Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NUWAY ENERGY, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
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Notes:
NUWAY ENERGY, INC.
19100 Von Karman Ave, Ste 450
Irvine, CA 92612
February 1, 2002
Dear Stockholders:
The annual meeting of the stockholders of NuWay Energy, Inc. (the
"Company") will be held at The Atrium Hotel, 18700 MaCarthur Blvd, Irvine,
California 921612 on Wednesday, March 20, 2002 at 10:00 a.m. local time and will
address the matters referred to in the enclosed Notice of Annual Meeting.
The Notice of Annual Meeting and Proxy Statement which follow describe
the business to be conducted at the meeting.
Your Board of Directors unanimously believes that (i) the election of
the nominees as directors, (ii) the issuance of the Convertible Debentures and
the shares of common stock issuable upon conversion thereof, (iii) the amendment
to the Company's Certificate of Incorporation changing the name of the Company,
and (iv) the ratification of its independent auditors for 2001, are in the best
interests of the Company and its stockholders, and accordingly, recommends a
vote "FOR" the foregoing proposals on the enclosed proxy card.
If you do not plan to attend the meeting, please review the enclosed
materials, make your decision and sign and return your proxy in the return
envelope provided. If you do not plan to attend the meeting, send your proxy now
to assure that your shares are voted. Be assured, that if you send in an
executed proxy you may revoke it at any time before it is voted at the meeting
by filing with the Secretary of the Company a document revoking it, by
submitting a proxy bearing a later date, or by attending the meeting and voting
in person.
The Board of Directors, as well as the executive officers of the
Company looks forward to seeing you. We hope you will participate in our Annual
Meeting, if not in person, then by proxy.
Sincerely,
/s/ TODD SANDERS
----------------------------------
Todd Sanders
President, Chief Executive Officer
NUWAY ENERGY, INC.
19100 Von Karman Ave, Ste 450
Irvine, CA 92612
NOTICE OF 2001 ANNUAL MEETING
OF SHAREHOLDERS AND PROXY STATEMENT
-------------------------------------------
YOUR VOTE IS IMPORTANT!
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE.
-------------------------------------------
To the Stockholders of NuWay Energy, Inc. (the "Company"):
NOTICE IS HEREBY GIVEN, that the annual meeting of the stockholders of
the Company will be held at The Atrium Hotel, 18700 MaCarthur Blvd, Irvine,
California 921612 on Wednesday, March 20, 2002 at 10:00 a.m. local time, for the
following purposes:
1. To elect the Directors of the Company to serve until the next
annual meeting of stockholders or until their respective
successors have been duly elected and qualified.
2. To ratify and approve the Convertible Debenture Purchase
Agreement dated as of December 14, 2000, and all transactions
contemplated thereby, including the issuance of $3,500,000 of
our 6% Convertible Debentures, the amendment thereto, and the
shares of common stock issuable upon conversion thereof.
3. To ratify the amendment to the Company's Certificate of
Incorporation (the "Certificate of Incorporation") to change
the Company's name to "NuWay Energy, Inc."
4. To approve the engagement of Hein + Associates LLP as the
Company's independent accountants for the year 2001 audit.
5. To transact such other and further business as may properly
come before the meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed the close of business on February 20,
2002 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting. A list of such stockholders will be available at
the Company's office, 19100 Von Karman Ave, Suite 450, Irvine, California 92612
during regular hours for inspection by any stockholder for any purpose germane
to this meeting.
Please return the proxy enclosed with this Notice as soon as possible
so that your shares can be voted at the 2001 Annual Meeting. Please be sure that
your proxy is signed and dated; it cannot be voted without your signature.
By Order of The Board of Directors
/s/ TODD SANDERS
----------------------------------
Todd Sanders
President, Chief Executive Officer
February 1, 2002
---------------------------------
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY. IF YOU DO NOT EXPECT TO BE PRESENT
AT THE MEETING: PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN
THE ENVELOPE PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND
IF YOU ARE PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT
THAT TIME AND EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
NUWAY ENERGY, INC.
19100 Von Karman Ave, Ste 450
Irvine, CA 92612
------------
PROXY STATEMENT
------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 20, 2002
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of NuWay Energy, Inc. (the "Company") for
use at the annual meeting of stockholders of the Company to be held on
Wednesday, March 20, 2002, including any adjournment or adjournments thereof,
and for the purposes set forth in the foregoing Notice of Annual Meeting of
Stockholders. The address of the Company's principal executive office is 19100
Von Karman Ave, Suite 450, Irvine, California 92612. The telephone number of the
Company's principal executive office is (949) 553-8002. This Proxy Statement and
form of proxy are being mailed to shareholders of record on or about February
25, 2002.
REVOCABILITY OF PROXY AND VOTING OF PROXY
Any proxy returned to the Company will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated on the proxy,
the proxy will be voted for the election of the nominees for Directors named
herein and in favor of Items 2, 3 and 4 in the Notice of Annual Meeting. A
Stockholder who has given a proxy may revoke it at any time before it is voted
at the meeting by filing with the Secretary of the Company a document revoking
it, by submitting a proxy bearing a later date, or by attending the meeting and
voting in person. Under Delaware law, abstentions are treated as present and
entitled to vote. Broker non-votes will not be included in vote totals and will
have no effect on the outcome of the votes.
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but directors, officers and regular
employees of the Company, who will receive no additional compensation, may
solicit proxies by any appropriate means. The Company will reimburse custodians,
nominees or other persons for their out-of-pocket expenses in sending proxy
materials to beneficial owners and obtaining proxies from such owners.
VOTING PROCEDURES AND PROXY INFORMATION
The directors will be elected by the affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting voting as a single class, provided a quorum exists. A quorum is
established if, as of the Record Date, at least a majority of the outstanding
shares of Common Stock are present in person or represented by proxy at the
Annual Meeting. All other matters at the meeting will be decided by the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy at the meeting and entitled to vote on the subject
matter, provided a quorum exists. Votes will be counted and certified by one or
more Inspectors of Election.
In accordance with Delaware law, abstentions and "broker non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares as to a matter with respect to which the brokers or nominees do not
have discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum. For purposes of determining approval of a
matter presented at the meeting, abstentions will be deemed present and entitled
to vote and will, therefore, have the same legal effect as a vote "against" a
matter presented at the meeting. Broker non-votes will be deemed not entitled to
vote on the subject matter as to which the non-vote is indicated. Abstentions
and broker non-votes will have no effect on the election of directors, the
approval of the Convertible Debenture Purchase Agreement dated as of December
14, 2000, and all transactions contemplated thereby, including the issuance of
$3,500,000 of our 6% Convertible Debentures, the amendment thereto, and the
shares of common stock issuable upon conversion thereof, ratification of the
amendment to the Company's Certificate of Incorporation changing the name of the
Company, or the vote to ratify the appointment of Hein + Associates LLP as
independent auditors of the Company for 2001.
The enclosed proxies will be voted in accordance with the instructions
thereon. Unless otherwise stated, all shares represented by such proxy will be
voted as instructed. Proxies may be revoked as noted above.
The entire cost of soliciting proxies, including the costs of
preparing, assembling, printing and mailing this Proxy Statement, the proxy and
any additional soliciting material furnished to stockholders, will be borne by
the Company. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy materials to the
beneficial owners of stock, and such persons may be reimbursed for their
expenses by the Company. Proxies may also be solicited by directors, officers or
employees of the Company in person or by telephone, telegram or other means. No
additional compensation will be paid to such individuals for these services.
YOU ARE REQUESTED, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, TO SIGN AND
DATE THE PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on February 20,
2002 are entitled to vote at the meeting. As of January 31, 2002, the Company
had entitled to vote 4,267,600 shares of Common Stock. Each stockholder entitled
to vote shall have one vote for each share of Common Stock registered in such
stockholder's name on the books of the Company as of the record date. Officers
and directors of the Company who together maintain voting rights to
approximately 29.5% of the Company's voting securities have indicated an
intention to vote for the election of the directors, for the approval of the
Convertible Debenture Purchase Agreement dated as of December 14, 2000, and all
transactions contemplated thereby, including the issuance of $3,500,000 of our
6% Convertible Debentures, the amendment thereto, and the shares of common stock
issuable upon conversion thereof, ratification of the amendment to the Company's
Certificate of Incorporation to changing the name of the Company, and for the
appointment of Hein + Associates LLP as independent auditors of the Company for
2001. See "Voting Security Ownership of Certain Beneficial Owners and
Management."
