10-K

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K
(Mark One)
     [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          For the fiscal year ended June 30, 2000
                                      OR

     [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          For the transition period from __________ to____________

     Commission File Number 1-9728

                           JACKPOT ENTERPRISES, INC.
_____________________________________________________________________________
            (Exact name of registrant as specified in its charter)


           Nevada                                     88-0169922
________________________________________________   ___________________
(State or other jurisdiction of incorporation or   (I.R.S. Employer
organization)                                      Identification No.)

1110 Palms Airport Drive, Las Vegas, Nevada            89119
________________________________________________   _____________
(Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code:  (702) 263-5555
                                                     ______________

Securities registered pursuant to Section 12(b) of the Act:

                                               Name of each exchange
Title of each class                              on which registered
______________________________________________ ______________________
Common Stock - Par value $.01 per share,       New York Stock Exchange
which includes certain preferred stock
purchase rights

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:  Yes    x      No
                                                      ___         ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K:      x
                                 ___

As of August 31, 2000, the aggregate market value of the voting stock held
by non-affiliates of the Registrant was $85,256,047.

As of September 15, 2000, there were 8,974,846 shares of the Registrant's
common stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement relating to the 2000 Annual Meeting of
Stockholders are incorporated by reference into Part III of this report.

                                    PART I

Item 1.  Business
         ________

     Jackpot Enterprises, Inc. ("Jackpot" or the "Company") is in the process
of a major transition.  On March 8, 2000, the Company announced a series of
actions designed to transform itself into a technology company and a manager
of technology related funds.  The Company has been engaged, through its
subsidiaries, in the gaming industry for over 30 years and is presently one
of the largest gaming machine route operators in the State of Nevada and an
established leader in the operation of gaming machines in multiple retail
locations ("Route Operations").  In July 2000, the Company executed a
definitive agreement to sell the Route Operations.  Such sale, subject to
regulatory approvals and customary closing conditions, is expected to be
completed during the quarter ending December 31, 2000.  Because of such
pending sale this Annual Report on Form 10-K for the Company's fiscal year
ended June 30, 2000 (this "Form 10-K") reflects the Route Operations as
discontinued operations.  See Discontinued Operations.

     The Company has a multi-pronged approach to effect its transition to its
new business model.  First, the Company has made significant investments in
two Internet infrastructure companies and is actively involved in
discussions with respect to potential acquisition of entities involved in
the Internet infrastructure business, including but not limited to, systems
development and software companies.  The Company expects that such efforts
will result in it acquiring a significant operating business within a
reasonable period of time following the closing of the sale of the Route
Operations.  Second, the Company acquired a 1% controlling interest in a
complex transaction involving a combination of put and call agreements, an
existing portfolio of interests in Internet related businesses.  Third, the
Company established and is the lead investor in J Net Ventures I, LLC
("Venture I"), an entity that will make investments in Internet and technology
companies.

     The Company has committed to invest approximately $55 million in Venture
I of which approximately $24 million has been raised from the issuance of
certain convertible subordinated notes by the Company to a small group of
investors.  Certain of such investors include officers and directors
of the Company or entities controlled by such directors and the Co-
Presidents of J Net Venture Partners, LLC, the manager of Venture I.

Company Investments
___________________

     The Company has taken several significant steps since announcing its new
business strategy.  As described below, the investments in TechTrader, Inc.
("TechTrader") and Digital Boardwalk, LLC ("Digital Boardwalk") are the first
steps in the process of becoming an Internet infrastructure company. Buying
an existing portfolio of investments and establishing Venture I helped
jump-start the Company's position in the marketplace.

    The Company intends to acquire, invest in and internally develop, manage
and operate companies in selected Internet infrastructure businesses.
Initially, the Company has focused on companies engaged in systems
development and software design. Many of such businesses have seen
significant reductions in their market valuations and continue to require
capital to support their growth.  The Company believes it is in a favorable
position to effect such acquisitions on terms that will be fair to the
Company and its stockholders because of its cash position, its relatively
debt free balance sheet, the NYSE listing for its common stock, and the
experience of its management team.  In addition, recent volatility in the
capital markets may make certain businesses available for acquisition that
would have previously gone public through an initial public offering.
Although the Company has been actively engaged in discussion with such
companies, there can be no assurance that any such company could be acquired
upon terms that the Company believes are fair.

All of the Company's investments are in non public companies.  Substantially,
all such companies are development stage companies.  The following is a
description of the Company's significant investments:

    TechTrader provides enabling technology for next-generation Net
    __________
markets through its proprietary software and tool kit.  TechTrader's
software provides the following: support for a variety of market
transaction mechanisms including many types of auctions, request for
quotation and bid/ask exchanges; the ability to evaluate and compare
complex products in a simplified format; advanced search capabilities;
management of complex sourcing and transaction activities; ability to
roll-out content and community features; ability to manage permission
and workflow rules; and ability to warehouse and analyze large quantities
of data.

    In June 2000, the Company led a $19 million Series B Preferred Stock
financing. Of the Company's $8.5 million investment, $6 million consisted of
cash and 178,571 shares of the Company's common stock.  Vistaar, Inc. and
affiliates of Banc One provided the balance of the financing.  On an as
converted basis, the Company had a 28.1% voting interest at the date of
acquisition.  The Series B investors received 4 of 7 TechTrader board seats
- -  2 of which are held by representatives of the Company.

