Exhibit 99.2
November 28, 2001
BounceBackTechnologies.com,Inc.
C/O CT Corp Systems, Inc.
403 2nd Ave, South
Minneapolis, Minnesota 55401
RE: KEVIN M. KEAN - DEMAND ON BBTC
Dear Sir or Madam:
This firm is engaged to represent the legal interests of Kevin M. Kean,
who is the beneficial owner of no less than 1,330,559 shares of common stock in
BounceBackTechnologies.com,Inc. ("BBTC" or the "Company"). In this capacity, we
write to demand that BBTC, by and through its Board of Directors, take immediate
steps to rectify the issues set forth in this letter. This letter will also
satisfy any "demand" requirements to the Company's Board of Directors of a
lawsuit against BBTC, its officers and its Board of Directors, past and present,
should BBTC not either file a lawsuit or rectify the issues in a timely and
satisfactory manner.
I. Background
At the outset allow us to recite our understanding of the relevant
corporate history for BBTC. BBTC (together with its subsidiaries) was formerly
known as Casino Resource Corporation. Prior to the name change, BBTC's common
stock (symbol "CSNR") and its Class A warrants (symbol "CSNRW") were originally
traded on the NASDAQ National Market System. On September 16, 1993, the date of
the Company's IPO, the stock closed at $1.75 per share.
On May 24, 1999, the NASD notified the Company that the Company had not
met the net tangible asset-listing requirements of NASDAQ and, therefore, the
Company's common stock and its warrants would be moved to the OTCBB effective at
the opening of trading on May 25, 1999. Since the move to the OTCBB, the
Company's stock price has continued to plummet. As of November 20, 2001, the
share price was six cents ($0.06) per share and has continued to fluctuate at
this level.
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The continued drop in the price of the stock is unacceptable for many
reasons, all of which relate to the mismanagement of the Company resulting from
the Company's Board of Directors and officers breach of fiduciary duties owed to
the Company and its shareholders. Please consider the following:
II. Executive Compensation
A. Salaries
Since 1995, John J. "Jack" Pilger has served as a member of the Board
of Directors and as an officer of BBTC. Pilger's base salary and overall
compensation as an officer of BBTC has risen from a low of $178,426 to a high of
almost $1,000,000. Noreen Pollman has also served on BBTC's Board of Directors,
as a BBTC officer and as a consultant to BBTC. During this time period Pollman's
compensation as an officer rose from a low of $109,546 to a high of $208,344 in
1999. Since 1996, Robert J. Allen has served on BBTC's Board of Directors and as
a BBTC officer. During this time period Allen's compensation as an officer rose
from a low of $116,583 to a high of $172,211 in 1999.
These substantial increases in salary are untenable given the
dramatically poor performance of BBTC's stock on the open market, and
illustrates the self-dealing conducted by the above officers and directors to
the detriment of the Company's best interests.
B. Bonuses
Since 1995, Jack Pilger has received forgiveness of a number of loans
he owed to BBTC. To accomplish this, BBTC, through its Board of Directors
("BOD"), instituted a practice of granting Pilger bonuses in order that Pilger
could apply the bonuses to his outstanding indebtedness to BBTC. This practice
resulted in Pilger receiving sums of cash from BBTC without having to repay the
monies in full or at all.
Examples of this practice are as follows:
a. Through September 30, 1997, the Company made loans to Pilger
totaling $507,461 in principal and interest. Such obligations accrued at
interest at rates between 7% and 9.5% per year and matured on October 1, 1999
with monthly payments of $4,500 beginning on April 1, 1998. The loans include
$150,000 advanced for the purchase by Mr. Pilger of a Mississippi residence and
$357,461 in other advances. No principal payments were made in fiscal year 1997.
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b. In fiscal year 1998, Pilger was indebted to the Company in the
amount of $449,461 including principal and interest. Mr. Pilger was reported as
current on his obligations to the Company. The original loans include $150,000
advanced for the purchase by Mr. Pilger of a Mississippi residence in 1994 and
$299,461 in other advances made to Mr. Pilger from 1994 to 1998. The avenue for
Pilger staying current on these obligations began in April 1994, when BBTC
purchased a residential property in Ocean Springs from Mr. Pilger, paying him
$137,000 in cash. BBTC's BOD authorized BBTC to acquire from Mr. Pilger two lots
that are contiguous to Pilger's residence at 303 LaSalle Court, Ocean Springs,
Mississippi, which is also owned by BBTC, on August 11, 1998. In consideration
for Mr. Pilger's transfer of ownership, he was given consideration equal to the
land value of $86,000, of which $43,000 was paid in cash and $43,000 was applied
to Mr. Pilger's loans due to the Company
c. In fiscal year 1999, BBTC awarded Pilger an additional $123,979 of
non-cash compensation which was then used to reduce Mr. Pilger's loan payable to
BBTC's subsidiary in Tunisia. In addition, as of September 30, 1999, Pilger was
indebted to BBTC in the amount of $385,935 including principal and interest.
During 1999, the Board approved a $137,479 bonus to Mr. Pilger that was applied
toward these obligations.
d. In BBTC's fiscal year 2000, BBTC reported that Pilger was to receive
noncash compensation of $165,305.64 that reduced Mr. Pilger's amount payable to
BBTC. In turn, Mr. Pilger canceled monies due him the last year of his
three-year agreement whereby he was to receive $126,000.00 in fees from CRC
Tunisia S.A., a BBTC subsidiary, for fiscal year 2000, as compensation for his
serving as Chairman on the foreign subsidiary as granted by the Board of
Directors of the Company.
Ms. Pollman has also received forgiveness of a number of loans she owed
to BBTC. To accomplish this, BBTC, through its Board of Directors ("BOD"), began
a practice of granting Pollman bonuses in order that she too could apply the
bonuses to her outstanding indebtedness to BBTC. This practice resulted in
Pollman receiving sums of cash from BBTC without having to repay the monies in
full or at all.
A prime example of this practice with respect to Pollman occurred in
BBTC's fiscal year 2000, when Pollman entered into a Consulting Agreement with
BBTC. The Agreement provided for a one-time bonus of up to $156,000 in stock or
cash payable in full no later than December 31, 1999, $100,000 of which bonus
was utilized to pay in full the $86,000 loan plus interest due to BBTC on
September 1998. However, BBTC only
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reported that "as of September 30, 1998, Noreen Pollman has paid BBTC in full
for a loan which had an outstanding balance of $83,278 by applying a pro rata
share of money earned under terms of a Consulting Agreement during fiscal year
1998, to satisfy the debt in full."
The practice of loan forgiveness is arbitrary, not in the best interest
of the Company and appears to involve self-dealing. Moreover, this errant
practice has been approved and/or ratified by the entire BBTC BOD.
With respect to BBTC relinquishing its rights to a percentage share of
the Lakes Gaming revenues from the Pokagon Tribe, please include in your
investigation the legitimacy of Messrs. Pilger, Pollman and Allen receiving
bonuses on this project.
C. Personal Consumption
From 1995 to present, BBTC allowed Pilger to expense vast amounts of
money to BBTC for Pilger's personal consumption and pleasure. In addition to the
instances discussed above, examples of these expenditures are as follows:
a. In 1995, BBTC paid for Pilger's son to attend Mercy Cross High
School in Ocean Springs, Mississippi.
b. In or around September 1998, BBTC allowed Pilger to charge
$9,000 of clothes on a company credit card.
c. BBTC paid for Pilger's personal utility bills, furniture,
cellular phone charges by his wife and wife's family, and
automobiles for Pilger and his family, some of which were sold
for cash.
d. BBTC allowed Pilger to run another corporation out of BBTC's
corporate office. Specifically, Pilger was president and
founder of Bubba Jack's Shrimp Co.,Inc. This Mississippi
corporation's address is the same as BBTC's. BBTC allowed
Pilger to operate this side business without any remuneration
to BBTC.
e. BBTC paid Pilger's personal legal bills, including attorney's
fees and the cost of a settlement arising out of a lawsuit
involving architectural work on Pilger's personal residence by
the Cunningham architects based in the State of Minnesota.
f. BBTC paid a portion of Pilger's personal costs to operate a
yacht owned by Pilger.
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III. Sweetheart Deals
Please also investigate each transaction between BBTC and the members
of its BOD, including Pilger's Bubba Jack Shrimp Co., Inc. All these
transactions should be investigated for fairness, for value and for a
determination of whether each transaction was entered into for personal and/or
business gain for the board member in question.
Moreover, we request that you investigate any and all specific
transactions between BBTC and/or John Pilger with respect to covering past stock
price losses of one or more individuals (including but not limited to Lyle
Berman) during the downward spiral of the stock over the last three years,
including a full accounting and the reasoning behind loans made to individuals
or family trusts.
Finally, please undertake an accounting of the funds received from the
sale of the Country Tonite Show in Branson, MO with an identification of the
recipients of all commissions, bonuses and monies from this transaction.
IV. Legal Actions
Investigate the lawfulness of the institution of the criminal
prosecutions of the Michael Wesaw, Christian Marie Sabella and Kevin Kean.