ACTION TO BE TAKEN AT THE MEETING
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Five directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting for a term expiring at the Annual Meeting of
Stockholders to be held in 2002. Unless otherwise specified, the enclosed proxy
will be voted in favor of the persons named below to serve until the next annual
meeting of stockholders of the Company and until their successors have been
elected and qualified. In the event that any of the nominees shall be unable to
serve as a director, the shares represented by the proxy will be voted for the
person, if any, who is designated by the Board of Directors to replace the
nominee. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve, or that any vacancy on the Board of Directors
will occur.
It is the intention of the Board of Directors to nominate Todd Sanders,
William Bossung, Jose A. Caballero, Michael Iscove, and Dennis R. Barry as
directors. Each director will be elected to serve until a successor is elected
and qualified or until the director's earlier resignation or removal. At this
year's Annual Meeting of Stockholders, the proxies granted by stockholders will
be voted individually for the election, as directors of the Company, of the
persons listed below, unless a proxy specifies that it is not to be voted in
favor of a nominee for director.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE ELECTION OF THE NOMINEES.
The names of the nominees and certain other information about them are
set forth below.
Name Age Position
---- --- --------
Todd Sanders 30 Director, Chief Executive Officer, President
William Bossung 42 Director, Chief Operating Officer, Secretary
Jose A. Caballero 43 Director
Michael Iscove 49 Director
Dennis R. Barry 61 Director
Mr. Sanders joined the Company as a Director and Chief Executive
Officer in October 2000, and was named President in October 2001. For the last
five years Mr. Sanders has been acting as a private financier of both public and
private ventures. Since 1998 Mr. Sanders has been the President of Strategic
Capital Consultants, Inc., an Orange County, California based corporate finance
and business development consulting company.
Mr. Bossung joined the Company as a Director and Chief Operating
Officer in October 2000, and was named Secretary of the Company in October 2001.
For approximately the last ten years Mr. Bossung has been President of Alliance
Financial Network, Inc. that provides financial consulting for public and
private companies. From early 1995 until mid 1997 Mr. Bossung was the Director
of Corporate Finance for Chadmoore Wireless Group, Inc. which was subsequently
acquired by Nextel.
Mr. Caballero has served on the Board of Directors since April 1994.
Mr. Caballero is the Vice President of Exfi International Corporation, an
advertising and marketing agency that specializes in doing work for companies
that plan to expand their business into Latin America. Mr. Caballero has been
with Exfi International Corporation since 1987.
Mr. Iscove joined the Company in October 2000 as a Director. From June
1995 to date, Mr. Iscove served as the Chairman, President and Chief Executive
Officer of Sirius Corporate Finance Inc.
Mr. Barry has been a member of the Board of Directors since June of
1999. Mr. Barry has been employed as a commercial mortgage broker and real
estate salesman for the past 37 years. He is a Vice President with the Mortgage
Corporation of America since 1997.
Compensation
The following table sets forth all compensation paid or accrued during
the three fiscal years ended December 31, 2000 by the Company for services
rendered by our former Chief Executive Officer and former Chief Financial
Officer, as well as our current Chief Executive Officer and Chief Operating
Officer.
===================================================================================================================
Annual Compensation Long Term Compensation
----------------- -------------------------------------------- ----------------------------------------------
Awards Payouts
----------------- ------- ---------- ------- -------- ------------------------ ------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
----------------- ------- ---------- ------- -------- ---------- ---------- ------- -------
Other
Annual Restricted All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Awards SARs Payouts sation
Position Year $ $ $ $ (#) $ $
----------------- ------- ---------- ------- -------- ---------- ---------- ------- -------
Lloyd Lyons, 2000 151,000(1) -- -- -- -- -- --
Chief Executive 1999 348,000 100,000 (42,000) -- 650,000 -- --
Officer 1998 300,000 -- -- -- 350,000 -- --
Todd Sanders, 2000(3) -- -- -- 175,000(3) 750,000(3) -- --
Chief Executive
Officer
William Bossung, 2000(4) -- -- -- 175,000(4) 750,000(4) -- --
Chief Operating
Officer
Donald Schiffour, 1999 38,060(5) -- -- -- 85,000(2) -- --
Chief Financial 1998 45,845 -- -- -- 85,000 -- --
Officer
================= ======= ======= ======= ======= ======= ======= ======= =======
-----------------
(1) Including wage continuation payments and offset of loans from Company.
(2) Options which were re-priced from $2.50 Per share to $1.00 Per share.
(3) Became Chief Executive Officer in October 2000. Pursuant to an employment
arrangement the Company issued Mr. Sanders 100,000 shares of Common Stock
and warrants to purchase 750,000 shares of Common Stock for $1.75 per
share.
(4) Became Chief Operating Officer in October 2000. Pursuant to an employment
arrangement the Company issued Mr. Bossung 100,000 shares of Common Stock
and warrants to purchase 750,000 shares of Common Stock for $1.75 per
share.
(5) An additional $2,595 was paid to the widow of Donald Schiffour as per his
employment contract.
Effective December 31, 1998, the Board of Directors, in lieu of giving
a bonus to Lloyd Lyons, then the Chief Executive Officer, re-priced options
previously granted to him. The board similarly re-priced other options
previously granted to key employees, as well as officers and directors. The
Board of Directors considered re-pricing a better alternative to issuing new
options at then current market prices, particularly in view of the fact that the
1994 Plan did not reserve a sufficient number of shares to accommodate such
action.
During 2000 there were no options issued to the named executive
officers.
Aggregated Options Exercises In Last Financial Year and
Financial Year-end Option Values
The following table (presented in accordance with the Exchange Act and
the Regulations) sets forth details of all exercises of stock options granted
during the year ended December 31, 2000 by each of the Named Executive Officers
and the financial year-end value of unexercised options on an aggregated basis:
Fiscal Year-End Options/Option Values Table
-------------------------------------------
Number of
securities underlying Value of unexercised
Shares unexercised options in-the-money options
acquired on Value at Fiscal Year End at Fiscal Year-end($)
Name exercise (#) realized ($) Exercisable / Unexercisable Exercisable / Unexercisable
---- ------------ ------------ --------------------------- ---------------------------
Lloyd Lyons 650,000 162,500 0 0
During fiscal 2000 the Estate of Lloyd Lyons exercised an aggregate of
650,000 options and sold the shares of common stock acquired therefrom in a
private transaction. During fiscal 2000 Geraldine Lyons exercised an aggregate
of 75,000 options.
Option Repricings
During the year ended December 31, 2000 there were no repricings of
stock options.
Employment Agreements
In January 1997, we entered into a five-year employment agreement with
Lloyd Lyons which provided for an annual salary commencing January, 1997 of
$275,000 and increasing at $25,000 per annum commencing January 1, 1998. The
1999 increase had been waived. The agreement provided for an adjustment in
salary to reflect increases, but not decreases, in the consumer price index. The
agreement further provided that in the event of either a merger, consolidation,
sale or conveyance of substantially all the assets of the Company which results
in the discharge of Mr. Lyons, he would be entitled to 200% of the balance of
payments remaining under the contract. Further, the agreement provided that an
annual bonus shall be at the discretion of the Board of Directors. The contract
provided the salary continuation for a period of two years after the death of
Mr. Lyons. In January 2000, Mr. Lyons passed away and effective August 2, 2000
the Company amended its employment contract with the surviving widow and primary
beneficiary of the Estate of Lloyd Lyons (Geraldine Lyons, our former Chief
Financial Officer and Secretary), where-in the salary continuation clause
included in his contract was replaced with a severance arrangement which
requires the Company to pay Geraldine Lyons $100,000 over a one year period
commencing on the first month following her termination from her employment with
the company and upon her termination she is to receive 100,000 shares of common
stock pursuant to an amendment to her employment agreement. The amended
employment agreement obligates the company to register these shares and
reimburse her for the difference in the gross proceeds upon the sale of such
shares and $300,000, regardless of the time she holds such shares. Upon
termination of the employee contract the company will record additional
compensation at the greater of the market price of the Company's common stock or
the guaranteed price stipulated in the contract. The agreement further provides
that she remain in the employment of the Company for at least four months
following the amendment of the contract. The contract revisions further provided
that the officer loan of $115,000 be recorded as additional compensation as
required by the officer compensation agreement, the employment agreement with
Geraldine Lyons obligates us to provide an annual compensation at the rate of
$46,800 per annum in the year 2000 and $51,480 in the subsequent year.
