TRANSACTIONS WITH LIFE FOUNDATION TRUST
On April 15, 1999, the Company agreed to issue, in a private placement,
2,000,000 shares of its common stock to Life Foundation Trust ("LFT") in
exchange for a subscription receivable in the amount of $10.0 million. The
Company also granted LFT the right to reserve Local City Editions ("LCEs") for
up to 200 local city areas and the right to use its proprietary software,
programming, website and content in support of the LCEs for a total purchase
price of $10.0 million. The agreement covering the LCEs is unconditional and
irrevocable and provides for, among other things, that the Company bring the
LCEs reserved by LFT on line over a period of twelve months. The 2,000,000
shares of common stock were issued to LFT on May 5, 1999.
LFT's $10.0 million subscription receivable and its obligation to pay $10.0
million for LCEs is collateralized by the assignment of a collection of
postage stamps. A third party holds the collection of postage stamps in
safekeeping. Pursuant to the April 15, 1999 agreement between the Company and
LFT, LFT has an unconditional and irrevocable obligation to pay the $10.0
million subscription receivable and the LCE receivables recognized by the
Company on or before April 15, 2000. As of June 30, 1999, the Company has
outstanding LCE receivables from LFT totaling $1,250,000. The $10.0 million
subscription receivable from LFT is shown as a reduction in stockholders'
equity in the accompanying June 30, 1999 balance sheet.
On May 15, 1999, the Company entered into a non-binding letter of intent to
issue LFT an additional five million shares of its common stock for an
aggregate purchase price of $100.0 million. LFT has delivered to the Company a
Subscription Agreement and Investment Representations for the shares that is
contingent only upon an increase in the Company's authorized shares and due
diligence to the Company's satisfaction on a $900.0 million Promissory Oil
Production Note to be delivered as collateral for LFT's obligation to pay the
purchase price. The Company's security interest in the note is to be limited
to $100.0 million and is to be an undivided interest with LFT, who has agreed
to permit the Company to receive the first $100.0 million paid under the note.
The completion of the related subscription agreement and issuance of the
shares to LFT is subject to stockholder approval of an increase in the
Company's authorized shares. Pending such shareholder approval, the Company's
Chairman of the Board, and a principal stockholder, has transferred shares
from his own account to LFT to hold the transaction. The Company's Chairman
has retained the right to vote the shares transferred to LFT on all matters
requiring the vote of stockholders. Upon completion of the transaction, the
shares transferred by the Company's Chairman to LFT will be returned to him.
That's from the most recent 10Q.
I sure would like to borrow a couple of million shares of LFT myself, right now. Well maybe not quite that many. It would be hard to sell them very fast, right now, without badly depressing the market.
What is a "$900.0 million Promissory Oil Production Note", anyway? Is that something that they give away in cereal boxes, like Aden stamps, for example? |
