incorporation of the Company.
Incorporated by reference to Exhibit 2.2 of the 8-A.
3.02 - By-Laws of the Company. Incorporated by reference
to Exhibit 2.2 of the 8-A.
3.03 - Certificate of Merger dated May 15, 1992 between
Jericap, Inc. and the Company. Incorporated by
reference to Exhibit 3.1 of the Company's Quarterly
Report on Form 10-Q for the Quarterly period ended
March 31, 1992 (the "March, 1992 10-Q").
4.01 - Specimen Certificate representing the Common Stock,
par value $.01 per share. Incorporated by reference
to Exhibit 1 of the 8-A.
5.01 - Opinion of Parker Duryee Rosoff & Haft.*
10.01 - Amended 1991 Management Stock Option Plan.
Incorporated by reference to Exhibit 10 of the
March, 1992 10-Q.
10.02 - Form of Stock Option Agreement for the 1991 Plan.
Incorporated by reference to Exhibit 10.02 of the
1992 10-K.
10.03 - The Company's 401(k) Tax Deferred Savings Plan.
Incorporated by reference to Exhibit 10.03 of the
1992 10-K.
10.04 - Employment Agreement dated as of June 1, 1992
between the Company and J. Roger Faherty.
Incorporated by reference to Exhibit 10.04 of the
1992 10-K.
10.05 - First Amendment dated as of February 22, 1993 to
Employment Agreement dated as of June 1, 1992
between the Company and J. Roger Faherty.
Incorporated by reference to Exhibit 10.05 of the
1992 10-K.
10.06 - Deferred Compensation Agreement dated as of October
1, 1992 between the Company and J. Roger Faherty.
Incorporated by reference to Exhibit 10.06 of
the 1992 10-K.
10.07 - Employment Agreement dated as of June 1, 1992
between the Company and Mark Graff. Incorporated by
reference to Exhibit 10.07 of the 1992 10-K.
10.08 - First Amendment dated as of February 22, 1993 to
Employment Agreement dated as of June 1, 1992
between the Company and Mark Graff. Incorporated
by reference to Exhibit 10.08 of the 1992 10-K.
10.09 - Deferred Compensation Agreement dated as of October
1, 1992 between the Company and Mark Graff.
Incorporated by reference to Exhibit 10.09 of the
1992 10-K.
10.10 - Employment Agreement dated as of June 1, 1992
between the Company and Leland H. Nolan.
Incorporated by reference to Exhibit 10.10 of the
1992 10-K.
10.11 - First Amendment dated as of February 22, 1993 to
Employment Agreement dated as of June 1, 1992
between the Company and Leland H. Nolan.
Incorporated by reference to Exhibit 10.11 of the
1992 10-K.
10.12 - Deferred Compensation Agreement dated as of October
1, 1992 between the Company and Leland H. Nolan.
Incorporated by reference to Exhibit 10.12 of
the 1992 10-K.
10.13 - 1993 Employees Stock Option Plan. Incorporated by
reference to Exhibit 10.19 of the 1993 S-1.
10.14 - Second Amendment dated as of June 15, 1993 to
Employment Agreement dated as of June 1, 1992
between the Company and J. Roger Faherty.
Incorporated by reference to Exhibit 10.20 of the
1993 S-1.
10.15 - Second Amendment dated as of June 15, 1993 to
Employment Agreement dated as of June 1, 1992
between the Company and Mark Graff. Incorporated
by reference to Exhibit 10.21 of the 1993 S-1.
10.16 - Second Amendment dated as of June 15, 1993 to
Employment Agreement dated as of June 1, 1992
between the Company Leland H. Nolan. Incorporated
by reference to Exhibit 10.22 of the 1993 S-1.
10.17 - Form of Stock Option Agreement for the 1993 Plan.
Incorporated by reference to Exhibit 10.23 of the
1993 S-1.
10.18 - Employment Agreement dated as of June 1, 1992
between Richard Kirby and the Company. Incorporated
by reference to Exhibit 10.24 of the 1933 S-1.
10.19 - Employment Agreement dated as of September 1, 1993
between the Company and Philip J. Callaghan.
Incorporated by reference to Exhibit 10.34 of the
1993 S-1.
10.20 - Agreement between Graff Pay-Per-View Inc. and Four
Media Company dated January 31, 1994. Incorporated
by reference to Exhibit 10.39 of the 1993 10-K.
10.21 - Third Amendment dated as of March 23, 1994 to
Employment Agreement dated as of June 1, 1992
between the Company and J. Roger Faherty.
Incorporated by reference to Exhibit 10.41 of the
1993 10-K.
10.22 - Third Amendment dated as of March 23, 1994 to
Employment Agreement dated as of June 1, 1992
between the Company and Mark Graff. Incorporated
by reference to Exhibit 10.42 of the 1993 10-K.
10.23 - Third Amendment dated as of March 23, 1994 to
Employment Agreement dated as of June 1, 1992
between the Company and Leland H. Nolan.
Incorporated by reference to Exhibit 10.43 of the
1993 10-K.
10.24 - Employment Agreement dated as of May 27, 1994
between Marc Greenberg and Graff Merger
Corp. Incorporated by reference to Exhibit 10.01
of the June, 1994 8-K.
10.25 - Employment Agreement dated as of May 27, 1994
between Richard Goldberg and Graff Merger Corp.
Incorporated by reference to Exhibit 10.02 of the
June, 1994 8-K.
10.26 - 1994 Employees' Stock Option Plan. Incorporated by
reference to Exhibit 1 to the Company's Proxy
Statement (the "1994 Proxy Statement") for its
Annual Meeting of Stockholders held June 22, 1994.
10.27 - Directors' Stock Option Plan. Incorporated by
reference to Exhibit 2 to the 1994 Proxy Statement.
10.28 - Loan and Security Agreement $900,000 Term Loan and
$2,500,000 Revolving Credit facility dated
October 21, 1994 with Midlantic National Bank,
N.A. Incorporated by reference to Exhibit
10.01 of the September 30, 1994 10-Q.
10.29 - Amended and restated Loan Agreement dated as of
December 9, 1994 with Midlantic National Bank,
N.A. Incorporated by reference to Exhibit
10.44 of the December 31, 1994 10-K.
l0.30 - Employment Agreement dated January 1, 1995 between
the Company and Daniel J. Barsky. Incorporated by
reference to Exhibit 10.48 of the December 31, 1994
10-K.
10.31 - Employment Agreement dated as of January 1, 1995
between the Company and Irene Merlo Posio.
Incorporated by reference to Exhibit 10.49 of the
December 31, 1994 10-K.
10.32 - Letter Agreement between SPICE, Inc., and Graff-Pay-
Per-View Inc., Adam & Eve Communications, Inc., PHE,
Inc. VCA Labs, Inc., Nolan Quan, John J. Gallagher,
Philip Harvey and Russell J. Hampshire dated
January 26, 1995. Incorporated by reference to
Exhibit 10.46 of the December 31, 1994 10-K.
10.33 - Agreement between AT&T Corp. and Graff Pay-Per-View
Inc. concerning Skynet Transponder Service dated
February 7, 1995. Incorporated by reference to
Exhibit 10.45 of the December 31, 1994 10-K.
10.34 - Letter Agreement by and between Graff Pay-Per-View
Inc., SPICE, Inc. and Cable VideoStore, Inc. and TVN
Entertainment Corporation dated March 27, 1995.
Incorporated by reference to Exhibit 10.57 of the
Company's Registration Statement on Form S-3,
Registration No. 33-93534, effective July 5, 1995.
10.35 - Joint Venture Agreement of American Gaming Network
dated June 28, 1995 and between American Gaming
Network, Inc. and TV Games, Inc. Incorporated by
reference to Exhibit 10.60 of the Company's
Registration Statement on Form S-3, Registration No.
33-93534, effective July 5, 1995.
10.36 - Letter Agreement between MultiMedia Games, Inc., TV
Games, Inc. Graff Pay-Per-View Inc. dated June 28,
1995. Incorporated by reference to Exhibit 10.61 of
the Company's Registration Statement on Form S-3,
Registration No. 33-93534, effective July 5, 1995.
10.37 - Industrial Lease Between Margate Associates and
Spector Entertainment Group, Inc. Incorporated by
reference to Exhibit 10.62 of the September 12, 1995
Form 8-K.
10.38 - Employment Agreement dated September 1, 1995
between the Company and Edward M. Spector.
Incorporated by reference to Exhibit 10.63 of the
September 12, 1995 Form 8-K.
10.39 - Amendatory Agreement dated as of August 14,
1995 between Graff Pay-Per-View Inc. and
Midlantic National Bank, N.A. Incorporated by
reference to Exhibit 10.65 of the September 30,
1995 Form 10-Q.
10.40 - Separation Agreement entered into as of
December 31, 1995 between Graff Pay-Per-View Inc.
and Leland Nolan. Incorporated by reference
to Exhibit 10.66 of the December 31, 1995 Form 10-K.
10.41 - Separation Agreement entered into as of
December 31, 1995 between Graff Pay-Per-View Inc.
and Mark Graff. Incorporated by reference to
Exhibit 10.66 of the Incorporated by reference
to Exhibit 10.67 of the December 31, 1995
Form 10-K.
10.42 - Fourth Amendment to Employment Agreement
effective as of January 1, 1996 between Graff
Pay-Per-View Inc. and J. Roger Faherty.
Incorporated by reference to Exhibit 10.66 of the
Incorporated by reference to Exhibit 10.68 of the
December 31, 1995 Form 10-K.
10.43 - General Partnership and Contribution
Agreement of CVS Partners dated January 27, 1996
by and between the Company and WilTech Cable
Television Services, Inc., WilTech Services, Inc.
and Cable Video Store, Inc. Incorporated by
reference to Exhibit 10.69 of the December 31, 1995
Form 10-K.
10.44 - Third Amendatory Agreement dated as of March
28, 1996 between Graff Pay-Per-View Inc. and
Midlantic National Bank, N.A. Incorporated by
reference to Exhibit 10.70 of the December 31, 1995
Form 10-K.
10.45 - Share Sale Agreement made on March 22, 1996 by
and between Philips Media Services B.V., KPN
Multimedia B.V. and Graff Pay-Per-View Inc.
Incorporated by reference to Exhibit 10.71 of the
December 31, 1995 Form 10-K.
23.01 - Consent of Coopers & Lybrand L.L.P.
23.02 - Consent of Price Waterhouse LLP.
23.03 - Consent of Parker Duryee Rosoff & Haft.*
24.01 - Power of Attorney (contained on Page II-11).
- --------------
*To be filed by amendment.
<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) That for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each post-effective
amendment that contains a form of prospectus 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.
(2) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement 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.
(3) To remove from registration any means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering;
(4) That, for purposed of determining any liability under the
Securities Act, each filing of Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") that is incorporated by reference in the Registration Statement, shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officer and controlling persons of Registrant
pursuant to Item 15 of this Part II to the Registration Statement, or otherwise,
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 Registrant
of expenses incurred or paid by a director, officer or controlling person of
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, Registrant will, unless in the opinion of its
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 the public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on May 10, 1996.
GRAFF PAY-PER-VIEW INC.
By: /s/ J. Roger Faherty
------------------------
J. Roger Faherty,
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints J. Roger Faherty and Edward M. Spector,
and each of them, his true and lawful attorney-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 sign any or all amendments (including
post-effective amendments) to this Registration Statement and all documents
relating thereto, 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 requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following persons in the capacities and on the dates indicated:
/s/ J. Roger Faherty Chief Executive and May 10, 1996
- --------------------------- Financial Officer and
J. Roger Faherty Chairman of the Board
(Principal Executive,
Financial and Accounting
Officer)
<PAGE>
/s/ Edward M. Spector President, Chief May 10, 1996
- --------------------------- Operating Officer
Edward M. Spector and Director
/s/ Leland H. Nolan Director May 10, 1996
- ---------------------------
Leland H. Nolan
/s/ Mark Graff Director May 10, 1996
- ---------------------------
Mark Graff
/s/ Marvin Small Director May 10, 1996
- ---------------------------
Marvin Small
/s/ Dean Ericson Director May 10, 1996
- ---------------------------
Dean Ericson
<PAGE>
EXHIBIT INDEX
Consecutively
Exhibit Numbered
Number Pages
23.01 Consent of Coopers & Lybrand, L.L.P.
23.02 Consent of Price Waterhouse LLP
23.03 Consent of Parker Duryee Rosoff & Haft.*
- ---------------
* To be filed by amendment.
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Graff Pay-Per-View Inc. on Form S-3 ("Registration Statement") of our report,
based in part on the reports of other auditors, dated March 8, 1996 except for
Note 2 and paragraph (a) and (e) of Note 6 as to which the dates are April 3,
1996, March 29, 1996 and April 10, 1996, respectively, on our audits of the
consolidated financial statements and financial statement schedule II of Graff
Pay-Per-View Inc. as of December 31, 1995 and 1994, and for the three years in
the period ended December 31, 1995, which report is included in the 1995 Annual
Report in the Form 10-K of Graff Pay-Per-View Inc. We also consent to the
reference to our firm under the caption "Experts" in the Registration Statement.
COOPERS & LYBRAND L.L.P.
New York, New York
May 9, 1996
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 30, 1995 on the balance sheet at December 31, 1994 and the related
statements of operations, of stockholders' equity and of cash flows for each of
the two years in the period ended December 31, 1994 of Spector Entertainment
Group, Inc., appearing on page F-3 of Graff Pay-Per-View Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1995. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
San Diego, California
May 6, 1996