In January 2000 we entered into two additional employment contracts,
both for the duration of two years and provides that company be obligated for an
aggregate compensation of $115,000 in year 2000 and $126,500 in year 2001.
Effective August 2, 2000 both of these employment contracts were amended to
reflect upon termination from employment these individuals will be entitled to
nine months of compensation and will receive in the aggregate 35,000 shares of
common stock which the company has agreed to reimburse the respective employees
the difference between the gross proceeds they receive upon sale and $105,000,
regardless of the term the employees hold such shares.
We entered into two-year employment contracts with Jeffrey A. Felder as
President (subsequently named President of Gaming and Cigar Operations, see
below), Geraldine Lyons as Chief Financial Officer (retired, see below), and
Angel Garcia, President of Latin American Operations on January 27, 2000,
calling for salaries of $70,000, $50,000 and $43,000 respectively for the first
year. The contracts call for a ten percent increase in salary during the second
year of each contract.
We entered into one-year employment agreements with the Todd Sanders as
Chief Executive Officer, and William Bossung as Chief Operating Officer, whereby
the Company issued each of them 100,000 shares of stock and private five year
warrants to purchase 750,000 shares of Common Stock at $1.75 per share.
In October 2001 Geraldine Lyons retired as Chief Financial Officer and
Secretary of the Company, and William Bossung was named Secretary of the Company
and Joseph Tawil was named Chief Financial Officer of the Company. Also, in
October 2001, Jeffrey Felder was named as President of the Company's Gaming and
Cigar Operations and Todd Sanders was named President of the Company.
Other than the stock option plan described below and pursuant to the
aforementioned employment agreements, as of January 31, 2002, we do not have any
contingent forms of remuneration, including any pension, retirement, stock
appreciation, cash or stock bonus, or other compensation plan.
1994 Stock Option Plan
In June 1994, the Board of Directors adopted the 1994 Stock Option Plan
(the "Plan"). The maximum number of shares available for issuance under the Plan
is 1,500,000 shares. The Plan terminates on June 13, 2004. The Plan is designed
to provide additional incentives for our Directors and officers and other key
employees, to promote the success of the business and to enhance our ability to
attract and retain the services of qualified persons. The Board of Directors
administers the Plan. The Plan authorizes the Board of Directors to grant key
employees selected by it, incentive stock options and non-qualified stock
options. The exercise price of shares of Common Stock subject to options
qualifying as incentive stock options must not be less than the fair market
value of the Common Stock on the date of the grant. The exercise price of
incentive options granted under the Plan to any participant who owns stock
possessing more than 10% of the total combined voting power of all classes of
our outstanding stock must be at least equal to 100% of the fair market value on
the date of grant. Fair market value has been determined to be the closing sales
price for our Common Stock reported by NASDAQ.
The Board of Directors may amend the Plan at any time but may not,
without shareholder approval, adopt any amendment, which would materially
increase the benefits accruing to participants, or materially modify the
eligibility requirements. The Company also may not, without shareholder
approval, adopt any amendment, which would increase the maximum number of
shares, which may be issued under the Plans, unless the increase results from a
stock dividend, stock split or other change in the capital stock of the Company.
In March 1999, the Board of Directors authorized an amendment to the
Plan increasing the number of shares to be issued there under from 1,000,000 to
1,500,000. This amendment was submitted for shareholder approval at the 1999
Annual Meeting and was approved.
Effective December 31, 1998 the Company ratified the re-pricing of
872,000 of employee stock options to $1.00 per share and simultaneously
authorized the issuance of 85,000 options at an exercise price $1.00 per share
and canceled 10,000 options issued in 1995 at $2.50 per share. Effective
February 2000 we issued 35,000 options at an exercise price of $1.06 and in
December 2000 we issued 80,000 options at a $1.75 exercise price. In fiscal 2000
725,000 options were exercised, and as of January 31, 2002 237,500 options
remain outstanding.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10% of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10% stockholders are required by the regulation to furnish the
Company with copies of the Section 16(a) forms which they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, and written representations that no other
reports were required during the year ended December 31, 2000, all Section 16(a)
filing requirements applicable to the Company's officers, directors and greater
than ten percent (10%) stockholders were complied with, except for the late
filing of a Form 5 by Michael Iscove, a member of our Board of Directors, and
the late filing of a Form 4 by Geraldine Lyons, our former Chief Financial
Officer and Secretary.
ADDITIONAL INFORMATION CONCERNING THE
BOARD OF DIRECTORS OF THE COMPANY
During 2000, the Board of Directors held five meetings, which were
attended by all of the members of the Board of Directors in person or by
telephone.
Each director who is not an employee of the Company is paid a fee of
$300 for each Board meeting attended. In addition, each such director is paid a
fee of $300 for attendance at a meeting of a committee of the Board.
Audit Committee
The functions of the Audit Committee are to serve as an independent and
objective monitor of the Company's financial reporting process and internal
control system. The audit committee is responsible for reviewing and appraising
the efforts of our independent public accountants, reviewing the plans and
results of the audit engagement with the independent public accounts, approving
professional services provided by the independent public accounts, and to
providing an open avenue of communication among the independent auditors and
management and the Board of Directors. Messrs. Iscove, Barry and Caballero
served as members of the Audit Committee during 2000. The audit committee held
two meetings during 2000 and from time to time had informal discussions.
The Audit Committee has a written charter, a copy of which is
reproduced as Appendix A to this proxy statement.
Report of the Audit Committee
Neither the following report of the Audit Committee nor any other
information included in this proxy statement pursuant to item 7(d)(3) of
Schedule 14A promulgated under the Securities Exchange Act of 1934 or pursuant
to Rule 306 of Regulation S-K constitutes "soliciting material" and none of such
information should be deemed to be "filed" with the Securities and Exchange
Commission or incorporated by reference into any other filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates such information by
reference in any of those filings.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2000 with the
Company's management. Based on the review and discussions described above, the
Audit Committee recommended to the Board of Directors of the Company that the
audited financial statements of the Company be included in its Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.
Compensation Committee
The Compensation Committee develops and implements formal policies with
respect to executive officer compensation in order to best link future
compensation to the performance of the officer, as well as the overall
performance of the Company. The Compensation Committee did not hold any meetings
during 2000, but from time to time held informal discussions. Messrs. Iscove,
Sanders, and Bossung served as members of the Compensation Committee during
2000.
VOTING SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding shares of
the Common Stock beneficially owned as of January 31, 2002, by (i) each person
or group, known to the Company, who beneficially owns more than 5% of the Common
Stock; (ii) each of the Company's directors; and (iii) all executive officers
and directors as a group:
---------------------------------------------------------------------------------------
Number of Shares
Name Beneficially Owned (1) Percent of Class
---------------------------------------------------------------------------------------
William Bossung 1,601,403 (2) 12.2%
c/o NuWay Energy, Inc.
19100 Von Karman Ave, Ste 450
Irvine, California 92612
---------------------------------------------------------------------------------------
Todd Sanders 1,480,260 (3) 12.2%
c/o NuWay Energy, Inc.
19100 Von Karman Ave, Ste 450
Irvine, California 92612
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Augustine Fund, L.P. 3,121,234 (4) 27.8%
141 W. Jackson, Suite 2182
Chicago, Illinois 60604
---------------------------------------------------------------------------------------
M.H. Meyerson & Co. Inc. 945,890 (5) 6.5%
525 Washington Boulevard
Jersey City, New Jersey 07503
---------------------------------------------------------------------------------------
Geraldine Lyons 226,224 (6) 2%
c/o NuWay Energy, Inc.
6826 NW 77th Court
Miami, Florida 33166
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Angel Garcia 75,000 (7) *
Mariscal Sucre 321 Miraflores
Lima, 18 Peru
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Kenneth Koock 263,750 (8) 2.4%
525 Washington Boulevard
Jersey City, New Jersey 07503
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Jose A. Caballero 30,000 (9) *
c/o NuWay Energy, Inc.
6826 NW 77th Court
Miami, Florida 33166
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Jeffrey A. Felder 50,092 (10) *
c/o NuWay Energy, Inc.
6826 NW 77th Court
Miami, Florida 33166
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Dennis R. Barry 30,000 (11) *
c/o NuWay Energy, Inc.
6826 NW 77th Court
Miami, Florida 33166
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Michael Iscove 50,000 (12) *
c/o NuWay Energy, Inc.
6826 NW 77th Court
Miami, Florida 33166
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All Executive Officers and Directors as a
group 1,260,122 29.5% (13)
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* Less than 1%
(1) To the Company's knowledge, all shares of Common Stock are owned
beneficially, with sole voting and investment power, except as otherwise
noted.