    Digital Boardwalk is an e-services company that focuses on e-business
    _________________
strategy and the development of commercial web sites requiring a heavy
emphasis on high-end application development and technology. Digital
Boardwalk offers a complete, ongoing package of web business-building
services, consulting, and financing services, designed to help traditional
business and emerging Internet ventures achieve critical mass and realize
long-term success. Current and previous Digital Boardwalk clients include:
eToys, Hughes Global Services, Direct TV, OfficeMax and Chyron.

    The Company acquired a 35% ownership interest and the right to purchase up
to 139,256 Common Units in Digital Boardwalk in March 2000 for an aggregate
purchase price of $4.7 million.  The consideration consisted of $3 million
of cash and 146,342 shares of the Company's common stock. The Company and
Digital Boardwalk management each have the right to elect 3 directors to the
Digital Boardwalk board.

    Meister Brothers Investments, LLC ("MBI") The Company acquired
    _________________________________________
a 1% controlling interest in a transaction involving a combination of put and
call agreements on March 1, 2000. MBI holds a portfolio of interest investments
in the form of preferred stock and equivalents in nine technology companies.
Venture I has made further investments in two of the companies, Carta, Inc. and
Cyberbillls, Inc, which are discussed more fully below. Other MBI holdings
include (a) uReach, a unified messaging services business, (b) Gobi, a provider
of subsidized computers and Internet access to consumers, (c) 401kexchange.com,
a b-2-b exchange in the retirement funds market, (d) PropertyFirst.com, a b-
2-b exchange in the commercial real estate industry, (e) iChoose, a
provider  of real-time dynamic pricing/marketing software for e-commerce,
(f) Netword, a provider of an infrastructure tool to facilitate internet
navigation and (g) Tutor.com, a provider of online tutoring services.

    Venture I  The Company has made a $55 million commitment to invest in
    _________
Venture I.  As of September 26, 2000, approximately $17 million has been
invested by the Company on behalf of Venture I.  Following is a description
of the major investments made by Venture I:

    CyberBills, Inc. ("Cyberbills") provides total bill management over the
    ________________
Internet.  In addition to electronic bill presentment and payment, it enables
customers to view, manage and pay their bills online, whether the bills are in
paper or electronic format.

    The Series A Preferred Stock financing of CyberBills, in which neither MBI
or Venture I participated, occurred in 1998 and was led by Dotcom Ventures and
Online Ventures. The Series B Preferred Stock occurred in 1999.  Such financing
raised $12.5 million.  Intuit and Vertex Management were the lead participants
in the Series B Preferred Stock financing.  MBI participated in the Series B
financing.  In March 2000, Venture I invested $3 million in the $28 million
Series C Preferred Stock financing led by GE Capital.  Other participants in
the Series C round included Texaco, Inc. and JW Seligman.

    Carta, Inc. ("Carta") provides systems integration, application development
    ___________
services and products and strategy consulting for state, county, municipal and
local governments in the United States. Carta enables government agencies to
offer e-commerce and services to constituents by providing an end-to-end
solution.  Carta's end-to-end solution includes front-end interface, commerce
application and the capability to receive and integrate information into
back-end systems.

    In May 2000, Venture I, along with Millenium Technology Ventures, an
affiliate of the Blackstone Group ("Millenium"), co-led an $8 million
convertible bridge note financing. A representative of the Company serves
on Carta's board of directors.

    Alistia, Inc. ("Alistia") is a web based direct marketing integration
    _____________
company that focuses on business-to-business information, analysis and
communication.

    In May 2000, Venture I invested $2 million in the Series A Preferred Stock
financing of $5 million.  The other participant in the Series A financing was
Arch Ventures. A representative of the Company serves on Alistia's board of
directors.

    Strategic Data Corp. ("SDC") offers transparent and secure analysis and
    ____________________
real time learning to clients implementing targeted marketing programs which
allow SDC's customers to identify who their most valuable customers are and
immediately deliver to them targeted content, product recommendations, and
marketing messages.

    Venture I invested $850,000 of the $5 million Series B Preferred Stock
financing completed in May 2000. Also participating in the financing were
Bear Stearns Constellation Ventures Fund and Smart Technology Ventures Fund.

    Jasmine Networks, Inc. develops high-speed, multi-service optical switches
    ______________________
for next generation networks.  Jasmine Network's vision is to effectively
utilize the existing fiber-optic infrastructure to deliver more bandwidth
and multiple services at light speed.

    In August 2000, Venture I invested $5 million in Series C Preferred Stock
in a financing of over $75 million. The Series C financing also included
investments by Baker Capital Group, as lead investor, Gilbert Global Equity,
the Optical Capital Group and other investors.  A representative of the Company
serves on Jasmine's board of directors.

    Tellme Networks, Inc. ("Tellme") provides voice driven interactive services
    _____________________
to consumers and businesses. Tellme Networks enables users through
voice-recognition and speech-synthesis to utilize any telephone to access the
Internet and hear online information.

