<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
June 4, 1999
YOUBET.COM, INC.
(Exact Name of Registrant as specified in Charter)
Delaware 33-13789LA 95-4627253
- --------------------------------------------------------------------------------
(State or other (Commission File Number) (IRS Employer
jurisdiction of incorporation) Identification Number)
1950 Sawtelle Boulevard, Suite 180, Los Angeles, California 90025
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(Address of principal executive offices) (Zip Code)
(310) 444-3300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
A. On June 9, 1999, Youbet.com, Inc. announced that it had entered into a
letter of intent with Station Casinos, Inc., to create a new venture which
will jointly offer in-home interactive and sports wagering to Nevada
residents. The new venture will be owned on a 50/50 basis by Youbet.com
and Station Casinos. Youbet.com will adapt its proprietary software and
technology and license it on a non-exclusive basis to the new venture.
Station Casinos will fund a portion of Youbet.com's software development
cost and contribute to funding the new venture's advertising and other
costs. The new venture is subject to execution of definitive agreements,
and its service will be offered only after obtaining all required
regulatory approvals, including the approval of the Nevada gaming
authorities.
The service, which will be available exclusively to Nevada residents,
is targeted for release on personal computers during the second quarter of
2000. It is anticipated that the service will allow subscribers to place
wagers on sporting events at Station Casinos using their personal
computers and the You Bet Network.
Youbet.com also agreed to grant Station Casinos a 5-year warrant to
purchase 100,000 shares of Youbet.com common stock at an exercise price of
$19.50 per share. Additionally, Station Casinos has agreed to purchase
shares in Youbet.com's pending underwritten public offering at an
aggregate cost of $2,000,000.
Station Casinos is a multi-jurisdictional gaming company that owns and
operates the Palace Station Hotel & Casino, the Boulder Station Hotel &
Casino, the Texas Station Gambling Hall & Hotel, and the Wild Wild West
Gambling Hall & Hotel in Las Vegas, Nevada, Sunset Station Hotel & Casino
in Henderson, Nevada, as well as slot machine route management services in
Clark County, Nevada. Station Casinos also owns and operates Station
Casino St. Charles, a gaming and entertainment facility in St. Charles,
Missouri, and Station Casino Kansas City, a gaming and entertainment
facility in Kansas City, Missouri.
Attached as Exhibit 99.1 and incorporated herein by reference is a copy
of Youbet.com's press release issued in connection with the foregoing.
B. As previously disclosed, certain warrants issued by Youbet.com have or
may have various registration rights with respect to the warrants or
shares of common stock issuable on exercise of such warrants. Youbet.com
has not registered any of the warrants or such shares of common stock. In
March 1999, Youbet.com sent a proposal to holders of approximately
5,955,000 warrants, certain of which warrants have or may have certain
registration rights. Among other things, the proposal requested a release
of claims, if any, which may arise from such warrants and shares of common
stock not having been registered in consideration of Youbet.com's agreeing
to allow such warrantholders to
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participate to a limited extent in its pending underwritten public
offering and to register such remaining shares of common stock by no later
than the earlier of the first anniversary of such offering or June 30,
2000. As of May 31, 1999, the holders of an aggregate of 5,361,882 of
such warrants (approximately 90%) have accepted such proposal and have
executed such releases. Certain of the remaining warrantholders have or
may have registration rights with respect to their warrants and/or shares
of common stock underlying such warrants and may assert claims against
Youbet.com in connection with such rights which may have a material
adverse effect on Youbet.com.
Youbet.com has been advised that on June 4, 1999, a complaint was filed
against Youbet.com in the Court of Chancery of the State of Delaware in
and for New Castle County entitled Georg Von Opel v. Youbet.com, Inc.
(C.A. No. 17200 NC). In the complaint Mr. Von Opel alleges that
Youbet.com breached its obligation to register the shares of common stock
underlying 400,000 warrants issued by Youbet.com to an affiliate of Mr.
Von Opel. The complaint seeks specific performance of the alleged
obligation to register such shares and damages for alleged breach of
contract in the amount of $8.7 million. Youbet.com, which has not yet
been served with a copy of the complaint, intends to defend itself
vigorously in the action. Among other things, Mr. Von Opel executed a
letter on February 24, 1998 which Youbet.com contends effected a waiver of
such registration rights. As the litigation is in an initial stage,
Youbet.com cannot predict its outcome, although if the claim is determined
adversely to Youbet.com, it could have a material adverse effect on
Youbet.com.