(2) Mr. Bossung is the Secretary and Chief Operating Officer and a Director of
the Company. Includes 125,000 shares which may be acquired upon exercise of
Company's publicly traded warrants, 212,000 shares which may be acquired
upon conversion of the Company's Convertible Debentures, and 750,000 shares
which may be acquired upon exercise of the Company's private warrants at a
price of $1.75 per share.
(3) Mr. Sanders is the President and Chief Executive Officer and a Director of
the Company. Includes 125,000 shares which may be acquired upon exercise of
Company's publicly traded warrants, 90,857 shares which may be acquired
upon conversion of the Company's Convertible Debentures, and 750,000 shares
which may be acquired upon exercise of the Company's private warrants at a
price of $1.75 per share.
(4) Based upon filings by Augustine Fund, L.P. with the Securities and Exchange
Commission. Includes 457,143 shares which may be acquired upon conversion
of the Company's Convertible Debentures owned by Augustine Fund, L.P.
Includes 285,714 shares which may be acquired upon conversion of the
Company's Convertible Debentures owned by Brian D. Porter. Includes 28,571
shares which may be acquired upon conversion of the Company's Convertible
Debentures and 45,000 shares which may be acquired upon exercise of the
Company's private warrants owned by David M. Matteson at a price of $1.75
per share. Mr. Porter and Mr. Matteson are either controlling members,
directors and officers of Augustine Capital, the general partner of
Augustine Fund L.P. Also, includes 1,500,000 shares which may be acquired
upon exercise of the Company's private warrants at a price of $1.75 per
share owned by Delano Group Securities LLC, which is owned, controlled
and/or managed by certain affiliates of Augustine Fund L.P.
(5) Includes 274,455 shares of common stock, 621,060 shares of common stock
which may be acquired upon exercise of the Company's publicly traded
warrants, and 50,375 shares of stock which may be acquired upon exercise of
investment banker warrants exercisable at $1.06 per share.
(6) Includes 10,000 shares which may be acquired upon exercise of Company
options which are exercisable at $1.75 per share, and 41,224 shares of
Common Stock held in trust for grandchildren.
(7) Includes 65,000 shares which may be acquired upon exercise of Company
options which are exercisable at $1.00 per share and 10,000 shares which
may be acquired upon exercise of Company options which are exercisable at
$1.75 per share.
(8) Includes 100,750 shares which may be acquired upon exercise of investment
banker warrants exercisable at $1.06 per share.
(9) Includes 5,000 shares which may be acquired upon exercise of Company
options exercisable at $1.06 per share and 25,000 shares which may be
acquired upon exercise of Company options exercisable at $1.75 per share.
(10) Includes 25,000 shares which may be acquired upon exercise of Company
options exercisable at $1.06 per share and 10,000 shares which may be
acquired upon exercise of Company options exercisable at $1.75 per share.
(11) Includes 5,000 shares which may be acquired upon exercise of Company
options exercisable at $1.06 per share and 25,000 shares which may be
acquired upon exercise of Company options exercisable at $1.75 per share.
(12) Includes 50,000 shares which may be acquired upon exercise of the Company's
private warrants.
(13) Percentage is based upon a total number of shares of common stock owned by
the directors and officers of the company. Does not include those shares of
common stock issuable upon conversion of the Company's Convertible
Debentures, or exercise of the Company's options, publicly traded warrants,
or private warrants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 14, 2000, we issued and sold $3,500,000 principal amount of
convertible debentures (the "Debentures") to certain accredited investors
(including William Bossung, a director and our Chief Operating Officer and
Secretary, and Todd Sanders, a director, and our President and Chief Executive
Officer) pursuant to a Convertible Debenture Stock Purchase Agreement dated as
of December 14, 2000. In June 2001 the Debentures were amended to reflect a
Maturity Date (as defined in the Debentures) of December 13, 2001, and we also
agreed to register the underlying shares of Common Stock.
In August 2001, a majority of the shareholders, via written consent,
consented to amend the Company's Certificate of Incorporation to change the name
of the Company to NuWay Energy, Inc.
Any future transactions with affiliates will be on terms no less
favorable to the Company than could be obtained from unaffiliated parties and
will be approved by a majority of the independent and disinterested members of
the Board of Directors, outside the presence of any interested directors and, to
the extent deemed appropriate by the Board of Directors, the Company will obtain
stockholder approval or fairness opinions in connection with any such
transaction.
APPROVAL OF THE SALE OF CONVERTIBLE DEBENTURES AND ISSUANCE
OF SHARES OF COMMON STOCK UPON CONVERSION THEREOF
(ITEM 2 ON THE PROXY CARD)
On December 14, 2000, we entered into a Convertible Debenture Purchase
Agreement with accredited investors (including William Bossung, a director, and
our Secretary and Chief Operating Officer, and Todd Sanders, a director, and our
President and Chief Executive Officer) pursuant to which we issued and the
investors purchased an aggregate of $3,500,000 principal amount of our 6%
Convertible Debentures. We received net proceeds of $3,500,000 from this
transaction, which is being used for general corporate purposes including but
not limited to the exploration of new business ventures. Our shareholders are
being asked to ratify and approve the Convertible Debenture Purchase Agreement,
and the exhibits thereto, including the issuance of $3,500,000 of our 6%
Convertible Debentures, the amendment to the 6% Convertible Debentures, and all
shares issuable upon conversion, in order to satisfy certain listing
requirements under The Nasdaq Marketplace Rules for continued listing of our
common stock on The Nasdaq Stock Market Small Cap Market.
The following summarizes the terms of the transaction and is qualified
in its entirety by the Convertible Debenture Purchase Agreement and the exhibits
thereto, and the amendment to the 6% Convertible Debentures, a copy of which is
attached hereto as Appendix B and incorporated by reference herein. Shareholders
are encouraged to review the attached Agreements.
The terms and conditions of the 6% Convertible Debentures are
summarized as follows:
o Interest rate on the Debentures is 6% per annum, payable, at
our option in cash or in that number of shares of our common
stock at the rate of $1.75 per share.
o Maturity date for the 6% Convertible Debentures is December
13, 2001 (as per the amendment to the 6% Convertible
Debentures).
o The Debentures are convertible into shares of our common
stock at a price of $1.75 per share.
o In the event the principal amount of the 6% Convertible
Debentures has not been repaid as of the close of business
on the maturity date, then at such time the holder thereof
shall have the option of receiving repayment of the
principal amount plus accrued and unpaid interest then
outstanding in cash or cash equivalent, or in shares of our
common stock at a price of $1.75 per share.
o In the event we enter into a definitive agreement, the
result of which is a consolidation or merger with or into
another corporation or other entity, or the sale of all or
substantially all of the our assets to another corporation
or other entity, then the Debentures automatically convert
into shares of our common stock at a price of $1.75 per
share.
o By amendment to the 6% Convertible Debentures we agreed to
file a registration statement with the Securities and
Exchange Commission including our shares of common stock
underlying the 6% Convertible Debentures (which was filed
July 27, 2001, and subsequently withdrawn), and the maturity
date of the 6% Convertible Debentures was amended to be
December 13, 2001.
In order to qualify for inclusion in The Nasdaq Stock Market Small Cap,
we need to satisfy certain financial and other criteria set forth in The Nasdaq
Marketplace Rules (the "Rules"). In addition, in order to maintain such
inclusion under the Rules, we must, among other things, follow certain corporate
governance procedures, including obtaining shareholder approval in connection
with certain corporate transactions. Rule 4350(i) of the Rules requires
shareholder approval of the issuance of securities by an issuer under various
circumstances. In particular, Subsection (1)(D) of paragraph (i) requires
shareholder approval prior to the issuance of securities in the following
situations: (D) In connection with a transaction other than a public offering
involving: (i) the sale or issuance by the issuer of common stock (or securities
convertible into or exercisable for common stock) at a price less than the
greater of book or market value which together with sales by officers, directors
or substantial shareholders of the company equals 20% or more of common stock or
20% or more of the voting power outstanding before the issuance; or (ii) the
sale or issuance by the company of common stock (or securities convertible into
or exercisable for common stock) equal to 20% or more of the common stock or 20%
or more of the voting power outstanding before the issuance for less than the
greater of book or market value of the stock. Pursuant to the terms of the 6%
Convertible Debentures, the Debentures are convertible into shares of common
stock at a price of $1.75 per share. As a result, if the 6% Convertible
Debentures were converted into shares of common stock, it would represent more
than 20% of our issued and outstanding common stock and, accordingly, would
require shareholder approval under the applicable Rules.
