EXHIBIT 10.12
Summerhill Gaming Limited
Devonshire House
Queen Street
Nassau, The Bahamas
March 24, 2000
Intercapital Global Fund, Ltd.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Re: Debt to Equity Conversion
Gentleman:
This letter shall confirm our agreement with you that as of December 31,
1999, all of Intercapital Global Fund, Ltd.'s ("IGF's") outstanding debt (the
"SGL Debt") to Summerhill Gaming Limited ("SGL") under the Revolving Credit Note
dated May 5, 1999 (the "SGL Note") and under the Amended and Restated Purchase
Agreement dated May 5, 1999 (the "SGL Agreement") in respect of the sale by IGF
to SGL of a 50% ownership interest in the slotsvegas online casino, which SGL
Debt amounted to $518,082.86 in the aggregate as of December 31, 1999, shall be
converted into 1,671,235 shares of common stock (the "TE Shares") of Total
Entertainment Inc. ("TE") as of December 31, 1999 based on the market price of
$0.31 per share of TE's common stock at such date.
We agree that the foregoing debt to equity conversion (the "Conversion")
was calculated in accordance with the attached "Schedule of Conversion of
Summerhill Payables into Capital Stock" which is hereby approved by SGL and
incorporated by reference herein.
Upon our receipt of the TE Shares, we agree that as of December 31, 1999,
the SGL Note shall be cancelled and the SGL Debt shall be extinguished. We
hereby confirm and acknowledge that all of IGF's obligations to SGL under the
SGL Agreement have been assumed by Xxxxxxxxx.xxx Inc. pursuant to the Purchase
Agreement dated March 1, 2000 between IGF and Netforfun.
In connection with our receipt of the TE shares we hereby represent and
warrant to IGF as follows:
(a) Securities Acquired for Investment.
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(1) SGL understands that the TE Shares are being offered and sold to
it in reliance
on specific provisions of federal and state securities laws and that TE is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of SGL set forth herein for
purposes of qualifying for exemptions from registration under the Securities Act
of 1933, as amended (the "Securities Act"), and applicable state securities
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laws.
(2) SGL is an "accredited investor" as defined under Rule 501 of
Regulation D promulgated under the Securities Act.
(3) SGL (x) is and will be acquiring the TE Shares for SGL's own
account, and not with a view to any resale or distribution of the TE Shares, in
whole or in part, in violation of the Securities Act or any applicable
securities laws and (y) has not offered or sold any portion of the TE Shares and
has no present intention or agreement to divide the TE Shares with others for
purposes of selling, offering, distributing or otherwise disposing of the TE
Shares.
(4) SGL (x) is capable of evaluating the risks and merits of an
investment in TE by virtue of its experience as an investor and its knowledge,
experience and sophistication in financial and business matters; (y) recognizes
that SGL's investment in TE involves a high degree of risk; and (z) is capable
of bearing the entire loss of its investment in the TE Shares.
(5) SGL has reviewed TE's Registration Statement on Form 10-SB and
other reports recently filed by TE with the Securities and Exchange Commission.
(6) SGL has had an opportunity to meet with and to ask questions of
TE's officers and directors in connection with its conversion of the SGL Debt
into the TE Shares.
(7) SGL acknowledges that no specific representations or warranties
regarding TE or its prospects have been made to it by any officer or director of
TE or by TE and that SGL is relying solely on its own evaluation in making an
investment in TE.
(b) Exemption from Registration; Restrictive Legend. It is acknowledged
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that the conversion of the SGL Debt into the TE Shares is intended to be exempt
from registration under the Securities Act by virtue of Section 4(2) of the
Securities Act. SGL understands that the TE Shares have not been, and may never
be, registered under the Securities Act; that the TE Shares cannot be sold,
transferred, assigned, pledged or subjected to any lien or security interest
unless they are first registered under the Securities Act and such state and
other securities laws as may be applicable or in the opinion of counsel for TE
an exemption from registration under the Securities Act is available (and then
the TE Shares may be sold, transferred, assigned, pledged or subjected to a
lien, security interest or other encumbrance of any nature whatsoever only in
compliance with such exemption and all applicable state and other securities
laws); and that the following legend will be placed upon the certificate for
such shares of the Common Stock:
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THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES
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LAW OF ANY STATE OR OTHER JURISDICTION. NEITHER THESE SECURITIES
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE TRANSACTION
THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE AND OTHER SECURITIES LAWS.
(c) Broker-Dealer Status. SGL is neither a registered broker-dealer nor
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an affiliate of any member broker-dealer firm of the National Association of
Securities Dealers, Inc.
(d) Compliance with Laws. SGL covenants and agrees, after purchasing
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the TE Shares and thereby becoming a shareholder of TE, to comply with all
applicable laws with respect to his ownership of the TE Shares.
Sincerely,
SUMMERHILL GAMING LIMITED
By:/S/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx; Phd.
Title: V.P.
AGREED AND ACCEPTED:
INTERCAPITAL GLOBAL FUND, LTD.
By:/S/ Xxxxx X. Xxxxxxxx, Xx.
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Xxxxx X. Xxxxxxxx, Xx.,
Chief Executive Officer
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