SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1/A
Tender offer statement pursuant to section 14(d)(1) of the
Security Exchange Act of 1934
(Amendment No. 2)
JACKPOT ENTERPRISES, INC.
(Name of subject company [Issuer])
JACKPOT ACQUISITION CORP.
(Bidder)
COMMON STOCK
(Title of Class of Securities)
466392
(CUSIP Number of Class of Securities)
Mr. Tim Noyle, Las Vegas Entertainment Network, Inc.
1801 Century Park East, 23rd Floor, Los Angeles, CA 90067
(310) 551-0011
(Name,Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Bidder)
Calculation of Filing Fee
Transaction valuation: $ 95,051,000.00 Amount of filing fee*: $19,010.20
* Computed by multiplying number of shares outstanding (8,641,000) by $11.00
per share, times 0.0002.
Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or Schedule and the date of its filing. Not applicable.
Note: The remainder of this cover page is only to be completed if this
Schedule 14D-1 (or amendments thereto) is being filed, inter alia, to
satisfy the reporting requirements of section 13(d) of the Securities
Exchange Act of 1934.
See General Instructions D, E, and F to Schedule 14D-1.
*The remainder of this cover page shall be filled out for a person's initial
filing on this form with respect to the subject class of securities, and for
any subsequent amendment containing information which would alter the
disclosure provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see Notes)
_______________________________________________________________________________
1. Name of Reporting Persons: JACKPOT ACQUISITION CORP., a wholly owned
subsidiary of Las Vegas Entertainment Network formed solely to accomplish
this acquisition.
I.R.S. Identification of Above Persons (Entities only): 94-3125854
_______________________________________________________________________________
2. Check the appropriate box if a Member of a Group (See Instructions)
a.
X b. Not a Member of a Group.
_______________________________________________________________________________
3. SEC Use Only________________________________________________________________
_______________________________________________________________________________
4. Source of Funds (See Instructions) Loan (See Investment Agreement and
U. S. Guarantee Corp. commitment attached as Exhibits)
_______________________________________________________________________________
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f). Not applicable.
_______________________________________________________________________________
6. Citizenship or Place of Organization: Nevada
_______________________________________________________________________________
7. Aggregate Amount Beneificially Owned by Each Reporting Person: -0-
_______________________________________________________________________________
8. Check if the Aggregate Amont in Row 7 Excludes Certain Shares
(See Instructions). Not applicable.
_______________________________________________________________________________
9. Percent of Class Represented by Amount in Row 7: -0-
_______________________________________________________________________________
10. Type of Reporting Person (See Instructions): CO
_______________________________________________________________________________
END OF COVER PAGE
Item 1. Security and Subject Company
(a) The name of the subject company is: JACKPOT ENTERPRISES, INC. The
address of its principal executive offices is:
1110 Palms Airport Drive
Las Vegas, NV 89119
(b) The exact title and the number of shares outstanding of the class of
securities being sought is: Common Stock, 8,641,000 shares.
(c) The principal market in which such securities are traded is the New
York Stock Exchange. The high and low sales prices for each quarterly
period for the past two years are as follows:
Fiscal 1998 High Low Fiscal 1999 High Low
1st Quarter 12.19 10.63 1st Quarter 12.56 9.58
2nd Quarter 13.00 10.75 2nd Quarter 11.50 9.13
3rd Quarter 13.94 11.00 3rd Quarter 9.63 7.63
4th Quarter 13.19 11.75 4th Quarter 9.00 7.50
Item 2. Identity and Background
The name of the person filing this statement is JACKPOT ACQUISITION CORP.,
a Nevada corporation, formed solely for the purpose of effectuating the
acquisition of JACKPOT ENTERPRISES, INC., by LAS VEGAS ENTERTAINMENT NETWORK,
INC., a Delaware corporation. JACKPOT ACQUISITION CORP. and LAS VEGAS
ENTERTAINMENT NETWORK, INC. are both located at 1801 Century Park East,
Suite 2300, Los Angeles, California 90067. JACKPOT ACQUISITION CORP. does not
operate any other business, and has not been a party to any litigation or civil
proceeding of a judicial or administrative body of competent jurisdiction, and
is not subject to any judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violations of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company
There have been absolutely no past contacts, transactions or negotiations
with the Subject Company or any of its affiliates (whether or not corporate),
or any of its, or any of its affiliates' (whether or not corporate), executive
officers, or directors.
Item 4. Source and Amount of Funds or Other Consideration
The source of funds to be used to finance the purchase of securities for
which the tender offer is being made is set forth in the Investment Agreement
attached to this Schedule and by this reference included herein as though set
forth in full hereat.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder
The purpose of the Tender Offer is to acquire the subject company as a
going business. The bidder proposes to maintain the business as presently
constituted, and has no extraordinary corporate transactions planned; nor does
it contemplate a sale of a material amount of assets of the subject company or
any of its subsidiaries. The present Board of Directors and management will be
reviewed with the intent to retain as many of the present personnel as
possible. No changes in capitalization or dividend policy are presently
contemplated, nor are any changes in the subject company's corporate structure
of business, or stock exchange listing presently contemplated. The bidder does
not intend to terminate any registration of equity securities pursuant to
section 12(g)(4) of the Act.
Item 6. Interest in Securities of the Subject Company
There are no shares of any securities beneficially owned by any person
identified in Item 2 of this Schedule; nor have there been any transactions
involving any such securities by any such person, or by any officer, director
or subsidiary of any such person.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities
There are no contracts, arrangements, understandings or relationships
with respect to the subject company's securities by the bidder, or any of its
officers, directors, or subsidiaries.
HOWEVER, THIS TENDER OFFER IS SUBJECT TO THE PRIOR APPROVAL OF
NEVADA GAMING REGULATORS, AND SUCH APPROVAL HAS NOT YET BEEN GIVEN.