In the event the shareholders do not ratify this proposal the Company
would not issue more than 19.99% of our issued and outstanding common stock upon
conversion of the convertible debentures.
THE BOARD OF DIRECTORS RECOMMENDS TO OUR SHAREHOLDERS THAT THEY VOTE "FOR" THE
APPROVAL AND RATIFICATION OF THE SALE OF CONVERTIBLE DEBENTURES PROPOSAL.
APPROVAL OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION TO
CHANGE THE COMPANY'S NAME TO
"NUWAY ENERGY, INC."
(ITEM THREE ON THE PROXY CARD)
On or about August 2001, the Company, pursuant to Section 228 of the
Delaware Corporation Law, obtained the written consent of a majority of the
outstanding shares of common stock of the Company, amended the Company's
Certificate of Incorporation and changed the name of the Company to NuWay
Energy, Inc. This proposal ratifies the amendment to the Company's Certificate
of Incorporation and the change of the Company's name to "NuWay Energy, Inc." On
or about April 2001 management began exploring opportunities to enhance
shareholder value. In this endeavor management decided to enter the field of oil
and gas exploration, in addition to its gaming and cigar operations. Based on
such endeavor, the Board of Directors is of the opinion that the name "NuWay
Energy, Inc." will assist the Company in its proposed endeavor.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE FOREGOING AMENDMENT
TO ARTICLE FIRST OF THE COMPANY'S CERTIFICATE OF INCORPORATION.
APPROVAL OF INDEPENDENT ACCOUNTANTS
(ITEM 4 ON THE PROXY CARD)
Action will be taken with respect to the approval of independent
accountants for the Company for the calendar year 2001. The Board of Directors
has, in January 2002, engaged Hein + Associates LLP ("Hein") to serve as the
Company's independent accountants. On November 26, 2001, the Company's former
independent accountants, Shubitz Rosenbloom & Co., P.A. ("Shubitz") notified the
Company that it has resigned as the Company's independent accountants. While
Shubitz will not conduct the audit for the Registrant for fiscal 2001, Shubitz
has agreed to continue to assist the Company in the preparation of the financial
statements. Shubitz' reports on the financial statements for the two most recent
fiscal years ended December 31, 1999 and December 31, 2000 did not contain an
adverse opinion, or a disclaimer of opinion, or was qualified as to audit scope
or accounting principles. Furthermore, during the two most recent fiscal years
and through November 26, 2001, there have been no disagreements with Shubitz on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope and procedures, which disagreements, if not resolved to the
satisfaction of Shubitz, would have caused that firm to make reference to the
subject matter of such disagreements in connection with its reports.
Representatives of Hein are expected to be present at the Annual
Meeting either in person or telephonically, will have the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
Audit Fees
In 2000, Shubitz billed us Thirty Three Thousand Dollars ($33,000) for
services rendered for the audit of our annual financial statements included in
our Form 10-KSB and the reviews of our quarterly financial statements.
Financial Information Systems Design and Implementation Fees
In 2000, Shubitz did not perform any professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
All Other Fees
In 2000, Shubitz billed us Two Thousand Nine Hundred Seventy Five
Dollars ($2,975) for services rendered for other services not covered above.
These services primarily related to domestic and foreign tax consultation and
compliance for the Company and our subsidiaries and to non-audit services
provided.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
THE ENGAGEMENT OF HEIN + ASSOCIATES LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS.
OTHER BUSINESS
The Board of Directors does not know of any other business to be
presented at the meeting and does not intend to bring before the meeting any
matter other than the proposals described herein. However, if any other business
should come before the meeting, or any adjournment thereof, the person(s) named
in the accompanying proxy will have discretionary authorization to vote all
proxies in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Proposals of security holders intended to be presented at the Company's
2002 Annual Meeting of Stockholders must be received by the Company by no later
than May 29, 2002.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company and will
consist of primarily of printing, postage and handling, including the expenses
of brokerage houses, custodians, nominees, and fiduciaries in forwarding
documents to beneficial owners. Solicitation also may be made by the Company's
officers, directors, or employees, personally or by telephone.
GENERAL
In order that all holders of Common Stock may be represented at the
Annual Meeting, it is extremely important that proxies be returned promptly.
PLEASE SIGN, DATE AND MAIL OR OTHERWISE DELIVER THE ENCLOSED PROXY. THE
ACCOMPANYING ADDRESSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
Stockholders mailing or otherwise delivering their proxies who attend
the meeting may, if desired, revoke their proxies and personally vote their
shares by ballot at the meeting. Your cooperation in promptly returning your
proxy will be appreciated and will help secure, at an early date, a quorum for
our meeting.
A copy of our Annual Report for the year ended December 31, 2000 has
been mailed concurrently with this Proxy Statement to all stockholders entitled
to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
/s/ TODD SANDERS
----------------------------------
Todd Sanders
President, Chief Executive Officer
February 1, 2002
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
LATIN AMERICAN CASINOS, INC.
The Board of Directors (the "Board") of Latin American Casinos, Inc., a
Delaware corporation (the "Company") has oversight responsibilities to, among
other things, promote an environment in which the Company maintains adequate
systems of internal control, presents reliable financial information and
complies with applicable laws, regulations and Company policies. To assist the
Board in fulfilling certain of those oversight responsibilities, the Board has
established an Audit Committee. The following sets forth certain guidelines and
requirements with respect to the Audit Committee and its responsibilities.
I. Purpose
The primary function of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities by reviewing the financial reports and
other financial information provided by the Company to any governmental body or
the public; the Company's systems of internal controls regarding finance,
accounting, legal compliance and ethics that management and the Board have
established or may in the future establish; and the Company's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should foster adherence to, the Company's
policies, procedures and practices at all levels. The Audit Committee's primary
duties and responsibilities are to: serve as an independent and objective party
to monitor the Company's financial reporting process and internal control
system; review and appraise the audit efforts of the Company's independent
auditors; and provide an open avenue of communication among the independent
auditors, financial and senior management and the Board.
The Audit Committee will fulfill these responsibilities by carrying out
the activities enumerated in this Charter as may from time to time be necessary
or appropriate.
II. AUTHORITY
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent accountants to attend meetings of the Audit Committee or to meet
with any members of, or consultants to, the Audit Committee. The Audit Committee
shall be given unrestricted access to Company personnel and documents and to the
Company's independent accountants.
IV. COMPOSITION
The Audit Committee shall consist of at least two Directors or such
additional number as the Board or the Audit Committee may determine, a majority
of the members of which shall be independent directors based on the rules of the
National Association of Securities Dealers for audit committees, as amended,
modified or supplemented from time to time. The Audit Committee shall not have
less than two directors without prior approval of the Board. In the event that
the Audit Committee has less than two Directors thereon due to the resignation,
death or removal of a Director or other similar event, the Board shall appoint
promptly another member thereto. Unless a chairman of the Audit Committee (the
"Chairman") is elected by the Board, the members of the Committee may designate
a Chairman by majority vote of the full Audit Committee membership.
V. RESPONSIBILITIES
A. Financial Reports. The Audit Committee shall: review this Charter
periodically, but at least annually, and update this Charter as conditions
dictate; review, prior to its filing, the Company's annual and quarterly reports
prior to its filing; and review such other reports or other financial
information submitted to the Securities and Exchange Commission or the public as
the Audit Committee shall deem appropriate. For purposes of this review the
Chairman may represent the entire Audit Committee.
B. Independent Auditors. The Audit Committee shall recommend to the
Board the selection of the independent auditors for each fiscal year, confirm
and assure their independence and approve the fees and other compensation to be
paid to the independent auditors. On an annual basis, the Audit Committee should
review and discuss with the auditors all significant relationships which effect
the auditors' independence and should receive the written statement from the
independent auditors required by Independence Standards Board Standard No. 1, as
amended, modified or supplemented from time to time. The Audit Committee shall
recommend to the Board the advisability of having the independent auditors make
specified studies and reports as to auditing matters, accounting procedures, tax
or other matters; review the performance of the independent auditors and approve
any proposed discharge of the independent auditors when circumstances warrant;
and periodically consult with the independent auditors out of the presence of
management about internal controls and the completeness and accuracy of the
Company's financial statements.
C. Financial Reporting Processes. The Audit Committee shall consider
the independent auditors' judgments about the quality and appropriateness of the
Company's accounting principles as applied in its financial reporting, and
consider and approve, if appropriate, major changes to the Company's auditing
and accounting principles and practices as suggested by the independent auditors
or management.