V. Short Swing and Insider Trading
Please allow this letter to also serve as a demand that you investigate
the trading history of John J. "Jack" Pilger. Specifically, demand is made on
you to immediately investigate for "short swing" trading violations pursuant to
Section 16(b) of the Securities Exchange Act of 1934, of stock trades of BBTC
shares of common stock by Jack Pilger whether reported or not reported to the
Securities and Exchange Commission during his association with BBTC.
Moreover, demand is made on you to investigate Mr. Pilger's stock
trades in light of possible insider trading violations. Specifically, please
immediately investigate and report your findings on Mr. Pilger's stock trades
for the 45 days prior to each of the following events concerning BBTC's business
operations:
a. July 1, 1996 - the announcement of the agreement with Samara
Casino Company to lease and operate a casino and 600-seat
theater in Sousse Tunisia.
b. September 23, 1996 - the announcement of the submission of
contract to purchase Palace Casino.
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c. September 26, 1996 - the announcement of JV for Pigeon Forge
Country Tonite show.
d. October 16, 1996 - the announcement that a bankruptcy court
ruled Tuesday, October 15 in favor of the purchase of the
Palace Casino by New Palace Casino LLC.
e. November 25, 1996 - the announcement of the appointment of
John Fertucci as GM and Head of Gaming Operations for Casino
Resource Corp's newly formed Joint Venture, New Palace Casino
LLC.
f. January 27, 1997 - the announcement that New Palace Casino LLC
was granted its conditional use permit on January 21, 1997 by
the City of Biloxi.
g. February 6, 1997 - the announcement that BBTC has sold its 20%
interest in new Palace Casino LLC to JV Partners Robert and
Lawana Low.
h. July 3, 1997 - NOT ANNOUNCED - the Pokagon compact does not
make it through the Michigan legislature and is delayed
indefinitely.
i. October 16, 1997 - the announcement of the opening of Tunisia
casino on October 18, 1997
j. November 11, 1997 - the announcement of BBTC's preliminary
operating results of their Casino Cariabe in Tunisia, North
Africa, for the first 16 days of operation.
k. January 5, 1998 - the announcement BBTC's stock buyback
program
VI. Usurpation and Relinquishment of Corporate Opportunities
Please investigate the specific transactions of BBTC allowing
John Pilger to buy 800,000 shares of stock from Roy Anderson at ten cents
($0.10) a share when the stock was offered originally to BBTC for the same
price. BBTC should not have allowed Pilger to buy the stock to the exclusion of
the Company. The Company should have retired the stock thus increasing the value
of the Company. Moreover, it is our understanding that BBTC financed Pilger's
purchase of these shares. Pilger's usurpation of corporate opportunities is a
breach of his fiduciary duty of care to the Company and its shareholders.
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Moreover, please investigate and report the reasons BBTC relinquished
its rights to a percentage share of the Lakes Gaming revenues from the Pokagon
Tribe.
VII. Avenues for Resolution
Short of instituting a lawsuit subsequent to a diligent and speedy
investigation, Mr. Kean submits the following as an acceptable resolution of the
deficiencies noted above:
a. Immediately remove John J. Pilger, Noreen Pollman, Robert J.
Allen and Dennis Evans as officers and, if applicable, as
consultants of BBTC and all of its subsidiaries.
b. Return of the short swing trading profits realized by John J.
Pilger to the Corporation.
c. Report to the Securities and Exchange Commission the need to
investigate the trading history of John J. Pilger for insider
trading violation.
d. File a report with the shareholders concerning the results of
your investigation into the allegations set forth above and
include a plan of action for further rectifying any misdeeds
including, but not limited to, full restitution to the
shareholders.
e. Grant to Mr. Kean and his attorneys immediate access to the
books, records, and accounting records of the Company and its
subsidiaries, including specifically all the Tunisia
operations (in the past Mr. Kean has been denied access to
these items).
Please note Mr. Kean had the right to deem this demand letter as
"futile" given the fact that the BOD of BBTC are the majority shareholders of
the Company in addition to having breached their fiduciary duties to the Company
and its shareholders and, as such, he could have proceeded with a lawsuit. Mr.
Kean retains the right to do so, and nothing contained herein is intended to, or
does, waive that right. Further, once a lawsuit is initiated, any potential
settlement would require court approval. Accordingly, Mr. Kean asks for BBTC's
immediate attention to these issues and that a representative of the BOD, other
than John J. Pilger, Noreen Pollman, Dennis Evans or Robert J. Allen, contact
the undersigned to discuss BBTC's intentions with respect to this demand.