In addition, holders of 37,667 warrants have demanded that Youbet.com
register the shares of common stock underlying such warrants. Youbet.com,
believes that such holders have registration rights only with respect to a
portion of such warrants. While Youbet.com anticipates having discussions
with such holders seeking to resolve such claims, such discussions may not
result in a successful resolution of these issues. It is possible that
these claims, as well as the potential claims of other warrantholders who
did not accept Youbet.com's March 1999 proposal, may, if determined
adversely to Youbet.com, have a material adverse effect Youbet.com.
C. The first paragraph of the section titled "DESCRIPTION OF CAPITAL
STOCK -- Registration Rights" contained in Youbet.com's Registration
Statement on Form S-3 (the "Registration Statement") originally filed with
the Securities and Exchange Commission on April 9, 1999 and subsequently
amended by Amendment 1 filed on May 11, 1999, is amended and restated as
follows:
"Following this offering, under specified circumstances and subject to
customary conditions, the holders of Series A Convertible Preferred
Stock and common stock issuable upon conversion of such Series A
Convertible Preferred Stock and certain other holders of common stock
will have certain registration rights with
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respect to their shares of common stock (subject to the 210 day
lock-up arrangement entered into by directors and executive officers of
Youbet.com). These registration rights enable such holders to require
Youbet.com to register their shares of common stock under the
Securities Act and permit them to "piggyback" on any future
registration of securities by Youbet.com. Youbet.com is not required
to effect more than two demand registrations on behalf of these
holders."
D. Attached as Exhibits 99.2 through 99.5 and incorporated herein by
reference are copies of letters between Michael Lovern, Sr. and
representatives of Youbet.com concerning a purported offer by Mr. Lovern
to acquire a controlling interest in Youbet.com. The offer, which was
substantially below market, was considered and rejected by the Board of
Directors and has since been withdrawn.
ITEM 7. EXHIBITS
Exhibit Number Description of Document
- -------------- -----------------------
99.1 Press release dated June 9, 1999
99.2 Letter from the attorneys for Youbet.com dated June 3, 1999
99.3 Letter from Michael Lovern, Sr. dated May 14, 1999
99.4 Letter from the attorneys for Youbet.com dated May 13, 1999
99.5 Letter from Michael Lovern, Sr. dated May 11, 1999
4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 9, 1999 YOUBET.COM, INC.,
(Registrant)
By: /s/ PHILLIP C. HERMANN
-----------------------------
Phillip C. Hermann
Chief Financial Officer
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[LOGO]
FOR IMMEDIATE RELEASE
- ---------------------
Contact: Phillip C. Hermann
Tel: (310) 444-3300
Email: [email protected]
YOUBET.COM, INC. AND STATION CASINOS, INC. ANNOUNCE PARTNERSHIP
TO OFFER NEVADA RESIDENTS IN-HOME INTERACTIVE SPORTS WAGERING
JUNE 9, 1999 - LOS ANGELES, CA - Youbet.com, Inc. (OTCBB:UBET) and Station
Casinos, Inc. (NYSE:STN) announced today that they have signed a letter of
intent to jointly offer in-home interactive race and sports wagering to
Nevada residents. The new venture will be owned on a 50/50 basis by
Youbet.com and Station Casinos. Youbet.com will adapt its proprietary
software and technology and license it on a non-exclusive basis to the new
venture. Station Casinos will fund a portion of Youbet.com's software
development cost and contribute to funding the new venture's advertising and
other costs. The new venture is subject to execution of definitive
agreements, and its services will be offered only after obtaining all required
regulatory approvals, including the approval of the Nevada gaming authorities.
The service, which will be available exclusively to Nevada residents, is
targeted for release on personal computers during the second quarter of 2000.
It is anticipated that the service will allow subscribers to place wagers on
sporting events at Station Casinos using their personal computers and the You
Bet Network.
Robert M. Fell, Youbet.com's Chairman and Chief Executive Officer, said:
"We are very pleased about our Nevada partnership with Station Casinos. This
will allow us to broaden our expertise outside of horse racing. It is an
important step in our expansion into worldwide sports wagering."
Youbet.com also agreed to grant Station Casinos a 5-year warrant to purchase
100,000 shares of Youbet.com common stock at an exercise price of $19.50 per
share, Additionally, Station Casinos has agreed to purchase shares in
Youbet.com's pending underwritten public offering at an aggregate cost of
$2,000,000.
A registration statement and an amendment to the registration statement
relating to Youbet.com's pending underwritten public offering has been filed
with the Securities and Exchange Commission but has not yet become effective.