SUCH APPROVAL IS A CONDITION PRECEDENT TO THE PURCHASE OF ANY SECURITIES
BY THE BIDDER.
Item 8. Persons Retained, Employed or to be Compensated
There are no persons or classes of persons employed, retained or to be
compensated by the bidder in connection with the tender offer.
Item 9. Financial Staements of Certain Bidders
The current financial statement of the bidder's parent company, LAS VEGAS
ENTERTAINMENT NETWORK INC., is as follows:
LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
JULY 31, OCTOBER 31,
1999 1998
(UNAUDITED)
ASSETS
<S> <C> <C>
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 177,619 $ 553,525
TRADING SECURITIES 19,977 106,199
------------- -------------
TOTAL CURRENT ASSETS 197,596 659,724
INVESTMENT IN & ADVANCES TO INTERNATIONAL
THOROUGHBRED BREEDERS INC. - Note 2 3,500,000 3,500,000
OTHER INVESTMENTS & ADVANCES 100,000 100,000
PROPERTY AND EQUIPMENT
net of accumulated depreciation
of $294,675 (1999) and $259,547(1998) 54,574 89,404
DEPOSITS AND OTHER - Note 6 3,000,000 56,652
------------- -------------
$ 6,852,170 $ 4,405,780
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 243,174 $ 308,181
ACCRUED OFFICERS SALARY 105,812
LOAN PAYABLE, OFFICER - Note 4 443,080
------------- -------------
TOTAL CURRENT LIABILITIES 792,066 308,181
ACCRUED OFFICER'S BENEFITS - Note 3 - 294,379
STOCKHOLDERS' EQUITY (NOTE 5)
PREFERRED STOCK - SERIES A, AUTHORIZED 30,000,000
SHARES, $.001 PAR VALUE; NONE OUTSTANDING - -
COMMON STOCK - AUTHORIZED 50,000,000
SHARES, $.001 PAR VALUE; ISSUED AND
OUTSTANDING 6,537,667 SHARES (1999)
AND 1,831,167 (1998) 130,750 36,620
ADDITIONAL PAID-IN CAPITAL 53,504,202 48,459,312
LONG TERM INVESTMENT RESERVE - (2,400,000)
DEFICIT (47,574,848) (42,292,712)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 6,060,104 3,803,220
------------- -------------
$ 6,852,170 $ 4,405,780
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended July 31, Nine Months Ended July 31
-------------------------- --------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
REVENUES $ - $ - $ - $ -
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
COSTS AND EXPENSES
El Rancho Costs - Note 2 142,205
Research & Development 16,250 290,137 108,250 361,814
Write-off of Investment
in ITB - Note 2 - - - 2,400,000
General & Administrative 1,237,169 1,002,023 2,793,914 2,381,401
------------ ------------ ------------ ------------
TOTAL COSTS AND EXPENSES 1,253,419 1,292,160 5,444,369 2,743,215
------------ ------------ ------------ ------------
LOSS BEFORE OTHER
INCOME AND (CHARGES) (1,253,419) (1,292,160) (5,444,369) (2,743,215)
OTHER INCOME AND (CHARGES):
Interest Income 402 31,200 5,763 124,348
Gain (Loss) on Trading
Securities (27,400) (13,310) 43,847 105,573
Other Charges (155,000) 115,892 (731,799)
Interest and Finance Costs (365) (21,512) (3,269) (60,287)
------------ ------------ ------------ ------------
TOTAL OTHER INCOME
AND (CHARGES) (27,363) (158,622) 162,233 (562,165)
------------ ------------ ------------ ------------
NET LOSS $(1,280,782) $(1,450,782) $(5,282,136) $(3,305,380)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OF COMMON
STOCK OUTSTANDING 4,934,532 1,744,917 3,720,111 1,744,917
============ ============ ============ ============
LOSS PER SHARE
OF COMMON STOCK $ (0.26) $ (0.65) $ (1.42) $ (1.89)
============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JULY 31, 1999 (UNAUDITED)
COMMON STOCK UNREALIZED
ADDITIONAL LOSS ON
NUMBER PAID-IN LONG-TERM
OF SHARES AMOUNT CAPITAL INVESTMENT DEFICIT TOTAL
--------- -------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - NOVEMBER 1, 1998
1,831,167 $ 36,620 $48,459,312 $(2,400,000) $(42,292,712) $ 3,803,220
Common Stock issued for services
1,456,500 29,130 1,812,390 1,841,520
Sales of Common Stock
250,000 5,000 292,500 297,500
Common Stock Issued for Acquisitions
3,000,000 60,000 2,940,000 3,000,000
Realization of loss on ITB Securities 2,400,000 2,400,000
Net Loss for the nine months ended July 31, 1999 (5,282,136) (5,282,136)
BALANCE - JULY 31, 1999
$6,537,667 $130,750 $53,504,202 - $(47,574,848)
========= ======== =========== ============ ============= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED JULY 31,
---------------------------------
1999 1998
------------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (5,282,136) $(1,854,598)
Gain from Marketable Securities (43,492) (118,883)
Loss on ITB Securities 2,400,000
Issuance of Stock for Services 1,841,520
Depreciation 34,830 33,311
Adjustments to reconcile net loss to net
Cash used in operating activities:
Increase (Decrease) in;
Accounts Payable (65,007) 39,806
Interest Payable - 38,775
Accrued Officer's Salaries 105,812 (419,843)
Accrued Officer's Benefits (294,379) 62,000
------------------- ------------
CASH USED IN OPERATING ACTIVITIES (1,302,852) (2,219,432)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Trading Securities (29,704)
Sale of Trading Securities 129,714
Advances to Nordic Gaming (102,446)
Advances on Airplane Deposits
Colllections on Airplane Deposits 56,652
Collections from ITB Inc. - 50,245
Investments & Advances - Other - (200,000)
Decrease in Deposits and Other - 446,323
Acquisition of Property and Equipment - (14,122)
------------------- ------------
CASH PROVIDED BY INVESTING ACTIVITIES 186,366 150,296
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Stock for Cash 297,500
Advances from Officer 443,080
Repayment of Notes Payable (505)
------------------- ------------
CASH PROVIDED BY (USED IN) FINANCING 740,580 (505)
ACTIVITIES
DECREASE IN CASH (375,906) (2,069,641)
CASH BALANCE - BEGINNING 553,525 2,399,491
------------------- ------------
CASH BALANCE - ENDING $ 177,619 $ 329,850
=================== ============
SUPPLEMENTAL INFORMATION OF NON-CASH Transactions
- - -------------------------------------------------
On July 15, 1999, the Company issued 3,000,000 shares of stock valued at
$3,000,000 in contemplation of an acquisition closing.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
</TABLE>
5
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF BUSINESS, GOING CONCERN AND SIGNIFICANT ACCOUNTING POLICIES
Background - Las Vegas Entertainment Network, Inc. ("LVEN" or "the
Company") was incorporated in October 1990, and is engaged in the business
of acquiring, developing and operating media and communications businesses
and gaming facilities including real estate redevelopment. The Company has
also identified a major business opportunity for the distribution of bingo
machines in Brazil, when if implemented, for which there can be no
assurance, will substantially alter the direction of the Company. The
Company is also investigating other potential businesses for acquisition in
the entertainment, gaming, lodging, and communications industries.