D. Process Improvement. The Audit Committee shall: establish regular
and separate systems of reporting to the Audit Committee by each of management
and the independent auditors regarding any significant judgments made in
management's preparation of the financial statements and the view of each as to
appropriateness of such judgments; following completion of the annual audit,
review separately with each of management and the independent auditors any
significant difficulties encountered during the course of the audit, including
any restrictions on the scope of work or access to required information; review
any significant disagreement among management and the independent auditors in
connection with the preparation of any of the Company's financial statements;
and review with the independent auditors and management the extent to which
changes or improvements in financial or accounting practices, as approved by the
Audit Committee, have been implemented.
E. Legal Compliance. The Audit Committee shall review with the
Company's corporate counsel legal compliance matters including corporate
securities trading policies, and review with the Company's corporate counsel any
legal matter that could have a significant impact on the Company's financial
statements.
F. Other Responsibilities. The Audit Committee shall perform any other
activities consistent with this Charter, and the Company's Certificate of
Incorporation, By-laws and governing law, as the Audit Committee or the Board
deems necessary or appropriate.
VI. MEETINGS
The Audit Committee shall meet such number of times in each fiscal year
of the Company as the Audit Committee believes are reasonable or necessary. The
Audit Committee shall maintain minutes or other records of those meetings and
its activities.
VII. MISCELLANEOUS
This Charter is intended to be flexible so that the Audit Committee is
able to meet changing conditions. The Audit Committee is authorized to take such
further actions as are consistent with the above-described responsibilities and
to perform such other actions as applicable law, the Company's charter documents
and/or the Board may require. To that end, the Audit Committee shall review and
reassess the adequacy of this Charter annually. Any proposed changes shall be
put before the Board for its approval.
APPENDIX B
$________ USD
No. 2000-____
LATIN AMERICAN CASINOS, INC.
6% Convertible Debenture due June 13, 2001
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THERE IS AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
This Convertible Debenture is duly authorized issue of
Convertible Debentures of Latin American Casinos, Inc., a Delaware corporation
(the "Issuer"), issued on December 14, 2000 (the "Issuance Date"), and
designated as its 6% Convertible Debenture due June 13, 2001 (the "Debenture").
FOR VALUE RECEIVED, the Issuer promises to pay to
the registered holder hereof or its registered assigns, if any (the "Holder"),
the principal sum of:
United States Dollars,
on or prior to June 13, 2001 (the "Maturity Date") or such earlier date this
Debenture is required to be repaid by the Issuer pursuant to the terms herein,
and to pay simple interest as outlined below, at the rate of six (6%) percent
per annum. Accrual of interest shall commence as of the Issuance Date. Interest
shall be payable by the Issuer, at the Issuer's option, in cash or in that
number of shares of common stock of the Issuer (the "Common Stock") (at a price
per share calculated pursuant to the conversion formula contained below), upon
the earlier to occur of (i) upon conversion of this Debenture into shares of
Common Stock pursuant to the conversion features set forth below, or (ii) upon
an Event of Default as defined below, and if an Event of Default occurs interest
due hereunder shall be payable in cash or Common Stock as set forth herein at
the option of the Holder. Unless otherwise agreed in writing by both parties
hereto, the interest so payable will be paid to the person in whose name this
Debenture (or one or more predecessor Debentures) is registered on the records
of the Issuer regarding registration and transfers of the Debenture (the
"Debenture Register"), provided, however, that the Issuer's obligation to a
transferee of this Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions contained in the
Agreement and this Debenture. This Debenture has been issued under the terms and
provisions of the Convertible Debenture Purchase Agreement dated as of December
14, 2000 between the Issuer and Holder (the "Agreement") and shall be subject to
all of the terms and conditions and entitled to all of the benefits thereof. In
the event the principal amount of this Debenture has not been repaid by the
Issuer to the Holder as of the close of business on the Maturity Date, then at
such time the Holder shall have the option of receiving (i) repayment of the
principal amount then outstanding to the Holder in cash or cash equivalent, plus
accrued and unpaid interest for this Debenture then outstanding, or (ii)
Conversion Shares (as defined below) for the then remaining principal and
interest outstanding. In the event the Issuer enters into a definitive
agreement, the result of which is a consolidation or merger of the Issuer with
or into another corporation or other entity, or the sale of all or substantially
all of the Issuer's assets to another corporation or other entity, then this
Debenture shall automatically convert into shares of Common Stock in accordance
with Section 4 below, as if the date such agreement was executed by the parties
thereto was a Conversion Date (as defined below).
The Debenture is subject to the following additional provisions:
1. The Debenture is exchangeable for like Debentures in equal
aggregate principal amount of authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such
registration or transfer or exchange.
2. The Issuer shall be entitled to withhold from all payments of
principal and/or interest of this Debenture any amounts required to be withheld
under the applicable provisions of the U.S. Internal Revenue Code of 1986, as
amended, or other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment
representations of the original Holder hereof and may be transferred or
exchanged only in compliance with the Securities Act and applicable state
securities laws and in compliance with the restrictions on transfer provided in
the Agreement. Prior to the due presentment for such transfer of this Debenture,
the Issuer and any agent of the Issuer may treat the person in whose name this
Debenture is duly registered on the Issuer's debenture register as the owner
hereof for the purpose of receiving payment as herein provided and all other
purposes, whether or not this Debenture is overdue, and neither the Issuer nor
any such agent shall be affected by notice to the contrary. The transferee shall
be bound, as the original Holder by the same representations and terms described
herein and under the Agreement.
4. The Holder of this Debenture is entitled, at its option, at any
time commencing on the date hereof up until the Maturity Date, the principal
amount of this Debenture or any portion thereof, into shares of fully paid and
non assessable Common Stock of the Issuer ("Conversion Shares") at a conversion
price for each Conversion Share ("Conversion Price") equal to $1.75. The number
of Conversion Shares due to the Holder is to be derived from dividing the
Conversion Amount by the Conversion Price. For purposes of this Debenture, the
"Conversion Amount" shall mean the principal dollar amount of the Debenture
being converted. In the event the principal amount of this Debenture has not
been repaid by the Issuer to the Holder (in the manner set forth in the first
sentence of this Section 4) as of the close of business on the Maturity Date,
then at such time the Issuer shall issue Conversion Shares for the then
remaining principal amount outstanding with no requirement of a Notice of
Conversion (as defined below), and the Maturity Date being deemed a Conversion
Date (as defined below). The Holder may exercise its right to convert the
Debenture by telecopying an executed and completed notice of conversion (the
"Notice of Conversion") to the Issuer and delivering the original Notice of
Conversion and the original Debenture to the Issuer by express courier. Each
business day on which a Notice of Conversion is telecopied to and received by
the Issuer in accordance with the provisions hereof shall be deemed a
"Conversion Date". The Issuer will transmit the certificates representing
Conversion Shares issuable upon such conversion of the Debenture (together with
the certificates representing the Debenture not so converted) to the Holder via
express courier, by electronic transfer (if applicable) or otherwise within five
Business Days after the Conversion Date, provided, the Issuer has received the
original Notice of Conversion and Debenture being so converted. If the Company
has not received the original Notice of Conversion and original Debenture being
converted within three Business Days after Conversion Date, then the Issuer
shall transmit the certificates representing the Conversion Shares issuable upon
such conversion of the Debenture (together with the certificates representing
the Debenture not so converted) to the Holder via express courier, by electronic
transfer (if applicable) or otherwise within five business days after receipt of
the original Notice of Conversion and original Debenture being converted.
The Notice of Conversion and Debenture representing the portion of the
Debenture converted shall be delivered as follows:
To the Issuer:
Latin American Casinos, Inc.
2000 NE 164th Street
North Miami Beach, FL 33162
Attention: President
Facsimile: (305) 945-0288
Telephone: (305) 945-9300
With a copy to:
The Goldstein Law Group, P.C.
65 Broadway, 10th Floor
New York, NY 10006
Attention: Jeffrey M. Stein
Facsimile: (212) 809-4228
Telephone: (212) 809-4220
or to such other address as may be communicated by the Issuer to the
Holder in writing.
The principal amount of this Debenture shall be reduced as per that
principal amount indicated on the Notice of Conversion upon the proper receipt
by the Holder of such Conversion Shares due upon such Notice of Conversion.