These securities may not be sold nor may offers to buy be accepted prior to
the time the registration statement becomes effective. This press release
shall
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2-2-2
not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State or other
jurisdiction in which such an offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
State or other jurisdiction.
Station Casinos is a multi-jurisdictional gaming company that owns and
operates the Palace Station Hotel & Casino, the Boulder Station Hotel &
Casino, the Texas Station Gambling Hall & Hotel and the Wild Wild West
Gambling Hall & Hotel in Las Vegas, Nevada, Sunset Station Hotel & Casino in
Henderson, Nevada, as well as slot machine route management services in Clark
County, Nevada. Station Casinos also owns and operates Station Casino St.
Charles, a gaming and entertainment facility in St. Charles, Missouri and
Station Casino Kansas City, a gaming and entertainment facility in Kansas
City, Missouri.
Youbet.com announced in 1998 the public release of the You Bet Network, the
only interactive online horse racing network in the U.S. Youbet.com provides
members the ability to watch and wager on a wide selection of coast-to-coast
thoroughbred and standard-bred horse racing, via its exclusive private closed
loop network. Members have 24 hour access to the network's features,
including live racing from a choice of more than 28 racetracks across the
country, commingled track pools, live audio/video, up-to-the-minute track
information, real-time wagering information, and value-added handicapping
products.
Youbet.com is a Los Angeles-based interactive technology company that
facilitates live events and is focused on content development, network
deployment and management services via a cross-platform environment.
For further information, visit http://www.youbet.com or contact Phillip C.
Hermann, Executive Vice President and Chief Financial Officer of Youbet.com
at (310) 444-3300. To subscribe to the You Bet Network, call 1-888-YOUBET-8.
Note: This release contains forward-looking statements, which are made
pursuant to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. Expressions of future goals and similar expressions
reflecting something other than historical fact are intended to identify
forward-looking statements, but are not the exclusive means of identifying
such statements. These forward-looking statements involve a number of risks
and uncertainties, including the timely development and market acceptance of
products and technologies, successful integration of acquisitions, licensing
and other risks, the ability to secure additional sources of financing, the
ability to reduce operating expenses and other factors described in
Youbet.com's filings with the Securities and Exchange Commission. The actual
results that Youbet.com achieves may differ materially from any
forward-looking statements due to such risks and uncertainties. Youbet.com
undertakes no obligations to revise or update any forward-looking statements
in order to reflect events or circumstances that many arise after the date of
this release. You Bet is a registered trademark of Youbet.com, Inc. All other
brands and products referenced herein are the trademarks or registered
trademarks of their respective holders.
###
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EXHIBIT 99.2
[LETTERHEAD]
June 3, 1999
VIA FEDERAL EXPRESS
- -------------------
Mr. Michael Lovern, Sr.
President
Trial Management Associates, Inc.
8972 Quioccasin Road
Suite 172
Richmond, VA 23229
Dear Mr. Lovern:
The Board of Directors of Youbet.com, Inc. (the "Company") has asked me to
reply to your letter of May 14, 1999 addressed to the undersigned, Mr. Fell and
the Board of Directors.
Although you appear to have withdrawn your proposal, in light of your
repeated communications, it is appropriate to advise you of the position of the
Company.
The Board of Directors has met to review your oral and written
communications and "proposal".
Despite your confrontational tone, the Board nevertheless carefully
considered your proposal. The Board was, among other things, concerned about
your failure to respond adequately to the Company's preliminary questions -
particularly why it would be in the best interests of the Company or its
shareholders to sell you 30,000,000 new shares of Company stock at $6.50 per
share when such shares are trading at prices well above that level.
Additionally, the Board was concerned about your refusal to identify your
purported "Bell" partner, to provide any contact person there or to provide
documented support to your claim that you have $141 million in personal funds
to invest in the Company.
<PAGE>
Mr. Michael Lovern, Sr.
June 3, 1999
Page 2
The Company's Board of Directors takes its responsibilities very seriously
and is pursuing a course of conduct which it believes is in the best interests
of its shareholders. It is certainly open to considering all good faith
proposals which it believes would enhance the interests of such shareholders.
Very truly yours,
/s/Gary N. Jacobs
of CHRISTENSEN, MILLER, FINK, JACOBS,
GLASER, WEIL & SHAPIRO, LLP
GNJ:lf
cc: The Board of Directors
Youbet.com, Inc.
<PAGE>
EXHIBIT 99.3
[LETTERHEAD]
May 14, 1999
Mr. Gary N. Jacobs
Mr. Robert M. Fell
& All Directors at
YOUBET.COM INC. Via fax: 310-444-3390
1950 Sawtelle Blvd., Suite 180 310-556-0189
Los Angeles, CA 90025
RE: Response to Mr. Jacobs letter dated May 13,1999
Dear Directors and Mr. Jacobs:
This letter is in response to Mr. Jacobs letter, which was in response to my
initial offer to purchase 60% of the company.