The accompanying unaudited financial statements include the accounts of
LVEN, and its wholly owned subsidiaries Las Vegas Communications Corp.
("LVCC"), Casino-Co Corporation, Casino Co. Ltda., Pacific DNS, Inc, and
its majority-owned subsidiary, Electric Media Company Inc. (EMC). All
significant intercompany transactions and balances have been eliminated.
Going Concern - The accompanying financial statements have been prepared on
a going concern basis which contemplates the realization of assets and
liabilities in the normal course of business. For the nine months ended
July 31, 1999 and the year ended October 31, 1998, the Company experienced
net losses of $5,282,136 and $4,754,530, respectively, and has experienced
operating losses since its inception. The Company anticipates that it will
continue to experience significant losses and significant cash shortages as
it continues working on its development plans.
The Company's capital requirements have been and will continue to be
significant. The Company's cash requirements to date have been funded from
proceeds received in connection with the sale of shares of its common
stock, warrants and short-term borrowings. At July 31, 1999, the Company
had cash and cash equivalents of $177,619 and trading securities of
$19,977. The Company's current monthly operating cash requirements are
approximately $50,000 to $75,000, composed of general and administrative
expenses, salary and consulting fees, legal and professional fees,
marketing and travel costs. In addition, the Company may be required to
fund, or obtain financing for; (i) the acquisition of up to 1,000
electronic bingo machines per month (up to 10,000 machines in total) that
cost approximately $10,000 each to meet delivery requirements to MG
Entertainment under the Company's agreement with them, and (ii) $5,500,000
to fund the acquisition of a fifty percent interest in Sulmatic, a
Brazilian corporation which currently operates approximately 500 electronic
gaming machines throughout Brazil. Under the terms of the Sales Contract,
the Company is required to pay Three Million Dollars ($3,000,000) forty
five days from the date of a definitive agreement, which obligation has
been secured by the pledge of a Gold Certificate for 10,601 Troy Ounces
.9999 pure (the "Gold Certificate") issued by a Nevada Real Estate Trust
(the "REIT") and Five Hundred Thousand Dollars ($500,000) per month
thereafter until the entire purchase price has been paid.
6
<PAGE>
In order to preserve working capital, the Company has reduced the number of
its employees, deferred or delayed the payment of certain accounts payable,
and reduced operating and capital expenditures. To fund operations during
the first nine months of fiscal 1999, the Company (i) issued 1,456,500
shares of its Common Stock for services and to settle certain accounts
payable, (ii) issued 250,000 shares of its common stock in private
transaction for aggregate proceeds of $297,500, (iii) issued 3,000,000
restricted shares of its common stock in connection with a potential
acquisition, and (iv) received advances of $443,080 from a credit facility
provided by the Company's Chairman.
The Company's sources and uses for financing during 1999 and beyond will
vary based upon a number of factors, some of which are outside the control
of the Company. These factors include; the success of the Company in
meeting its delivery requirements to MG Entertainment for the sale of up to
10,000 bingo machines; the potential sale of the El Rancho Property and
receipt of proceeds therefrom (Note 2); the ultimate realization of other
LVEN assets, and; potential legal and political issues. In addition, the
Company's business plans may change based on changes in technology, new
developments in the marketplace or unforeseen events which could require
the Company to raise additional funds. The unavailability of additional
funds under acceptable terms and conditions when needed could have a
material adverse effect on the Company.
The Company's significant operating losses and capital requirements raise
substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments relating
to the recoverability of the recorded assets or the classification of the
liabilities that might be necessary should the Company not be able to
continue as a going concern.
Basis of Presentation - The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the nine-month period ended July 31, 1999 are not necessarily indicative of
the results that may be expected for the year ended October 31, 1999. The
unaudited consolidated financial statements should be read in conjunction
with the consolidated financial statements and footnotes thereto included
in the Company's Form 10-KSB for the year ended October 31, 1998.
Stock Split - On October 16, 1998, the stockholders of the Company ratified
a one for twenty reverse stock split of the shares of the Company's Common
Stock. All disclosures and applicable per share data have been
retroactively restated to reflect this reverse split.
7
<PAGE>
2. INVESTMENT IN AND ADVANCES TO INTERNATIONAL THOROUGHBRED BREEDERS INC.
On January 22, 1996, the Company sold the assets and liabilities of the El
Rancho Hotel and Casino in Las Vegas, Nevada (the "El Rancho" or "the
Property") to International Thoroughbred Breeders Inc. ("ITB") for
consideration of $43,500,000. The purchase price included the issuance of
an 8% promissory note in the principal amount of $10.5 Million. On May 22,
1997, the Company, ITB and its lender entered into certain agreements
whereby LVEN converted the $10.5 Million into 2,093,868 restricted shares
of ITB common stock.
October 10, 1997, certain former or current directors of ITB filed an
action against ITB and its other directors, the Company, the Company's
Chairman and certain other individuals in the Delaware Court of Chancery.
The plaintiffs sought, among other things, the recession of the issuance of
the 2,093,068 shares of ITB common stock to LVEN. On July 2, 1998, the
parties entered into a Stipulation and Agreement of Compromise, whereby all
prior agreements between or among LVEN and ITB pursuant to which ITB issued
to LVEN 2,093,868 shares of ITB Common Stock, were terminated and the
Company returned all such shares to ITB for cancellation. Upon return of
the shares on January 29, 1999, and in accordance with Financial Accounting
Standards Board Statement No. 115, the Company recognized a $2,400,00
non-cash loss during the first quarter of 1999 that had previously been
provided as a reduction in stockholders equity.
Pursuant to the Stipulation and Agreement, the Company obtained various
exclusive and non-exclusive rights for the period ending on April 19, 1999,
(the "Escrow Period") to effect a sale or refinancing of ITB's
non-operating El Rancho Hotel and Casino property in Las Vegas, Nevada,
under the terms and conditions set forth in the Stipulation and Agreement,
including the right of LVEN to receive certain excess sales proceeds. On
April 19, 1999, the Escrow Period terminated without the Company having
exercised its Disposition Rights, which Disposition Right thereby lapsed
and expired.
On August 16, 1999, the Company entered into a letter with Countryland USA,
an unrelated party, and a prospective buyer of the former El Rancho Hotel &
Casino property from ITB Corporation. The agreement provides that the
Company, upon the successful acquisition by Countryland USA will receive
certain compensation. The agreement between Countryland USA and ITB did not
close as scheduled, and the parties are currently intervening to structure
a closing time frame that meets all parties needs. If this transaction is
not concluded, the Company will immediately issue an 8K and write off any
remaining amount associated with the El Rancho property.
8
<PAGE>
3. ACCRUED OFFICERS SALARY AND BENEFIT
As of October 31, 1998, Mr. Corazzi, the Chairman of the Board of the
Company, agreed to terminate any past or future amounts due him under his
retirement benefit in exchange for cash payment of $192,000 and the
issuance of 85,000 registered shares of common stock of the Company. These
shares were issued during the second fiscal quarter of 1999. The
termination of the retirement plan resulted in a gain of $125,000 which is
included in other income. Effective May 1, 1999 Mr. Corazzi agreed to
cancel his LVCC employment contract for 205,000 shares of the Company's
Common Stock. The termination of the employment contract with LVCC resulted
in a charge of $205,000 which is included in general and administrative
expenses.
During the three months ended July 31, 1999, Mr. Corazzi was issued 300,000
shares of the Company's common stock and Mr. Carl Sambus, the Company's
Chief Financial Officer was issued 100,000 shares of the Company's common
stock as a bonus for consideration of various transactions secured for the
Company. These shares have been valued at $450,000 and $150,000,
respectively. A portion of these shares must be returned to the Company if
the Company unwinds the transactions for any reason. In addition, all
previous stock options given to Mr. Corazzi have been canceled. The
4. LOAN PAYABLE, OFFICER
The Chairman of the Board has committed to provide a credit line to fund
working capital to fund operations. As of July 31, 1999, the Chairman has
made advances of $443,080. The advances are unsecured with no formal terms
of repayment.
5. CAPITAL STOCK TRANSACTIONS
During the nine months ended July 31, 1999, the Company issued 1,456,500
shares of its Common Stock in settlement for certain accounts payable. The
shares were valued at $1,841,520, the value of the accounts payable settled
or at the market price at the date of issuance (average price ranging from
$1.00 to $4.40 per share). Included in these shares were 590,000 shares
issued to the Chairman (Note 3) and177,000 shares issued to other officers
and directors.
During the nine months ended July 31, 1999, the Company sold, in private
transactions, 250,000 shares of its Common Stock for aggregate proceeds of
$297,500.
The Company entered into an acquisition agreement whereby the company
issued 3,000,000 restricted shares of its capital stock to each of six
different trusts in contemplation of closing (Note 6). The shares have been
valued at $3,000,000 and have been reflected as a deposit in the
accompanying balance sheet until such time as the Company closes the
transaction.
9
<PAGE>
6. OTHER MATTERS
Pending Acquisition
--------------------
On April 27, 1999, Casino Co. Ltda. ("CCL"), a wholly-owned subsidiary of
the Company, as buyer, and the principal shareholder (the "Seller") of
Sulmatic ("Sulmatic") entered into a document entitled Sales Contract (the
"Sales Contract"), pursuant to which CCL agreed to purchase from the Seller
the Seller's one-half interest in Sulmatic for a purchase price of Five
Million Five Hundred Thousand Dollars ($5,500,000). The remaining one-half
interest in Sulmatic, subject to a final contract, would be owned by L. G.
Cirsa, a manufacturer of gaming equipment.
Sulmatic is a Brazilian corporation which currently operates approximately
500 electronic gaming machines throughout Brazil, and has stated that it
intends to install an additional 500 machines by July 1, 1999. Under the
terms of the Sales Contract, CCL is required to pay Three Million Dollars
($3,000,000) forty five days from the date of a definitive agreement, which
obligation has been secured by the pledge of a Gold Certificate for 10,601
Troy Ounces .9999 pure (the "Gold Certificate") issued by a Nevada Trust
(the "Trust") and Five Hundred Thousand Dollars ($500,000) per month
thereafter until the entire purchase price has been paid. The closing of
the Sulmatic acquisition is subject to, among other things, the completion
of due diligence, the negotiation and execution of definitive documentation
and the obtaining of any required regulatory approvals, and financing.
In consideration of the pledge by the Trust of the Gold Certificate, and
the assignment by Trust to the Company of certain bank guarantees in the
aggregate face amount of Three Hundred Million Dollars ($300,000,000), the
Company issued 3,000,000 shares of the Company's restricted common stock to
six third party trusts. The shares have been valued at $3,000,000 and have
been reflected as a deposit in the accompanying balance sheet until such
time as the Company closes the transaction. In the event the transaction
does not close, the Company would receive Gold Certificate which is
currently valued at $3,000,000.
Nasdaq Status
--------------
Based on information made available to the Company at the time of this
filing, the transaction between Countryland USA and ITB Corporation (see
Note 2) will be scheduled for a closing date prior to the end of the month
and that the transaction between ITB Corporation and Countryland USA will
be concluded. If the Company fails to conclude either this transaction or
the pending acquisition of a 50% interest in Sulmatic, the Company may no
longer meet the minimum net worth standards imposed by NASDAQ. If the
Company is not successful in meeting its NASDAQ listing, all trading
activity may be transferred to a bulletin board system until such time if
any the Company is able to re-list with NASDAQ.
Item 10. Additional Information
THIS TENDER OFFER IS CONTINGENT UPON THE PRIOR APPROVAL OF
NEVADA GAMING REGULATORS, WHICH HAS NOT YET BEEN OBTAINED.
UNTIL SUCH APPROVAL IS GIVEN, BIDDER IS UNDER NO OBLIGATION TO
PURCHASE STOCK PURSUANT TO THIS TENDER OFFER.
Item 11. Material to be Filed as Exhibits
(a) There is no tender offer material which is published, sent or given to
security holders by or on behalf of the bidder in connection with the
tender offer.
(b) A copy of the Investment Agreement by and between Fred Cruz and Kari
L. Cruz, each an "Investor", and Las Vegas Entertainment Network, Inc.
together with U. S. Guarantee Corp.'s funding comittment in the sum of
$400,000,000.00, are filed as Exhibits to this tender offer.
(c) There are no contracts, arrangements, understandings or relationships
referred to in Item 7 or 10 of this schedule.
(d) There is no written opinion by legal counsel at bidder's request
pertaining to the tax consequences of the tender offer.
(e) No securities of the bidder are involved in the tender offer.
(f) No oral solicitations are contemplated, nor are any written
instructions to be given by any person associated with bidder in
connection with the tender offer.
(g) This Tender Offer shall expire 60 days from the date hereof (December
7, 1999) unless extended by a majority vote of the Bidder's Board of
Directors, pursuant to a resolution adopted by said Board.
(h) Security Holders who deposit their securities with the Transfer Agent,
Continental Stock Transfer & Trust Company, 2 Broadway, New York, New
York 10004 (who is the transfer agent for the subject company) will
have 30 days after the expiration date (which will occur on January
5, 2000) or the date upon which payment is sent to such Security
Holder, whichever is earlier, within which period to withdraw their
securities pursuant to Section 14(d)(5) of the Act and SEC Rule 14(d)
(7), by notifying, in writing sent to the said transfer agent, that
they withdraw said deposit of securities.
(i) Payment for the transfer of shares pursuant to this Tender Offer will
commence 30 days after the date upon which 80% 0f the subject company's
stock has been received by the transfer agent agent, and will
continue for a 30 day period thereafter for any shareholder who, for
any reason, later decides to tender his/her shares.
(j) This Tender Offer is for all of the issued and outstanding stock of
the subject company; if less than 80% are tendered before the tender
expiration date, the Board of Directors of the bidder will decide
wether or not to consumate the purchase of any tendered shares.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
October 8, 1999 JACKPOT ACQUISITION CORP.
By: /S/ Kenneth S. Scholl
Kenneth S. Scholl
President
<PAGE>
Exhibit A
INVESTMENT AGREEMENT
This Investment Agreement (this "Agreement") is made and
entered into as of the 29th day of September, 1999, by and among
Fred Cruz and Kari L. Cruz, husband and wife (each a "Investor"
and collectively, "Investors"), on the one hand, and Las Vegas
Entertainment Network, Inc., a Delaware corporation (the
"Company"), on the other hand, with reference to the following
facts and circumstances:
WHEREAS, desire to invest in the Company, and the Company
is willing to issue stock in the Company to Investors, upon and
subject to the terms and conditions contained herein.
NOW, THEREFORE, for and in consideration of the agreements
and obligations herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Investors and the Company hereby agree as follows:
. Investment and Issuance; Closing.
1.1 .. Subject to the terms and conditions set forth in
this Agreement, the Company agrees to issue to Investors, and
Investors agrees to accept and acquire from the Company, Twelve
Million Two Hundred Thousand (12,200,000) shares (the "Shares")
of the Company's common stock, par value $0.001 per share
("Common Stock"), for and in consideration of an investment in
the Company (the "Investment") of One Hundred Ninety Million
Dollars ($190,000,000). The Shares will have demand registration
rights.
1.2 .. The closing (the "Closing") of the investment
provided for in Section 1.1 above shall take place as soon as
practicable after the date hereof, but in no event later than
September 31, 1999, unless extended by the Company. At the
Closing, the Company shall issue and deliver to Investors
certificates representing the Shares, one-half of which will
be registered in the name of each Investor, against payment
therefor by delivery to the Company of the Investment in
immediately available funds.