5. Upon each adjustment of the Conversion Price (as set forth below),
the Holder shall thereafter be entitled to (but not obligated to) receive upon
conversion of this Debenture, at the Conversion Price resulting from such
adjustment, the number of shares of Common Stock obtained by (i) multiplying the
Conversion Price in effect immediately prior to such adjustment by the number of
shares of Common Stock receivable hereunder immediately prior to such adjustment
and (ii) dividing the product thereof by the Conversion Price resulting from
such adjustment. The Conversion Price shall be adjusted as follows:
(i) In the case of any amendment to the Issuer's Articles of
Incorporation to change the designation of the Common Stock or the
rights, privileges, restrictions or conditions in respect to the Common
Stock or division of the Common Stock, this Debenture shall be adjusted
so as to provide that upon exercise thereof, the Holder shall receive,
in lieu of each share of Common Stock theretofore issuable upon such
conversion, the kind and amount of shares, other securities, money and
property receivable upon such designation, change or division by the
Holder issuable upon such conversion had the conversion occurred
immediately prior to such designation, change or division. This
Debenture shall be deemed thereafter to provide for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section. The provisions of this Subsection (i)
shall apply in the same manner to successive reclassifications,
changes, consolidations and mergers.
(ii) If the Issuer shall at any time subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock,
or declare a dividend or make any other distribution upon the Common
Stock payable in shares of Common Stock, the Conversion Price in effect
immediately prior to such subdivision or dividend or other distribution
shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect
immediately prior to such combination shall be proportionately
increased.
(iii) If any capital reorganization or reclassification of the
capital stock of the Issuer, then, the Holder shall thereafter have the
right to receive upon the conversion hereof upon the basis and upon the
terms and conditions specified herein, such shares of stock,
securities, other evidence of equity ownership or assets as may be
issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares
of Common Stock immediately theretofore receivable upon the conversion
of this Debenture under this Section had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in
any such case appropriate provisions shall be made with respect to the
rights and interests of the holder to the end that the provisions
hereof (including, without limitation, provisions for adjustments of
the Conversion Price and of the number of shares of Common Stock
receivable upon the conversion of this Debenture) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock,
securities, other evidence of equity ownership or assets thereafter
deliverable upon the exercise hereof including an immediate adjustment,
by reason of such consolidation or merger, of the Conversion Price to
the value for the Common Stock reflected, by the terms of such
consolidation or merger if the value so reflected is less than the
Conversion Price in effect immediately prior to such consolidation or
merger. Subject to the terms of this Debenture, in the event of a
merger or consolidation of the Issuer with or into another corporation
or other entity as a result of which the number of shares of common
stock of the surviving corporation or other entity issuable to
investors of Common Stock, is greater or lesser than the number of
shares of Common Stock outstanding immediately prior to such merger or
consolidation, then the Conversion Price in effect immediately prior to
such merger or consolidation shall be adjusted in the same manner as
though there were a subdivision or combination of the outstanding
shares of Common Stock. If a purchase, tender or exchange offer is made
to and accepted by the holders of more than fifty (50%) percent of the
outstanding shares of Common Stock, the Issuer shall not effect any
consolidation, merger or sale with the person having made such offer or
with any affiliate of such person, unless prior to the consummation of
such consolidation, merger or sale the Holder shall have been given a
reasonable opportunity to then elect to receive upon the conversion of
this Debenture the amount of stock, securities, other evidence of
equity ownership or assets then issuable with respect to the number of
shares of Common Stock in accordance with such offer.
(iv) In case the Issuer shall, at any time prior to conversion
of this Debenture, consolidate or merge with any other corporation or
other entity (where the Issuer is not the surviving entity) or transfer
all or substantially all of its assets to any other corporation or
other entity, then the Issuer shall cause effective provision to be
made so that the Holder upon the conversion of this Debenture after the
effective date of such transaction shall be entitled to receive the
kind and, amount of shares, evidences of indebtedness and/or other
securities or property receivable on such transaction by the Holder of
the number of shares of Common Stock as to which this Debenture was
convertible immediately prior to such transaction (without giving
effect to any restriction upon such exercise); and, in any such case,
appropriate provision shall be made with respect to the rights and
interests of the Holder to the end that the provisions of this
Debenture shall thereafter be applicable (as nearly as may be
practicable) with respect to any shares, evidences of indebtedness or
other securities or assets thereafter deliverable upon conversion of
this Debenture. Upon the occurrence of any event described in this
Subsection (iv), the Holder shall have the right to (a) convert this
Debenture immediately prior to such event at a Conversion Price equal
to the lesser of (1) the Conversion Price or (2) the price per share of
Common Stock paid in such event, or (b) retain ownership of this
Debenture, in which event, appropriate provisions shall be made so that
this Debenture shall be convertible at the Holder's option into shares
of stock, securities or other equity ownership of the surviving or
acquiring entity.
(v) In the case of any (a) consolidation or merger of the
Issuer into any entity (other than a consolidation or merger that does
not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Issuer), (b)
sale, transfer, lease or conveyance of all or substantially all of the
assets of the Issuer as an entirety or substantially as an entirety, or
(c) reclassification, capital reorganization or change of the Common
Stock (other than solely a change in par value, or from par value to no
par value), in each case as a result of which shares of Common Stock
shall be converted into the right to receive stock, securities or other
property (including cash or any combination thereof), the holder of
this Debenture then outstanding shall have the right thereafter to
convert such share only into the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale,
transfer, capital reorganization or reclassification by a holder of the
number of shares of Common Stock of the Issuer into which such
Debenture would have been converted immediately prior to such
consolidation, merger, sale, transfer, capital reorganization or
reclassification, assuming such holder of Common Stock of the Issuer
(A) is not an entity with which the Issuer consolidated or into which
such sale or transfer was made, as the case may be ("constituent
entity"), or an affiliate of the constituent entity, and (B) failed to
exercise his or her rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share
of Common Stock of the Issuer held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
entity or an affiliate thereof and in respect of which the Issuer
merged into the Issuer or to which such rights or election shall not
have been exercised ("non-electing share"), then for the purpose of
this paragraph the kind and amount of securities, cash or other
property receivable upon such consolidation, merger, sale or transfer
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a majority of the non-electing shares). If
necessary, appropriate adjustment shall be made in the application of
the provision set forth herein with respect to the rights and interest
thereafter of the Holder, to the end that the provisions set forth
herein shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, in relation to any shares of stock or other
securities or property thereafter deliverable on the conversion of this
Debenture. The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers, capital reorganizations and
reclassifications. The Issuer shall not effect any such consolidation,
merger, sale or transfer unless prior to or simultaneously with the
consummation thereof the successor issuer or entity (if other than the
Issuer) resulting from such consolidation, merger, sale or transfer
shall assume, by written instrument, the obligation to deliver to the
Holder such shares of Common Stock, securities or assets as, in
accordance with the provisions of this Debenture, such Holder may be
entitled to receive under this Debenture.
(vi) The Issuer will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer
of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Issuer, but will at all times in good faith
assist in the carrying out of all the provisions of this Debenture and
in taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the Holder against
impairment.
(vii) Whenever the Conversion Price shall be adjusted pursuant to
this Section the Issuer shall promptly mail by registered or certified
mail, return receipt requested, to the Holder a certificate signed by
its President setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on
which the Board of Directors of the Issuer made any determination
hereunder), and the Conversion Price after giving effect to such
adjustment, and shall cause copies of such certificates to be mailed
(by first-class mail, postage prepaid) to the Holder. The Issuer shall
make such certificate and mail it to the Holder immediately after each
adjustment.
6. No provision of this Debenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, upon an Event of Default (as
defined below), to pay the principal of, and interest on this Debenture at the
place, time, and rate, and in the coin or currency herein prescribed.
7. The Issuer hereby expressly waives demand and presentment for
payment, notice on nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
8. If one or more of the following described "Events of Default" shall
occur,
(a) Any of the representations, covenants, or warranties made by
the Issuer herein, or in the Agreement (including all Exhibits annexed
thereto) shall have been incorrect when made in any material respect or
shall thereafter be determined to be incorrect; or
(b) The Issuer shall breach, fail to perform, or fail to observe
in any material respect any material covenant, term, provision,
condition, agreement or obligation of the Issuer under this Debenture,
the Agreement, between the parties of even date herewith, and such
breach or failure has not been cured within ten business days after
receipt of written notice from the Holder setting forth such breach or
failure; or
(c) A trustee, liquidator or receiver shall be appointed for the
Issuer or for a substantial part of its property or business without
its consent and shall not be discharged within thirty (30) calendar
days after such appointment; or
(d) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of the
properties or assets of the Issuer and shall not be dismissed within
thirty (30) calendar days thereafter; or
(e) Bankruptcy reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy law or
any law for the relief of debtors shall be instituted by or against the
Issuer and, if instituted against the Issuer, Issuer shall by any
action or answer approve of, consent to or acquiesce in any such
proceedings or admit the material allegations of, or default in
answering a petition filed in any such proceeding or such proceedings
shall not be dismissed within thirty (30) calendar days thereafter; or
(f) The Issuer shall have failed to deliver shares of Common
Stock issuable upon conversion of the Debentures within five business
days of when due under the terms of this Debenture.