The purchase price mentioned in my letter is calculated using current
outstanding common shares and approximate current trading price. The company
is not worth anywhere close to $100 million, much less $141 million. Your
book value at best with the new loan converted to equity might be around
$1.20 / share. After this new round of proposed stock offering the book
value might go $2.00 / share with over 30 million shares of common stock
committed. (Warrants and debt conversion included). If you accept my offer
and we do a reverse split there will be 25 million shares of common committed
with a book value close to $7.00 / share and 3 times as much cash in the
company with no debt except the notes which will be dealt with ASAP.
This financial strength within the company coupled with a major top 50 Fortune
500 company in control and at the helm, allows the company to not only compete
but it will drive the stock to at least $80.00 by the end of 1999. I can deal
with FOX and AT&T to protect YOUBET's market position. Without help YOUBET is
in serious trouble. The stock is being held up by "HOT AIR." Without a
foundation it's just a matter of time before it comes tumbling down. This deal
works for me because of tax implications and potential stock prices. Take
advantage of it for the sake of the shareholders as you will never see a deal
this good again.
<PAGE>
page 2
The swap of $5.5 million warrants for $5.1 million warrants is simple. For the
company to sell me 30 million shares of common without changing the
authorization of 50 million shares, there will have to be approximately 5.1
million warrants released so as to free up those shares for the company to sell
to me. There isn't 30 million shares available under the current structure.
For me to put the entire $141 million + in the company you must sell me company
stock. There will be no use of company assets to finance this acquistion. My
cash goes directly to shareholder equity / book value.
Regarding the convertible notes it is belief they can be bought from the current
noteholders in a manner to protect the conversion rate value, therefore
protecting the noteholders. You should not focus on the short term mechanics of
my proposal but instead look at the end result for the company. The end
justifies the means.
Right now the company has no ability to compete with someone like AT&T (T.V.
Guide, Inc.) and FOX SPORTS. If they launch their proposed joint venture,
YOUBET in its current status dries up and blows away like dust, because you
have no way to compete. You need mainstream broadcasting in the form of a
dedicated cable/satellite racing channel EXCLUSIVE to YOUBET. One race at a
time, international scheduled programming available on T.V. as well as the
internet; available for wagering worldwide via YOUBET. Your programming
needs to be from decent tracks with decent purses, fed via satellite to a
single control room location, rebroadcast over your network, picked-up by
cable/satellite delivery systems worldwide, delivered in multiple languages
in conjunction with multiple language wagering capability at the website and
on T.V. Racing will have to be from Europe to Asia, USA included.
In addition, you need other products to keep the consumer from surfing away
inbetween races. It takes more than horse racing to hold your audience. YOUBET
not only has no way to put up a racing channel, it has no other products.
Regarding financing, there is none. No YOUBET assets will be used to finance
this deal before or after. The idea is to make YOUBET a very attractive stock
by putting them on NMS - NASDAQ. I will be using personal money unencumbered to
pay for the stock. I need to make an investment of this size and YOUBET has
been chosen. Confirmation of funds can be done upon proper circumstances.
Forget financing!
I need a letter of intent contingent on appropriate circumstances right away.
Yours truly,
/s/ Michael Lovern, Sr.
Michael Lovern, Sr.
President
<PAGE>
EXHIBIT 99.4
[LETTERHEAD]
May 13, 1999
VIA FEDERAL EXPRESS
- -------------------
Mr. Michael Lovern, Sr.
President
Trial Management Associates, Inc.
8972 Quioccasin Road
Suite 172
Richmond, VA 23229
Dear Mr. Lovern:
I have been asked by Youbet.com, Inc. (the "Company") to respond to your
letter of May 11, 1999 addressed to Mr. Robert Fell and the other directors of
the Company. The Company's practice is to consider all matters brought before
it and, accordingly, your proposal is being reviewed by the Company. However,
such review should not be construed as an expression of interest on the part of
the Company.
In connection with that review, we have some preliminary questions,
especially since your proposal would apparently entail the Company backing away
from its pending public offering. (As you are aware, the Company filed on May
11, 1999 Amendment No. 1 to its registration statement prepared in connection
with that offering).
At the outset, we would like you to explain why you believe it is in the
Company's best interests at this time to issue to you or your group 30,000,000
new shares of Company stock at $6.50 per share when the stock is trading
publicly at prices substantially above $6.50. Your own letter indicates that if
you could purchase 60% of the outstanding shares in the market, you believe you
would have to pay $16.50 per share. In fact, in a tender offer situation, you
would probably have to pay a significant premium to market.
You also indicate that you would propose to exchange 5.1 million warrants
for 5.5 million warrants. Please explain what this is about and what the point
of that would be.
As for the convertible notes, I previously explained to you that they may
not be redeemed
<PAGE>
Mr. Michael Lovern, Sr.
May 13, 1999
Page 2
without the consent of the noteholders until April 2001, and even then the
noteholders would have the opportunity to convert. Additionally, if the Company
did issue shares to you or your group at $6.50 per share, the note conversion
rate would be reduced to $6.50 per share.
Finally, even if further analysis of your proposal suggests that it has any
viability, the Company would need you to provide credible evidence of your
ability to finance the transaction before it could be given any further
consideration.
Very truly yours,
/s/ Gary N. Jacobs
Gary N. Jacobs
of CHRISTENSEN, MILLER, FINK, JACOBS,
GLASER, WEIL & SHAPIRO, LLP
GNJ:lf
cc: The Board of Directors
Youbet.com, Inc.
<PAGE>
EXHIBIT 99.5
[LETTERHEAD]
May 11, 1999
Mr. Robert M. Fell
& All Directors at
YOUBET.COM, INC. Via fax: 310-444-3390
1950 Sawtelle Blvd., Suite 180 310-558-0189
Los Angeles, CA 90025
RE: Acquisition of 60% UBET
Dear Board Members:
This proposal is informal but very real. It is subject of course to due
diligence and my subsequent approval. It is my desire to purchase 30 million
of the 50 million authorized shares of common stock, or 60% of the company. The
offering price has been determined as follows:
If I was able to go into the market and purchase 60% of the current outstanding
shares at the trading price it would be approximately 8,588,838 shares or 60% of
14,314,731 outstanding shares at a price of $16.50, for a total of $141,715,827.
This is what I would be willing to pay for 30,000,000 shares of common from the
treasury as I want the $141,715,827 purchase price to go into the company. This
will drive the book value of the stock from $.19/share to over $2.00/share.
Right now the stock is trading at 82 times book value. At the new book value it
could go through the roof. My new shares [30 million] are to be registered upon
my discretion and automatically upon UBET going on NASDAQ. We will be on NASDAQ
immediately.
To accomplish this you will have to put approximately 5.1 million shares back
into the company that are currently being held as warrants. I will replace
those warrants by giving you back 5.5 million warrants at $4.00 within 30 days
of closing. These warrants can be registered at your discretion and upon moving
to NASDAQ it would be automatic. The terms follow the warrants regardless of
ownership. Registration stays the same even if transferred.
<PAGE>
page 2
New By Laws will have to be issued to allow me to appoint additional board
members immediately after closing to take control of the Board. The new board
members will come from my partner [one of four Bell Companies - cannot name at
this time] who will in fact operate the company through current management.
Their presence will ignite the market and greatly help in the marketing efforts.
Additional guarantees will have to be in place as part of the deal to assure
no changes in the company after closing until the new board is in place.
[Moratorium on contracts, stock issuance, financial spending, etc...].
The current notes convertible to 4.5 million shares of common stock will be
bought by the company after closing. The 5.5 million warrants at $4.00 will be
provided either by a reverse split or new authorization over and above the
current 50 million. This decision will be driven by market reaction to the
acquisition, new book value, press releases, and strategic partners. We will
make sure the stock continues to go up.
There is nothing hidden in this offer. It is a simple deal that has
incredible potential. I can create a 24 hour racing channel immediately for
UBET that can originate [rebroadcast] right from your backyard. Also, I have
made a serious offer to purchase control in the company that owns Colonial
Downs Race Track in Virginia. I believe I can get control and even if I
don't I will purchase a premier track somewhere to eliminate Youbet's
licensed parimutuel contract problems forever.
This UBET stock purchase will be with our money and we will be using our
partner's expertise and personnel to help take Youbet to the next level. This
will also help us compete with AT&T or any other major communication company.
I look forward to your reaction as I have many applications that can be
integrated into Youbet, including electronic high stakes bingo that can be
played in between races.
Yours truly,
/s/ Michael Lovern, Sr.
Michael Lovern, Sr.
President
cc: Gary N. Jacobs - Christensen, Miller, Fink, Jacobs,
Glaser, Weil, Shapiro LLP
Rober Peariman - Peariman & Peariman