2. Prior Share Issuances. Investors and the Company hereby
confirm and acknowledge that the investment provided for herein
is in further consideration of the prior issuance to the
Investor-affiliated entities identified on Exhibit "A" hereto of
an aggregate of Three Million (3,000,000) shares of Common Stock,
as provided and in accordance with the prior agreement by and
between the Company and such entities.
3. Representations and Warranties of the Company. The
Company represents and warrants to Investors as follows:
3.1 The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware. The Company has the corporate power to own its
properties and to carry on its business as now being conducted
and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a
material adverse effect on its financial condition, results of
operations, assets, business and/or prospects (a "Material
Adverse Effect").
3.2 The authorized capitalization of the Company
consists of (i) Fifty Million (50,000,000) shares of Common
Stock, and (ii) Thirty Million (30,000,000) shares of preferred
stock, $.001 par value per share. All outstanding shares of
Common Stock have been duly authorized, validly issued, fully
paid and are nonassessable and free of any liens or encumbrances
in favor of the Company and are not subject to preemptive rights
or rights of first refusal created by statute, the Certificate of
Incorporation or bylaws of the Company or any agreement to which
the Company is a party or by which it is bound.
3.3 The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes
the valid and binding obligation of the Company enforceable
against it in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to
creditors rights generally, and is subject to general principles
of equity. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation of, or default
under (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of
any material obligation or loss of a material benefit under (i)
any provision of the certificate of incorporation or bylaws of
the Company, as amended, or (ii) any material mortgage indenture,
lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgement, order, decree, statue,
law, ordinance, rule or regulation applicable to the Company or
its properties or assets.
3.4 The Company has made available to Investors a true
and complete copy of each statement, report, and other document
filed with the SEC by the Company since October 31, 1998, and,
prior to the time of Closing, the Company will have furnished
Investors with true and complete copies of any additional
documents filed with the SEC by the Company prior to the time of
Closing (collectively, the "Company SEC Documents"). In
addition, the Company has made available to Investors all
exhibits to the Company SEC Documents filed prior to the date
hereof, and will promptly make available to Investors all
exhibits to any additional Company SEC Documents filed prior to
the time of Closing. All documents required to be filed as
exhibits to the Company SEC Documents have been so filed, and all
material contracts so filed as exhibits are in full force and
effect, except those which have expired in accordance with their
terms, and the Company is not in default thereunder. As of their
respective filing dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities
Exchange Act of 1934, as no documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were
made, not misleading, except to the extent corrected by a
subsequently filed Company SEC Document prior to the date hereof.
The financial statements of the Company, including the notes
thereto, included in the Company SEC Documents (the "Company
Financial Statements") were complete and correct in all material
respects as of their respective dates, complied as to form in all
material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect
thereto as of their respective dates, and have been prepared in
accordance with generally accepted accounting principles applied
on a basis consistent throughout the periods indicated and
consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in
Quarterly Reports on Form 10-QSB, as permitted by Form 10-QSB of
the SEC). The Company Financial Statements fairly present the
consolidated financial condition and operating results of the
Company at the dates and during the periods indicated therein
(subject, in the case of unaudited statements, to normal,
recurring year-end adjustments). There has been no change in
the Company's accounting policies except as described in the
notes to the Company Financial Statements.
3.5 The Company has obtained each federal, state,
county, local or foreign governmental consent, license, permit,
grant, or other authorization of a Governmental Entity (i)
pursuant to which the Company currently operates or holds any
interest in any of its properties or (ii) that is required for
the operation of the Company's business or the holding of any
such interest {(i) and (ii) herein collectively called "Company
Authorizations"}, and all of such Company Authorizations are in
full force and effect, except where the failure to obtain or have
any such Company Authorizations could not reasonably be expected
to have a Material Adverse Effect.
3.6 The Board of Directors of the Company has
unanimously approved this Agreement.
3.7 None of the representations or warranties made by
the Company herein or in any certificate furnished by the Company
pursuant to this Agreement, or the Company SEC Documents, or any
written statement furnished to Investors pursuant hereto or in
connection with the transactions contemplated hereby, when all
such documents are read together in their entirety, contains or
will contain at the Time of Closing to state any material fact
necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not
misleading.
3.8 All acts and conditions required by law on the
part of the Company to authorize the execution and delivery of
this Agreement by the Company and the transactions contemplated
herein and the performance of all obligations of the Company
hereunder have been duly performed and obtained, and this
Agreement constitutes a valid and legally binding obligation of
the Company, enforceable in accordance with its terms, subject,
as to the enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally, to general equitable principles and
to limitations on the enforceability of indemnification
provisions as applied to certain types of claims arising
hereafter, if any, under the federal securities laws.
3.9 The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby will not result in any violation or default of any
provision of any instrument, judgment, order, writ, decree or
contract to which the Company is a party or by which it is bound,
or require any consent under or be in conflict with or
constitute, with or without the passage of time and giving of
notice, either a violation or default under any such provision.
3.10 No consent, approval, order or authorization of
or registration, qualification, designation, declaration or
filing with, any federal, regional, state or local governmental
authority of the United States on the part of the Company is
required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings, if any,
required pursuant to applicable federal and state securities
laws, which filings will be made within the required statutory
period.
3.11 The Company has good title to the capital stock
to be transferred pursuant to this Agreement, free and clear of
any lien, pledge, security interest or other encumbrance (other
than restrictions on transfer arising under applicable securities
laws) and, upon delivery of the Shares at the Closing as provided
for in this Agreement, the Investors will acquire good title
thereto, free and clear of any lien, pledge, security interest or
encumbrance (other than restrictions on transfer arising under
applicable securities laws).
3.12 The Company has delivered or will deliver to
Investors at or prior to the Closing all Schedules and documents
required to be delivered under this Agreement.
3.13 Each of the foregoing representations and
warranties shall be deemed to survive the Closing and shall be
deemed expressly for the benefit of Investors.
4. Representations and Warranties of Investors. Each
Investor represents and warrants to the Company as follows:
4.1 Each Investor has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by Investors and constitutes the valid and
binding obligation of Investors enforceable against each of them
in accordance with its terms, except that such enforceability may
be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting or relating to creditors rights generally, and is
subject to general principles of equity. The execution and
delivery of this Agreement by Investors does not, and the
consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any
material obligation or loss of any material benefit under any
material mortgage indenture, lease, contract or other agreement
or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to Investors or any of their respective properties or
assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court,
administrative agency or commission or other governmental
authority or instrumentality ("Governmental Entity") is required
by or with respect to Investors in connection with the execution
and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.2 None of the representations or warranties made by
Investors, or schedules, exhibits or certificates furnished by
Investors pursuant to this Agreement or any written statement
furnished to the Company pursuant hereto or in connection with
the transactions contemplated hereby, when all such documents are
read together in their entirety, contains or will contain at the
time of Closing any untrue statement of a material fact, or omits
or will omit at the time of Closing to state any material fact
necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made not
misleading.
4.3 Investors have fully provided the Company and the
Company's legal counsel with all the information in Investors'
possession that the Company has requested in connection with the
transactions contemplated hereby. Nothing contained in this
Agreement or in any schedule attached to this Agreement nor any
certificate delivered pursuant hereto that, in any such case, has
been or will be provided by or on behalf of Investors contains
any untrue statement of a material fact or omits to state a
material fact necessary to make the statements made herein or
therein not misleading in light of the circumstances under which
they were made.
4.4 (a) The Shares to be issued to Investors will be
issued in a transaction exempt from registration under Section
4(2) of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Investors represent and warrant that they are
acquiring the Shares for their own account, for investment and
not with a view to, or for sale in connection with, any
distribution of such Shares or any part thereof.
(c) Investors represent and warrant that they are
investors experienced in the evaluation of businesses similar to
the Company, are able to fend for itself in the transactions
contemplated by this Agreement, have such knowledge and
experience in financial business matters as to be capable of
evaluating the merits and risks of this investment, have had
access to such information as is specified in Rule 502
promulgated under the Securities Act. Investors represent and
warrant that, during the course of this transaction and prior to
their investment in the Company, they have had the opportunity to
ask questions of and receive answers from the Company concerning
the terms and conditions of the transactions contemplated by this
Agreement and to obtain any additional information necessary to
verify the accuracy of the representations and warranties and
other information contained in this Agreement. Investors confirm
that all documents, records and books pertaining to its
investment in the Company and requested by them have been made
available or delivered to them.
4.5 Investors agree that:
(a) They will not, and are not permitted to,
offer, sell, pledge, hypothecate, or otherwise dispose of the
Shares unless such offer, sale, pledge, hypothecation or other
disposition is (i) registered under the Securities Act, or (ii)
such offer, sale, pledge, hypothecation or other disposition
thereof does not violate the Securities Act, and
(b) the certificates representing the Shares shall
bear a legend stating in substance:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND SUCH LAWS, OR SUCH OFFER, SALE
OR TRANSFER, PLEDGE OR HYPOTHECATION IS OTHERWISE EXEMPT
FROM REGISTRATION UNDER SAID ACT AND SUCH LAWS.
4.6 Each of the foregoing representations and
warranties shall be deemed to survive the Closing and shall be
deemed expressly for the benefit of the Company.
5. Conditions to Obligations of Investors. The obligation
of Investors to make the investment herein provided for is
subject to the representations and warranties of the Company
contained in Section 3 hereof being true and correct in all
material respects on and as of the time of closing with the same
effect as though such representations and warranties had been
made on and as of the time of closing.
6. Conditions to Obligations of the Company. The
obligation of the Company to sell the Shares is subject to the
representations and warranties of Investors contained in Section
4 hereof being true and correct in all material respects on and
as of the time of closing with the same effect as though such
representations and warranties had been made on and as of the
time of closing.
7. Amendment. No amendment or modification hereto, or
waiver of the terms hereof, shall be valid unless in a writing
executed by each of the parties hereto.
8. Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by either the Company or Investors
without the prior written consent of the other party, which
consent shall not be unreasonably withheld.
9. Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Nevada,
without regard to conflicts of laws principles.
10. Section and Other Headings. The section and other
headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
Agreement.
11. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and
all of which shall together constitute one and the same
Agreement.
12. Notices. Any notice, request, demand or other
communication given with reference to this Agreement shall be in
writing and shall be delivered personally or sent by cable,
telecopier, telex or certified or registered mail, and shall be
deemed given when so delivered personally, cabled, telecopied or
telexed or 48 hours after deposit in the United States Mail,
postage paid and sent certified or registered mail, return
receipt requested, correctly addressed as follows or to such
other address as a party hereto may, from time to time, notify
the other parties in accordance with the provisions of this
Section:
To the Company: Las Vegas Entertainment
Network, Inc.
1801 Century Park East
Suite 2300
Los Angeles, California 90067
To Investors: Dr. Fred Cruz
Kari L. Cruz
2205 Purple Majesty Court
Las Vegas, Nevada
13. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
14. Severability. If any provision herein, or the
application thereof to any circumstance, is found to be
unenforceable, invalid or illegal, such provision shall be deemed
deleted from this Agreement or not applicable to such
circumstance, as the case may be, and the remainder of this
Agreement shall not be affected or impaired thereby.
15. Attorneys' Fees. If any action should arise among the
parties hereto to enforce or interpret the provisions of this
Agreement, the prevailing party in such action shall be
reimbursed for all reasonable expenses incurred in connection
with such action, including reasonable attorneys' fees.
16. Integration. This Agreement expresses the entire
agreement and understanding of the parties hereto with respect to
the matters set forth herein and supersedes all prior agreements,
arrangements and understandings among the parties hereto with
respect to the matters set forth herein.
17. Jurisdiction and Venue. Each party acknowledges that
the only appropriate forums for any legal dispute arising under
or in connection with this Agreement are, and each party hereby
irrevocably submits itself to the personal jurisdiction of, the
United States District Court for the Central District of
California or the Superior Court of the State of California in
and for the County of Los Angeles, and the parties consent and
agree that such courts shall have sole jurisdiction over any
matter arising under or in connection with this Agreement.
18. Waivers. No waiver of any term, provision or condition
of this Agreement, in any one or more instances, shall be deemed
to be or construed as a further waiver of any such term,
provision or condition or as a waiver of any other term,
provision or condition.
19. Pronouns and Number. When the context so requires, the
masculine shall include the feminine and neuter, the singular
shall include the plural and conversely.
20. Certain Terms. As used herein, the term "person" means
any individual or natural person, or any corporation, trust,
governmental agency or body or any other legal entity, whether
acting for himself, herself or itself or in a fiduciary or other
capacity; the terms "hereof," "herein," "hereby," and "hereunder"
refer to this Agreement in its entirety and not solely to the
particular provisions in which they may appear.
21. Injunctive Relief and Specific Performance. In the
event of a breach, or a threatened or attempted breach, of any
provision of this Agreement by any party hereto, the other party
shall, in addition to all other remedies, be entitled to a
temporary or permanent injunction restraining such breach, or
threatened or attempted breach, without the necessity of showing
actual damages, and to a decree for the specific performance of
this Agreement. No bond or other security shall be required of
the party requesting such injunctive relief or specific
performance.
22. Expenses. Except as otherwise provided herein, each
party shall separately bear its own expenses incurred in
connection with this Agreement and the transactions contemplated
hereby.
23. Further Assistance. The parties hereto agree to
execute any and all such further agreements, instruments or
documents, and to take any and all such further action, as may be
necessary or desirable to carry into effect the purpose and
intent of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
Las Vegas Entertainment Network,
Inc., a Delaware corporation
By: /S/ Joseph Corazzi
Joseph Corazzi
/S/ Fred Cruz
Dr. Fred Cruz
/S/ Kari L. Cruz
Kari L. Cruz
Exhibit "A"
Rick Eriksen Family Trust - 500,000 shares
Federico Cruz II Family Trust - 500,000 shares
Ronald F. Cruz Family Trust - 500,000 shares
Melvin Gary Cruz Family Trust - 500,000 shares
Federico Cruz Cordero Family Trust - 500,000 shares
Dr. Fred Cruz Family Trust - 500,000 shares
Exhibit B
U.S. GUARANTEE CORP.
July 28, 1999
Via facsimile:702-240-4345
Dr. Fred Cruz
Countryland Wellness Internet Network Trust
2205 Purple Majesty Court
Las Vegas, Nevada 891 17-2747
Re: Funding
Dear Dr. Cruz:
The following are terms, conditions, and procedures by which we can complete
this transaction with your assistance:
Face amount: $100 million USD (one hundred million USD)
($400 million USD in aggregate total)
Maturity date: March 2000 (approximately)
Kind of bank instrument: Four bank guarantees
Bank: B.N.I. Bank
Indonesia
Conditional upon the establishment to the satisfaction of our designated bank
that the instruments are:
Free and clear of liens, hypothecation, and encumbrances.
Enforceable under the laws of the United States of America.
Instruments collectible end payable at the counters of the B.N.I. Bank in New
York, NY, USA.
B.N.I. Bank, New York, NY, USA will accept instruments at maturity with full
bank responsibility (as per s.w.i.f.t.).
Freely assignable without notification and without conditions.
Instruments backed by clean US funds clear of any criminal origin.
Terms of Transfer of Instruments:
Instruments shall be transferred to US Guarantee Corporation or its designee
through an assignment of ownership that is recognized by issuing bank (B.N.I.
Bank) and acceptable to the paying bank.
USGC shall guarantee through cash instruments or something acceptable to Dr.
Cruz, the additional payments of $330 million over the scheduled term.
Payments to Dr. Cruz:
Total of payments will be $400,000,000.00 USD (four hundred million USD).
Payments are to be as follows:
$70,000,000.00 USD (seventy million USD) to be paid to Cruz within 5
business days of the delivery of the instruments by corporate invoice,
in the prescribed form and condition.
$75,000,000.00 USD (seventy-five million USD) to be paid within 30 days of
first payment.
$75,000,000.00 USD (seventy-five million USD to be paid within 60 days of
first payment.
$80,000,000.00 USD (eighty million USD) to be paid within 90 days of the
first payment.
$100,000,000.00 USD (one hundred million USD) to be paid within 120 of the
first payment.
If this is acceptable, we will provide you with SWIFT instructions.
You may S.W.I.F.T. to the following account subject to our right to designate
another bank after we formally document this proposal.
Acct. Name: US Guarantee Corp.
Bank: Western Security Bank
ABA #: 122105184
Acct. #: 6355101027
SWIFT # West Sec Scotts
Acct. Officer: Kate Shumate
Phone #: 480-947-9888
Address: 7401 E. Camelback Rd.
Scottsdale, AZ 85251
Fax #: 480-990-0443
Best regards,
/S/ Alvin A. Tang
Alvin A. Tang
Chief Operating Officer
I hereby accept the terms and conditions of this agreement.
/S/ Fred Cruz 7-28-99
Dr. Fred Cruz Date