Then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) or
cured as provided herein, at the option of the Holder, and in the Holder's sole
discretion, the Holder may consider this Debenture (and all interest through
such date) immediately due and payable in cash, without presentment, demand
protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and Holder may immediately, and without expiration of any
period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law (including but
not limited to consequential damages if any). It is agreed that in the event of
such action, such Holder shall be entitled to receive all reasonable fees, costs
and expenses incurred, including without limitation such reasonable fees and
expenses of attorneys. The parties acknowledge that a change in control of the
Issuer shall not be deemed to be an Event of Default as set forth herein.
9. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
10. The Holder shall have the right to include all of the Conversion
Shares underlying this Debenture (the "Registrable Securities") as part of any
registration of securities filed by the Issuer (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to
Form S-4 or S-8) and must be notified in writing of such filing as soon as
reasonably practicable; provided, however, that the Holder agrees it shall not
have any piggy-back registration rights pursuant to this Debenture if the
Conversion Shares underlying this Debenture may be sold in the United States
pursuant to the provisions of Rule 144 without any restriction on resale. Holder
shall have five business days after receipt of the aforementioned notice from
the Issuer, to notify the Issuer in writing as to whether the Issuer is to
include Holder or not include Holder as part of such registration; provided,
however, that if any registration pursuant to this paragraph shall be
underwritten, in whole or in part, the Issuer may require that the Registrable
Securities requested for inclusion pursuant to this paragraph be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If in the good faith judgment of the underwriter
evidenced in writing of such offering only a limited number of Registrable
Securities should be included in such offering, or no such shares should be
included, the Holder, and all other selling stockholders, shall be limited to
registering such proportion of their respective shares as shall equal the
proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. All registration expenses incurred by the Issuer in complying with the
terms of this Debenture shall be paid by the Issuer, exclusive of underwriting
discounts, commissions and legal fees and expenses for counsel to the Holder.
11. This Debenture, together with all documents referenced herein,
embodies the full and entire understanding and agreement between the Issuer and
Holder with respect to the subject matter hereof and supersedes all prior oral
or written agreements and understandings relating to the subject matter hereof.
Neither this Debenture nor any terms hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the Issuer and the
Holder. All capitalized terms not otherwise defined herein shall have the same
meaning as given in the Agreement. In the event of any inconsistencies between
this Debenture and the Agreement, the Debenture shall control. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Debenture shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Debenture.
12. This Debenture will be construed and enforced in accordance with
and governed exclusively by the laws of the State of New York, except for
matters arising under the Securities Act, without reference to principles of
conflicts of law. Each of the parties consents to the exclusive jurisdiction of
the U.S. District Court sitting in the Southern District of the State of New
York sitting in Manhattan in connection with any dispute arising under this
Debenture and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. Each party hereby agrees
that if the other party to this Debenture obtains a judgment against it in such
a proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any country having jurisdiction over the party against
whom such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Debenture irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law. Each party waives its right to a trial by jury.
13. Upon receipt by the Issuer of evidence of the loss, theft,
destruction or mutilation of any Debenture certificate(s), and (in the case of
loss, theft or destruction) of indemnity or security reasonably satisfactory to
the Issuer, and upon the cancellation of the Debenture certificate(s), if
mutilated, the Issuer shall execute and deliver new certificates for
Debenture(s) of like tenure and date.
14. This Debenture does not entitle the Holder hereof to any voting
rights or other rights as a shareholder of the Issuer prior to the conversion
into Common Stock thereof, except as provided by applicable law. If, however, at
the time of the surrender of this Debenture and conversion the Holder hereof
shall be entitled to convert this Debenture, the Conversion Shares so issued
shall be and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the Conversion Date.
15. Except as expressly provided herein or as required by law, so long
as this Debenture remains outstanding, the Issuer shall not, without the
approval by vote or written consent by the Holder, take any action that would
adversely affect the rights, preferences or privileges of this Debenture.
IN WITNESS WHEREOF, the Issuer has caused this Convertible Debenture to
be duly executed by an officer thereunto duly authorized.
LATIN AMERICAN CASINOS, INC.
By
------------------------------
Name: Jeffrey Felder
Title: President
Date: December 14, 2000
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ ________________
of the principal amount of the above Debenture No. ___ into Shares of Common
Stock of Latin American Casinos, Inc. according to the conditions hereof, as of
the date written below.
Date of Conversion _____________________________________________________________
Applicable Conversion Price ___________________________________________________
Signature_______________________________________________________________________
[Name]
Address:________________________________________________________________________
________________________________________________________________________
AMENDMENT TO LATIN AMERICAN CASINOS, INC.
6% CONVERTIBLE DEBENTURE DUE JUNE 13, 2001
Latin American Casinos, Inc. and the undersigned holder (the "Holder") of
that principal amount of Latin American Casinos, Inc. 6% Convertible Debentures
due June 13, 2001 (the "Debentures") set forth below hereby agree, as of the
date below, as follows:
1. Within thirty (30) days of the date below, Latin American Casinos,
Inc. agrees to file a registration statement with the Securities and
Exchange Commission including the shares of Latin American Casinos,
Inc. common stock underlying that principal amount of Debentures owned
by the Holder as set forth below.
2. The Maturity Date as defined in the Debentures is hereby amended to be
December 13, 2001.
3. The Holder has good and marketable title to the principal amount of
Debentures set forth below free and clear of any security interests,
pledges, mortgages or other encumbrances of any kind, and the Holder
is authorized to enter into this amendment.
Holder:
------
-----------------------------
Debenture No.: 2000-
Principal Amount of Debenture: $
Latin American Casinos, Inc.
By: /s/ JEFFREY FELDER Dated:
------------------------- -----------------
Jeffrey Felder, President
NUWAY ENERGY, INC.
19100 Von Karman Ave, Ste 450
Irvine, CA 92612
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 20, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Meeting
and Proxy Statement relating to the meeting and hereby revokes any proxy or
proxies heretofore given. The undersigned hereby appoints Todd Sanders and
William Bossung, each of them, Proxies, with full power of substitution in each
of them, in the name, place and stead of the undersigned, to vote at the Annual
Meeting of Stockholders of NuWay Energy, Inc. (the "Company") at The Atrium
Hotel, 18700 MaCarthur Blvd, Irvine, California 921612 on Wednesday, March 20,
2002 at 10:00 a.m. local time, or at any adjournment or adjournments thereof,
according to the number of votes that the undersigned would be entitled to vote
if personally present, upon the following matters:
1) To elect directors for the ensuing year.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below) listed below.
Todd Sanders, William Bossung, Jose A. Caballero, Michael Iscove,
and Dennis R. Barry
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space below)
-----------------------------------------------------------------
(Continued and to be signed on reverse side)
2) To ratify and approve the Convertible Debenture Purchase Agreement
dated as of December 14, 2000, and all transactions contemplated
thereby, including the issuance of $3,500,000 of our 6% Convertible
Debentures, the amendment thereto, and the shares of common stock
issuable upon conversion thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3) To ratify the amendment to the Company's Certificate of Incorporation
to change the Company's name.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4) To ratify the appointment of Hein + Associates LLP as independent
auditors of the Company for fiscal 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN
ABOVE. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES
AND THE PROPOSALS LISTED ABOVE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
OF THE FOREGOING. IN ADDITION, DISCRETIONARY AUTHORITY IS CONFERRED AS TO ALL
OTHER MATTERS THAT MAY COME BEFORE THE MEETING UNLESS SUCH AUTHORITY IS
SPECIFICALLY WITHHELD. STOCKHOLDERS WHO ARE PRESENT AT THE MEETING MAY WITHDRAW
THEIR PROXY AND VOTE IN PERSON IF THEY SO DESIRE.
DATED: ____________________, 2002
---------------------------------
Signature
---------------------------------
Signature if held jointly
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY.