NUMBER 00-10- $10,000.00
UNITED STATES OF AMERICA
STATE OF NEVADA
CAVALCADE OF SPORTS MEDIA, INC.
2000 CONVERTIBLE SUBORDINATED CAPITAL NOTE
CAVALCADE OF SPORTS MEDIA, INC., a Nevada corporation, (hereinafter
called the "COMPANY"), for value received, hereby promises to pay to:
Name:_________________________________________________________________________
Address_______________________________________________________________________
or registered assigns, in legal tender of the United States of America, the
principal sum of Ten Thousand Dollars ($10,000.00), with interest at the rate of
twelve percent (12%) calculated from the date of issuance of this Capital Note
to the earlier of maturity or payment in full if paid before maturity. Unless
this Capital Note has been converted, as provided below, the principal sum
remaining and all accrued interest thereon shall be due and payable, in full, on
December 31, 2000. In the event that this note is not converted to Common Stock
of the COMPANY or paid on or before such date, then in that event interest shall
be accrued on the principal sum and all accrued but unpaid interest to December
31, 2000 at the rate of eighteen percent (18%) per annum calculated from January
1, 2001 to the date of payment in full.
All payments shall be paid to the registered owner of this Capital Note
as of the date of payment and no proration shall be required.
The indebtedness of the COMPANY evidenced by this Capital Note,
including the principal and any interest thereon, shall be subordinate and
junior in right of payment of its obligations to its other creditors, whether
now outstanding or hereafter incurred, (except as to any obligation of the
COMPANY ranking on a parity with or junior to this Capital Note) so that in case
of any insolvency proceedings, receivership, conservatorship, reorganization,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings relating to the COMPANY or any liquidation or winding-up of the
COMPANY, whether voluntary or involuntary, all such obligations (other than
those above excepted) shall be entitled to be paid in full before any
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payment shall be made on account of the principal of, or interest on, this
Capital Note. In the event of any such proceeding, after payment in full of all
sums owing with respect of such prior obligations, the Holder of this Capital
Notes, together with the holders of any obligations of the COMPANY ranking on a
parity with this Capital Note, shall be entitled to be paid from the remaining
assets of the COMPANY the unpaid principal thereof and any interest thereon
before any payment or other distribution, whether in cash, property or
otherwise, shall be made on account of any capital stock of the COMPANY, or any
obligations of the COMPANY ranking junior to this Capital Note. Subject to the
payment in full of all such prior obligations, the Holder of this Capital Note
shall be subrogated to the rights of the holders of such prior obligations to
receive payments or distributions of cash, property or securities of the COMPANY
applicable to such prior obligations.
In the event that the COMPANY shall file a registration statement with
the Securities and Exchange Commission under the Securities Act of 1933 for the
registration of any securities, the COMPANY shall register sufficient shares of
its Common Stock to permit the conversion of this Capital Note to such
registered shares of Common Stock. The Holder of this Capital Note shall have
the right, for a period of thirty (30) business days following effectiveness of
any such registration statement, to convert the principal and accrued but unpaid
interest into shares of the COMPANY's Common Stock. The principal sum ($10,000)
of this Capital Note and the accrued but unpaid interest thereon shall be
convertible into Common Stock at a price of One Dollar and Twenty-five Cents
($1.25) per share. Upon any conversion of this Capital Note into Common Stock of
the COMPANY, this Capital Note shall be deemed retired and not to be outstanding
and shall not be entitled to any benefit except to receive the Common Stock
entitled to as a result of the conversion. Such conversion shall be subject to
anti-dilution protection in the event of a stock dividend, stock split, or other
restructuring of the capital structure.
Upon the occurrence and continuance of default, the principal of this
Capital Note may be declared due and payable prior to its regular maturity. The
COMPANY shall be in default under this INSTRUMENT upon the happening of any of
the following events or conditions: (a) Failure or omission(s) to pay, or other
delinquency in the payment of; any interest upon this Capital Note as and when
the same shall become due and payable, and continuance of such delinquency for a
period of thirty (30) days; or
(b) Failure or omission(s) to pay, or other default in the payment of
the principal of this Capital Note as and when the same shall become due and
payable either upon redemption, by declaration or otherwise; or
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(c) If the COMPANY becomes insolvent or unable to pay its debts as they
mature or makes an assignment for the benefit of its creditors, or a proceeding
is instituted by or against the COMPANY alleging that the COMPANY is insolvent
or unable to pay its debts as they mature and such proceeding remains
undismissed for ninety (90) days; or
(d) Failure on the part of the COMPANY duly to observe or perform any
of the covenants or agreements on the part of the COMPANY contained in this
Capital Note for a period of ninety (90) days after the date on which the
earliest written notice of such failure, requiring the COMPANY to remedy the
same, shall have been given to the COMPANY by the Holder; or
(e) If the COMPANY shall, on a petition in bankruptcy or reorganization
filed against it, be adjudicated a bankrupt, or if a court of competent
jurisdiction shall enter an order or decree appointing, without the consent of
the COMPANY, a receiver of the COMPANY or of the whole or substantially all of
its property, or approving a petition filed against it seeking reorganization or
arrangement of the COMPANY under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof,
and such adjudication, order, or decree shall not be vacated or set aside or
stayed within ninety (90) days from the date of the entry thereof. If the
COMPANY shall default, as defined herein, then and in each and every such case,
unless the principal of this Capital Note shall have already become due and
payable, the Holder, by notice in writing to the COMPANY, may declare the
principal of this Capital Note to be due and payable immediately, and upon such
declaration the same shall become and shall be immediately due and payable,
anything in this Capital Note contained to the contrary notwithstanding.
This Capital Note is subject to call and redemption at any time prior
to its regular maturity upon payment of the principal amount of this Capital
Note, without a redemption premium or prepayment penalty.
Subject to the transfer restrictions of federal and state securities
laws, this Capital Note is transferable on the books of the Company, to be kept
at the office of the Company in Del Mar, California, by the registered owner
hereof in person, or by an attorney duly authorized in writing, upon surrender
and cancellation of this Capital Note. Upon any such transfer, a new registered
Capital Note or Capital Notes of the same issue and for the same aggregate
original face amount shall be issued to the transferee in exchange therefor;
provided, nevertheless, that the actual liability of the Company shall be
limited to the actual unpaid principal amount outstanding as of the date of
transfer, together with any accrued but unpaid interest thereon.
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The Company may deem or treat the person in whose name this Capital
Note shall at the time be registered as the absolute owner hereof for the
purposes of transfer and receiving payment of principal and/or interest as well
as for all other purposes whatsoever and the Company shall not be affected by
any notice to the contrary.
IN WITNESS WHEREOF, the COMPANY has caused this Capital Note to be
executed by the signatures of its duly authorized officers, and the corporate
seal hereunto affixed.
Dated:
CAVALCADE OF SPORTS MEDIA, INC.
ATTEST:
/s/ Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx, President
/s/ Xxxxxx Xxxxxxx
------------------
Secretary
TRANSFER RESTRICTION NOTICE
This Capital Note has not been registered under the Securities Act of
1933. Accordingly, this Capital Note may not be transferred unless subsequently
registered or unless, in the opinion of counsel satisfactory to the Company,
such registration is not required.
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ASSIGNMENT OF CAPITAL NOTE
For value received, the undersigned, hereby sell(s), assign(s), and
transfer(s) all of his/her/their interest represented by the within 2000
Convertible Subordinated Capital Note to:
Name(s):_____________________________________________________________________
Street: _____________________________________________________________________
City/State:____________________________________________Zip Code______________
and hereby irrevocably constitute(s) and appoint(s) the Secretary of CAVALCADE
OF SPORTS MEDIA, INC. attorney to transfer such Capital Note on the books of
CAVALCADE OF SPORTS MEDIA, INC. with full power of substitution in the premises.
The officers of CAVALCADE OF SPORTS MEDIA, INC. are hereby authorized
and directed to issue a Capital Note to such transferee(s) in exchange for this
Capital Note which shall be canceled. Dated:
WITNESS: SIGNATURE(S):
_______________ __________________
(Registered Owner)
_______________ __________________
(Registered Co-Owner)
NOTICE: The signature(s) on this assignment must correspond in every particular
respect with the name(s) as written upon the face of this Capital Note.
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CAVALCADE OF SPORTS MEDIA, INC
00000 XXX XXXXXX
XXX XXX, XXXXXXXXXX 00000
MEMBERSHIP PRIVATE PLACEMENT
TERM SHEET
EXECUTIVE SUMMARY
ISSUER:
Cavalcade of Sports Media, Inc., (the "Company"), a Nevada corporation,
with principal offices at 00000 Xxx Xxxxxx, Xxx Xxx, Xxxxxxxxxx 00000.
SECURITIES OFFERED:
Convertible Subordinated Capital Notes, in the face values of $10,000,
$5,000 and $1,000 which are non-interest bearing prior to the maturity
date. The Capital Notes are due on or before September 30, 2000 (maturity
date). If the Company ' completes the state review of its Rule 504 Offering
on or before September 30, 2000, then the principal sum of the Capital
Notes automatically converts 'to free trading shares of the Company's
Common Stock under the Rule 504 Offering at the per share offering price of
$1.25 (800 shares for each $1,000 principal sum of the Capital Notes
converted). If for any reason the review is not completed on or.. before
September 30, 2000, then, (a) interest retroactively accrues for the period
' from the date of issuance to September 30, 2000 at the rate of 7% per
annum and. for the period after the maturity date at the rate of 18% and
(b) the Holder may elect, in his sole option, whether to convert the
Capital Notes (principal and interest) into free trading shares of Common
Stock under the Rule 504 Offering or may elect to demand repayment.
OFFERING PRICE:
The Capital Notes are offered at par; i.e., at the face values of 510,000,
$5,000 and $1,000 without discount or premium. Subject to the discretion of
the Company's Board of Directors to permit less under special
circumstances, the minimum investment permitted is Twenty-Five Thousand
Dollars ($25,000) with additional increments of $ 10,000, 55,000 or $ 1,000
or any combination thereof.
OFFERING:
The Company is offering to sell up to One Million Dollars of its
Convertible Subordinated Capital Notes in a private placement pursuant to
Section 4(2) of the Securities Act of 1933 and Rule 506 issued by the SEC
under that section. The offering will commence on January 18, 2000 and will
continue until the earlier to occur of (a) effectiveness of the offering
memorandum following state review or (b) September 30, 2000 or (c) sale of
the entire 51,000,000 in Capital Notes, although the Company reserves the
right to close the offering earlier. The offering will be on a best efforts
basis. There is no placement agent; the Capital Notes will be sold by
certain officers and directors of the Company, none of whom will receive
any commissions or compensation for Capital Notes sold, although the
Company may reimburse them for reasonable and accountable expenses incurred
in
offering and selling the Capital Notes.. The Company reserves the right to
reject any subscription in whole or in part.
SUITABILITY STANDARDS:
Investors in the Capital Notes must be either accredited investors (as
defined in Regulation D) or sufficiently knowledgeable about business and
development stage companies.
USE OF PROCEEDS:
The proceeds to the Company, before deducting any placement expenses but
after or the legal and accounting expenses of this Offering and the related
Rule 504 Offering, estimated at $25,000, will be $975,000. Such net
proceeds will be used for investment capital and for working capital of the
Company.
RISK FACTORS:
The Company will be engaged in purchasing film of vintage sporting events,
converting (digitizing) such film to a format usable for television cable
broadcast, establishing a new television subscription cable station, which
will broadcast the vintage sports films with and without advertising. The
Company has incurred, and will continue to incur, the costs of acquiring
such films and digitizing them until it has a sufficient inventory
(library) to support continuous broadcasting for a twelve, hour period over
a seven day week for a substantial time period, before it can commence
broadcasting and seeking subscribers. The Company must complete
arrangements for broadcasting, up-linking (to the satellite) the signal,
and distribute such channel via existing television service providers
(e.g., DirectTV) and will incur expenses for that before the commencement
of broadcasting. There is no assurance that the Company will be able to
secure a sufficient digitized film library to meet the demands of
subscribers or to interest television service providers in adding this
vintage sports channel. There is no assurance that, if available through a
television service provider, sufficient viewers will subscribe to permit
the Company to become profitable.
TRANSFER RESTRICTIONS:
The Capital Notes being sold in this offering have not been registered with
the Securities and Exchange Commission. Therefore, if you purchase any
Capital Notes they will be restricted from resale, transfer or other
disposition. The shares of Common Stock into which the Capital Notes are
convertible will, however, be registered as a Rule 504 Offering and will
therefore be free-trading upon effectiveness of the Offering Memorandum
following state review.
TRANSFER AGENT:
The Company's stock transfer agent is Olde Monmouth Stock Transfer Co.,
Inc., 00 Xxxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxxxx; Xxx Xxxxxx 00000. Its
telephone number is (000) 000-0000. There is, however, no transfer agent
for the Capital Notes since they are being issued in a private placement
and transfer is restricted.
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