    Investors in Tellme include The Barksdale Group, Benchmark Capital,
Kleiner Perkins Caufield & Byers and AT&T.  In September 2000, Venture I
invested $2 million in Tellme along with many of the existing investors and
several new investors.

Discontinued Operations
_______________________

    Prior to the Company's change in business strategy, the Company had been
actively engaged, through its subsidiaries, in the gaming industry for over
30 years.  The Company is one of the largest gaming machine route operators
in the state of Nevada, and is an established leader in the operation of
gaming machines in multiple retail locations.  At various times during the
past several years, the Company has engaged in the active consideration of
potential acquisitions and expansion opportunities in both the gaming and
non-gaming markets, including most recently in 1999 in connection with the
potential acquisition of Players International, Inc. ("Players") and CRC
Holdings, Inc. d/b/a Carnival Resorts & Casinos ("CRC"), a privately owned
company.  In connection with this change, the Company retained the
investment banking firm of Koffler & Company to advise the Company on the
disposition of its gaming business segment.  During the quarter ended June
30, 2000, management formalized its plan to sell the Route Operations and
commenced activities to dispose of the subsidiaries identified with that
segment. On July 8, 2000, the Company entered into a definitive agreement to
sell its Route Operations for $45 million in cash.  The sale, which is
subject to regulatory approvals and customary closing conditions, is
expected to close in the quarter ended December 31, 2000.  As of June 30,
2000, the Company operated 3,540 gaming machines at 356 locations.  For the
fiscal year ended June 30, 2000, 100% of the Company's revenues were
generated by Jackpot's Route Operations.

Industry Background
___________________

    Advances in technology have led to the general acceptance of the
Internet as a new global medium that allows people to share information and
conduct commerce. The number of Internet users has grown dramatically.
International Data Corporation, an independent research firm, forecasts that
the number of worldwide Internet users will increase from 196 million in
1999 to 502 million in 2003, a compound annual growth rate of 27%.
Similarly, International Data Corporation estimates that the growth of
Internet content, as measured by number of web pages worldwide, will grow
from 1.7 billion pages in 1999 to 13.4 billion pages in 2003, a compound
annual growth rate of 67%.

Intellectual Property Rights
____________________________

    We will rely upon a combination of trade secret, nondisclosure and other
contractual arrangements, and copyright and trademark laws, to protect our
proprietary rights. Where possible we will enter into confidentiality
agreements with our employees, and will generally require that our
consultants and clients enter into such agreements and limit access to and
distribution of our proprietary information. We cannot assure you that the
steps taken by us in this regard will be adequate to deter misappropriation
of our proprietary information or that we will be able to detect
unauthorized use and take appropriate steps to enforce our intellectual
property rights.

Employees
_________

    As of June 30, 2000, Jackpot employed approximately 700  persons, the
substantial number of whom are non-management personnel.  Of the 700
employees, approximately 690 were employed by the gaming business segment.
None of Jackpot's employees are covered by a collective bargaining agreement
and Jackpot believes that it has satisfactory employee relations.

Regulation and Licensing Requirements of Discontinued Operations
________________________________________________________________

    Nevada

    The following requirements are applicable to the Company's discontinued
operations for as long as any of the Company's subsidiaries continue gaming
operations in the State of Nevada.  The Company has requested release by the
Nevada Gaming Commission from the following requirements after the sale of
the Route Operations is completed.

    The ownership and operation of casino gaming facilities and gaming
routes in Nevada are subject to:  (i) the Nevada Gaming Control Act and the
regulations promulgated thereunder (collectively, "Nevada Act"); and (ii)
various local regulations.  The Company's gaming operations are subject to
the licensing and regulatory control of the Nevada Gaming Commission
("Nevada Commission"), the Nevada State Gaming Control Board ("Nevada
Board") and local regulatory authorities.  The Nevada Commission, the Nevada
Board and the local regulatory authorities are collectively referred to as
the "Nevada Gaming Authorities."

    The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things:  (i) the prevention of unsavory or unsuitable
persons from having a direct or indirect involvement with gaming at any time
or in any capacity; (ii) the establishment and maintenance of responsible
accounting practices and procedures; (iii) the maintenance of effective
controls over the financial practices of licensees, including the
establishment of minimum procedures for internal fiscal affairs and the
safeguarding of assets and revenues, providing reliable record keeping and
requiring the filing of periodic reports with the Nevada Gaming Authorities;
(iv) the prevention of cheating and fraudulent practices; and (v) to provide
a source of state and local revenues through taxation and licensing fees.
Change in such laws, regulations and procedures could have an adverse effect
on the Company's gaming operations.

    Corporations that operate casinos and gaming machine routes in Nevada
are required to be licensed by the Nevada Gaming Authorities.  A gaming
license requires the periodic payment of fees and taxes and is not
transferable.  The Company is registered by the Nevada Commission as a
publicly traded corporation ("Registered Corporation") and as such, it is
required periodically to submit detailed financial and operating reports to
the Nevada Commission and furnish any other information which the Nevada
Commission may require.  The Company has been found suitable by the Nevada
Commission to own the stock of Cardivan Company, Corral Coin, Inc., Corral
Country Coin, Inc. and Corral United, Inc. (the "Route Subsidiaries").  No
person may become a stockholder of, or receive any percentage of profits
from the Route Subsidiaries without first obtaining licenses and approvals
from the Nevada Gaming Authorities.  The Company and the Route Subsidiaries
have obtained from the Nevada Gaming Authorities the various registrations,
approvals, permits and licenses required in order to engage in gaming
activities in Nevada.

    The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or any
of its subsidiaries in order to determine whether such individual is
suitable or should be licensed as a business associate of a gaming licensee.
Officers, directors and certain key employees of the Route Subsidiaries must
file applications with the Nevada Gaming Authorities and may be required to
be licensed or be found suitable by the Nevada Gaming Authorities.
Officers, directors and key employees of the Company who are actively and
directly involved in gaming activities of the Company or its subsidiaries
may be required to be licensed or found suitable by the Nevada Gaming
Authorities.  The Nevada Gaming Authorities may deny an application for
licensing for any cause which they deem reasonable.  A finding of
suitability is comparable to licensing, and both require submission of
detailed personal and financial information followed by a thorough
investigation.  The applicant for licensing or a finding of suitability must
pay all the costs of the investigation.  Changes in licensed positions must
be reported to the Nevada Gaming Authorities and, in addition to their
authority to deny an application for a finding of suitability or licensure,
the Nevada Gaming Authorities have jurisdiction to disapprove a change in a
corporate position.

    If the Nevada Gaming Authorities were to find an officer, director or
key employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or any of its subsidiaries, the companies
involved would have to sever all relationships with such person.  In
addition, the Nevada Commission may require the Company and its subsidiaries
to terminate the employment of any person who refuses to file appropriate
applications.  Determinations of suitability or of questions pertaining to
licensing are not subject to judicial review in Nevada.

    The Company and the Route Subsidiaries are required to submit detailed
financial and operating reports to the Nevada Commission.  Substantially all
material loans, leases, sales of securities and similar financing
transactions by the Company and its subsidiaries must be reported to, or
approved by, the Nevada Commission.

    If it were determined that the Nevada Act was violated by the Company or
any of its subsidiaries, the gaming licenses and approvals they hold could
be limited, conditioned, suspended or revoked, subject to compliance with
certain statutory and regulatory procedures.  In addition, the Company, the
subsidiary involved, and the persons involved could be subject to
substantial fines for each separate violation of the Nevada Act at the
discretion of the Nevada Commission.  Further, a supervisor could be
appointed by the Nevada Commission to operate the Company's gaming
properties and, under certain circumstances, earnings generated during the
supervisor's appointment (except for the reasonable rental value of the
Company's gaming properties) could be forfeited to the State of Nevada.
Limitation, conditioning or suspension of any gaming license or the
appointment of a supervisor could (and revocation of any gaming license
would) materially adversely affect the Company's gaming operations.

    Any beneficial holder of the Company's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated, and have his suitability as a beneficial holder of the
Company's voting securities determined if the Nevada Commission has reason
to believe that such ownership would otherwise be inconsistent with the
declared policies of the State of Nevada.  The applicant must pay all costs
of investigation incurred by the Nevada Gaming Authorities in conducting any
such investigation.

    The Nevada Act requires any person who acquires more than 5% of the
Company's voting securities to report the acquisition to the Nevada
Commission.  The Nevada Act requires that beneficial owners of more than 10%
of the Company's voting securities apply to the Nevada Commission for a
finding of suitability within thirty days after the Chairman of the Nevada
Board mails the written notice requiring such filing.  Under certain
circumstances, an "institutional investor," as defined in the Nevada Act,
which acquires more than 10%, but not more than 15%, of the Company's voting
securities may apply to the Nevada Commission for a waiver of such finding
of suitability if such institutional investor holds the voting securities
for investment purposes only.  An institutional investor shall not be deemed
to hold voting securities for investment purposes unless the voting
securities were acquired and are held in the ordinary course of business as
an institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of
directors of the Company, any change in the Company's corporate charter,
bylaws, management, policies or operations of the Company, or any of its
gaming affiliates, or any other action which the Nevada Commission finds to
be inconsistent with holding the Company's voting securities for investment
purposes only.  Activities which are not deemed to be inconsistent with
holding voting securities for investment purposes only include:  (i) voting
on all matters voted on by stockholders; (ii) making financial and other
inquiries of management of the type normally made by securities analysts for
informational purposes and not to cause a change in its management, policies
or operations; and (iii) such other activities as the Nevada Commission may
determine to be consistent with such investment intent.  If the beneficial
holder of voting securities who must be found suitable is a corporation,
partnership or trust, it must submit detailed business and financial
information including a list of beneficial owners.  The applicant is
required to pay all costs of investigation.

    Any person who fails or refuses to apply for a finding of suitability or
a license within thirty days after being ordered to do so by the Nevada
Commission or the Chairman of the Nevada Board, may be found unsuitable.
The same restrictions apply to a record owner if the record owner, after
requests, fails to identify the beneficial owner.  Any stockholder found
unsuitable and who holds, directly or indirectly, any beneficial ownership
of the common stock of a Registered Corporation beyond such period of time
as may be prescribed by the Nevada Commission may be guilty of a criminal
offense.  The Company is subject to disciplinary action if, after it
receives notice that a person is unsuitable to be a stockholder or to have
any other relationship with the Company or any of its subsidiaries, the
Company (i) pays that person any dividend or interest upon voting securities
of the Company, (ii) allows that person to exercise, directly or indirectly,
any voting right conferred through securities held by that person, (iii)
pays remuneration in any form to that person for services rendered or
otherwise, or (iv) fails to pursue all lawful efforts to require such
unsuitable person to relinquish his voting securities for cash at fair
market value.

    The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation to file applications, be
investigated and be found suitable to own the debt security of a Registered
Corporation.  If the Nevada Commission determines that a person is
unsuitable to own such security, then pursuant to the Nevada Act, the
Registered Corporation can be sanctioned, including the loss of its
approvals, if without the prior approval of the Nevada Commission, it:  (i)
pays to the unsuitable person any dividend, interest, or any distribution
whatsoever; (ii) recognizes any voting right by such unsuitable person in
connection with such securities; (iii) pays the unsuitable person
remuneration in any form; or (iv) makes any payment to the unsuitable person
by way of principal, redemption, conversion, exchange, liquidation, or
similar transaction.

    The Company is required to maintain a current stock ledger in Nevada
which may be examined by the Nevada Gaming Authorities at any time.  If any
securities are held in trust by an agent or by a nominee, the record holder
may be required to disclose the identity of the beneficial owner to the
Nevada Gaming Authorities.  A failure to make such disclosure may be grounds
for finding the record holder unsuitable.  The Company is also required to
render maximum assistance in determining the identity of the beneficial
owner.  The Nevada Commission has required that the Company's stock
certificates bear a legend indicating that the securities are subject to the
Nevada Act.

    The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes.  Such approval, if given, does not constitute a finding,
recommendation or approval by the Nevada Commission or the Nevada Board as
to the accuracy or adequacy of the prospectus or the investment merits of
the securities.  Any representation to the contrary is unlawful.

    Changes in control of the Company through merger, consolidation, stock
or asset acquisitions, management or consulting agreements, or any act or
conduct by a person whereby he obtains control, may not occur without the
prior approval of the Nevada Commission.  Entities seeking to acquire
control of a Registered Corporation must satisfy the Nevada Board and the
Nevada Commission in a variety of stringent standards prior to assuming
control of such Registered Corporation.  The Nevada Commission may also
require controlling stockholders, officers, directors and other persons
having a material relationship or involvement with the entity proposing to
acquire control, to be investigated and licensed as part of the approval
process relating to the transaction.

    The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate
defense tactics affecting Nevada gaming licensees, and Registered
Corporations that are affiliated with those operations, may be injurious to
stable and productive corporate gaming.  The Nevada Commission has
established a regulatory scheme to ameliorate the potentially adverse
effects of these business practices upon Nevada's gaming industry and to
further Nevada's policy to:  (i) assure the financial stability of corporate
gaming operators and their affiliates; (ii) preserve the beneficial aspects
of conducting business in the corporate form; and (iii) promote a neutral
environment for the orderly governance of corporate affairs.  Approvals are,
in certain circumstances, required from the Nevada Commission before the
Company can make exceptional repurchases of voting securities above the
current market price thereof and before a corporate acquisition opposed by
management can be consummated.  The Nevada Act also requires prior approval
of a plan of recapitalization proposed by the Company's Board of Directors
in response to a tender offer made directly to the Registered Corporation's
stockholders for the purposes of acquiring control of the Registered
Corporation.

    License fees and taxes, computed in various ways depending upon the type
of gaming or activity involved, are payable to the State of Nevada and to
the local jurisdictions.  Depending upon the particular fee or tax involved,
these fees and taxes are payable either monthly, quarterly or annually and
are based upon any of:  (i) a percentage of the gross revenues received;
(ii) the number of gaming devices operated; or (iii) the number of table
games operated.  Nevada licensees that hold a license as an operator of a
slot route, or a manufacturer's or distributor's license, also pay certain
fees and taxes to the State of Nevada.

    Any person who is licensed, required to be licensed, registered,
required to be registered, or is under common control with such persons
(collectively, "Licensees"), and who proposes to become involved in a gaming
venture outside of Nevada is required to deposit with the Nevada Board, and
thereafter maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation of the Nevada Board of their participation in such
foreign gaming.  The revolving fund is subject to increase or decrease in
the discretion of the Nevada Commission.  Thereafter, Licensees are required
to comply with certain reporting requirements imposed by the Nevada Act.
Licensees are also subject to disciplinary action by the Nevada Commission
if they knowingly violate any laws of the foreign jurisdiction pertaining to
the foreign gaming operation, fail to conduct the foreign gaming operation
in accordance with the standards of honesty and integrity required of Nevada
gaming operations, engage in activities that are harmful to the State of
Nevada or its ability to collect gaming taxes and fees, or employ a person
in the foreign operation who has been denied a license or finding of
suitability in Nevada on the ground of personal unsuitability.

    Federal Regulation

    The Federal Gambling Devices Act of 1962 (the "Federal Act") makes it
unlawful, in general, for a person to manufacture, deliver, or receive
gaming machines, gaming machine type devices, and components thereof across
interstate lines or to operate gaming machines unless that person has first
registered with the Attorney General of the United States.  The Company's
subsidiaries have so registered and must renew their registration annually.
In addition, various record keeping and equipment identification
requirements are imposed by the Federal Act.  Violation of the Federal Act
may result in seizure and forfeiture of equipment, as well as other
penalties.

Item 2.  Properties
         __________

    Jackpot's corporate headquarters and  Route Operations are currently
located in Las Vegas, Nevada with approximately 34,000 square feet of
office, warehouse and shop space under a lease which expires in 2006.  In
connection with the sale of its  Route Operations, the purchaser must enter
into an assumption of the leased property in Las Vegas, Nevada.  Jackpot
also conducts certain corporate affairs in offices in New York, New York
with approximately 8,500  square feet under a lease which expires in 2010,
and in Dallas, Texas under a month-to-month lease.  Upon the closing of the
sale of the  Route Operations, all corporate functions which are presently
performed in Las Vegas will be transferred to offices in New York and
Dallas.  Jackpot believes its properties are adequate and suitable for its
purposes.

Item 3.  Legal Proceedings
         _________________

    For information concerning the settlement of a legal matter with
Albertson's, Inc. and the status of the dispute with Rite Aid Corporation,
see Note 11 of Notes to Consolidated Financial Statements in this Form 10-K.

Item 4.  Submission of Matters to a Vote of Security Holders
         ___________________________________________________

    Not applicable.

Item 4A. Executive Officers of the Registrant
         ____________________________________

                                                               Year Became an
    Name          Age      Position                           Executive Officer
________________  ___ _____________________________________   _________________

Allan R. Tessler  63  Chief Executive Officer                       2000
                      and Chairman of the Board

Mark W. Hobbs     44  President and Chief Operating Officer         2000

Steven L. Korby   54  Executive Vice President and Chief            2000
                      Financial Officer

George Congdon    51  Senior Vice President - Operations            1995

Bob Torkar        49  Senior Vice President - Finance,              1991
                      Treasurer and Chief Accounting Officer

    Allan R. Tessler has served as Chief Executive Officer and Chairman of
the Board since March 2000 and May 1994, respectively, and has been a
director of Jackpot since 1980.  Mr. Tessler also served as Secretary of
Jackpot from 1980 through August 1993.  He has been Chairman and Chief
Executive Officer of International Financial Group, Inc., an international
merchant banking firm, since 1987.  He was Co-Chairman and Co-Chief
Executive Officer of Data Broadcasting Corporation, a securities market data
supplier, from June 1992 through February 2000.  Mr. Tessler has been
Chairman of the Board of Enhance Financial Services, Inc., an insurance
holding company, since 1986, and was Chairman of the Board of Great Dane
Holdings Inc., a diversified holding company, from 1987 through December
1996.  He is also a director of The Limited, Inc., Allis-Chalmers
Corporation and Marketwatch.com, Inc.

    Mark W. Hobbs joined Jackpot as President and Chief Operating Officer
in June 2000.  From 1995 through his appointment to Jackpot, Mr. Hobbs
was a partner in Mariner Investment Group, a private money management and
hedge fund operation that had approximately $500 million under management.
Prior to Mariner, Mr. Hobbs was involved in private investing and financial
consulting from 1991 to 1995.  From 1982 to 1991, Mr. Hobbs was President of
Rosewood Financial, Inc., a private investment management company.

    Steven L. Korby was appointed Executive Vice President and Chief
Financial Officer in June 2000.  From April 1999 through his appointment
with Jackpot, Mr. Korby was engaged in a private investment and consulting
business.  From February 1998 through March 1999, Mr. Korby was Executive
Vice President and Chief Financial Officer of The Cerplex Group, Inc., a
provider of repair and logistics services, and spare parts sourcing and
service management for manufacturers of computer, communications and
electronic office equipment. From 1995 through 1997, Mr. Korby was Executive
Vice President and Chief Financial Officer of Greyhound Lines, Inc., a
nationwide intercity bus company.  Prior to that and from 1983, Mr. Korby
was Executive Vice President and Chief Financial Officer of Neodata
Corporation and its predecessors, a direct marketing services company.

    George Congdon was appointed Senior Vice President - Operations of
Jackpot on May 11, 1995.  From October 1990 to May 1995, Mr. Congdon held
various management positions with certain of Jackpot's subsidiaries,
including Vice President of Route Operations and Senior Vice President of
Operations.  Prior to October 1990, Mr. Congdon was employed for over
sixteen years in various operating positions by Bally Manufacturing, Inc.
and Bally Distributing, Inc., gaming machine manufacturers and distributors.

    Bob Torkar was appointed Vice President - Finance, Treasurer and Chief
Accounting Officer of Jackpot on July 1, 1991 and Senior Vice President on
October 15, 1993.  From February 1991 to June 1991, Mr. Torkar was a
financial consultant to Jackpot.  Prior to the consulting assignment with
Jackpot, Mr. Torkar was Vice President and Chief Financial Officer with
Furnishings 2000, Inc., a publicly traded retail furnishings company in San
Diego, California, having spent seven years (1983-1990) with such
corporation.

                                    PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters
         _____________________________________________________________________

    Jackpot's common stock, par value $.01 per share (the "Common Stock"),
is listed on the New York Stock Exchange (NYSE) under the trading symbol
"J".  The following table sets forth the range of high and low prices for
shares of the Common Stock for the fiscal quarters indicated, as furnished
by the NYSE.  No cash dividends were paid during those fiscal quarters.
Future payment of quarterly cash dividends, if any, is subject to periodic
review and reconsideration by Jackpot's Board of Directors.

                             JACKPOT COMMON STOCK
__________________________________________________________________________

                              High           Low
__________________________________________________________________________

Fiscal 1999
  First Quarter              $12.56        $ 9.38
  Second Quarter              11.50          9.13
  Third Quarter                9.63          7.63
  Fourth Quarter               9.00          7.50

__________________________________________________________________________

Fiscal 2000
  First Quarter              $10.00        $ 7.63
  Second Quarter              10.25          7.75
  Third Quarter               21.50          7.88
  Fourth Quarter              16.50         10.19
__________________________________________________________________________

    As of September 15, 2000 there were 1,330 holders of record of Common
Stock.  The number of holders of record of Jackpot's Common Stock on
September 15, 2000 was computed by a count of record holders.

Item 6.  Selected Financial Data
         _______________________

    On July 8, 2000, the Company entered into a definitive agreement
to sell its  Route Operations.  As a result of the sale, which is
subject to closing conditions and regulatory and other approvals, the
financial position and results of operations of the  Route Operations
have been reported as discontinued operations.  The following
information has been derived from Jackpot's consolidated financial
statements.  In accordance with accounting principles generally accepted
in the United States of America applicable to discontinued operations,
certain data in the table below has been reclassified to reflect the
Route Operations as discontinued.

                                             Years Ended June 30,
                                ___________________________________________

                                2000       1999      1998     1997     1996
                                ____       ____      ____     ____     ____

                     (Dollars and shares in thousands, except per share data)

OPERATING DATA:

Income (loss) from
  continuing operations (1) $  6,295 (2) $  (978) $  (194) $  (764) $(1,178)
___________________________________________________________________________
Income from discontinued
  operations                $    346     $ 5,581  $ 7,407  $ 8,608  $ 7,033
___________________________________________________________________________
Net income                  $  6,641     $ 4,603  $ 7,213  $ 7,844    5,855
___________________________________________________________________________
Basic earnings (loss)
  per share from continuing
  operations(3)             $    .73 (2) $  (.11) $  (.02) $  (.08) $  (.13)
___________________________________________________________________________
Diluted earnings (loss)
  per share from continuing
  operations (3)            $    .71 (2) $  (.11) $  (.02) $  (.08) $  (.13)
___________________________________________________________________________
Dividends declared per
  share                     $      -     $     -  $     -  $   .16  $   .32
___________________________________________________________________________
Average common  shares
  outstanding                  8,674       8,641    8,991    9,237    9,307
___________________________________________________________________________
Average common shares and
  common share equivalents
  outstanding                  8,987       8,641    8,991    9,237    9,307
___________________________________________________________________________
BALANCE SHEET DATA
(at end of period):

Cash and cash equivalents   $ 60,090     $44,137  $46,775  $44,445  $35,524
___________________________________________________________________________
Total assets                $104,735     $77,721  $72,506  $70,116  $64,693
___________________________________________________________________________
Long-term debt              $ 12,750     $     -  $     -  $     -  $     -
___________________________________________________________________________
Stockholders' equity        $ 87,910     $74,614  $70,871  $67,281  $63,495
___________________________________________________________________________


    (1)  For the periods presented above, Route Operations, which was
         Jackpot's only business segment through February 2000, generated
         100% of the Company's revenues.  The Company's Internet-Related
         Businesses segment, which the Company began operating in March
         2000, did not generate any operating revenues in fiscal 2000.

    (2)  Includes a net fee from a terminated merger of $11,116.

    (3)  In February 1997, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 128, "Earnings per
         Share", which became effective for periods ending after December
         15, 1997.  All prior-period earnings per share data presented has
         been restated to conform to the provisions of such statement.

Item 7.  Management's Discussion and Analysis of Financial Condition and
         _______________________________________________________________
         Results of Operations
         _____________________

Forward-looking statements; Risks and Uncertainties
___________________________________________________

    Certain information included in this Form 10-K and other
materials filed or to be filed by the Company with the Securities and
Exchange Commission contains statements that may be considered forward-
looking.  All statements other than statements of historical
information provided herein may be deemed to be forward-looking
statements.  Without limiting the foregoing, the words "believes",
"anticipates", "plans", "expects", "should" and similar expressions are
intended to identify forward-looking statements.  In addition, from
time to time, the Company may release or publish forward-looking
statements relating to such matters as anticipated financial
performance, business prospects, technological developments and similar
matters. The Private Securities Litigation Reform Act of 1995 provides
a safe harbor for forward-looking statements.  In order to comply with
the terms of the safe harbor, the Company notes that a variety of
factors could cause the Company's actual results and experience to
differ materially from the anticipated results or other expectations
expressed in the Company's forward-looking statements.

     The risks and uncertainties that may affect the operations, performance,
development and results of the Company's Internet-Related Businesses
include, but are not limited to, the ability of the Company to identify
and negotiate on terms acceptable to the Company  an acquisition of a
systems development or other internet infrastructure company and the
ability to successfully integrate and grow such business if acquired,
the success of those entities in which the Company has invested, the
ability of those entities, in which the Company has existing minority
investments, to raise additional capital on terms that such entities
find attractive to themselves and to the Company or to otherwise
monetize their securities, and the ability of the Company to raise
additional outside capital for J Net Ventures I, LLC or for any future
funds to be established.

     The risks and uncertainties that may affect the operations, performance,
development and results of the Company's discontinued Route Operations
include, but are not limited to, competitive pressures, the loss or
nonrenewal of any of Jackpot's significant contracts, the consolidation or
disposition of selected locations as a result of the merger of
Albertson's, Inc. and American Stores Company (each of which was a
significant customer of the Company during the past three fiscal
years), conditioning or suspension of any gaming license, unfavorable
changes in gaming regulations, certain approvals from the Nevada Gaming
Commission of the amendments to the Rite Aid agreements, possible
future financial difficulties of any significant customer and the
continued growth of the gaming industry and population in Nevada.
Readers are cautioned not to place undue reliance on any forward-looking
statements, which speak only as of the date thereof.  The Company assumes
no obligation to update or supplement forward-looking statements as a result
of new circumstances or subsequent events.

Overview
________

    On March 8, 2000, Jackpot Enterprises, Inc. ("Jackpot" or the
"Company"), which has operated as one business segment since it was
organized in 1980, announced a series of actions designed to transform
the Company from a gaming entity into a high growth, technology,
Internet infrastructure provider and fund manager ("Internet-Related
Businesses").  On March 10, 2000, the Company formed J Net Ventures I,
LLC ("Venture I"), an entity that will invest primarily in Internet-
Related Businesses.  As of June 30, 2000, the Company owned 100% of
Venture I. Venture I is managed by J Net Venture Partners, LLC (the
"Manager").  Allan R. Tessler, the Company's Chief Executive Officer is
the Chairman of the Manager and Keith Meister and Todd Meister are Co-
Presidents of the Manager.  The Company will at all times own at least
51% of the Manager.  In addition, the Board of Directors has
unanimously adopted a resolution to change the name of the Company to J
Net Enterprises, Inc.  Such change is subject to the approval of the
Company's stockholders.

    Management anticipates that Venture I will be an $80 million fund.
Of the $80 million, entities associated with Gilbert Global Entities
have committed $15 million.  The remaining $10 million will be funded
by certain other investors, subject to the completion of the agreement
between such investors and Venture I.  A portion of the $55 million was
derived from the sale of certain convertible subordinated notes (the "Notes").
The investors in such Notes include officers and directors of the
Company or entities controlled by such directors and the Co-Presidents
of the Manager.  As of September 26, 2000, the Company has raised
approximately $24 million through the issuance of the Notes.  The
receipt of the remaining $4 million is subject to the completion of
subscription agreements between the Company and certain other
investors.  For financial statement purposes, the Notes were deemed to
have been beneficially converted as the conversion feature was in-the-
money at the commitment date.  Approximately $3.8 million of the proceeds
from the issuance of the Notes, equal to the intrinsic value, will be recorded
as debt discount and allocated to additional paid-in capital.  Of the $3.8
million, $2.5 million was recorded on June 28, 2000, and the remaining $1.3
million will be recorded in the quarter ending September 30, 2000.  Because
the debt is not convertible until June 1, 2001, the debt discount is amortized
to interest expense from the date of issuance of the Notes through June 1,
2001 using the interest method.  As a result of the issuance of the notes,
interest expense for the year ending June 30, 2001 will increase substantially.
For further information concerning the convertible subordinated notes, see
Note 2 of Notes to Consolidated Financial Statements.

    Venture I will make investments primarily in early stage ventures
(first and second round financing) exhibiting reasonable risk adjusted
valuations.  Additionally, Venture I may invest in public companies
when an opportunity exists for value creation.  It is anticipated that
individual investments will range from $1 million to $10 million and
will consist of the following:  (1) New companies primarily in the
business-to-business segment; (2) Established "brick and mortar"
companies who have established brand identities but have not yet
developed, deployed or migrated their businesses to the Internet; (3)
Technology and infrastructure opportunities which capitalize on the
growth of Internet traffic and the proliferation of Internet ready
devices; (4) Broadband technologies and related content driven
opportunities; and (5) Opportunistic turn-around situations.  As of
September 26, 2000, the Company had invested approximately $33 million
in Internet-Related Businesses.  Of the $33 million, the Company
invested approximately $17 million on behalf of Venture I .

    Prior to the Company's change in business strategy, the Company
had been actively engaged, through its subsidiaries, in the gaming
industry for over 30 years.  The Company is one of the largest gaming
machine route operators in the State of Nevada, and is an established
leader in the operation of gaming machines in multiple retail locations
("Route Operations"). In connection with its change in business
strategy, the Company has retained the investment banking firm of
Koffler & Company to advise the Company on the disposition of its
gaming business segment.  During the quarter ended June 30, 2000,
management formalized its plan to sell the Route Operations and
commenced activities to dispose of such operations.  On July 8, 2000,
the Company entered into a definitive agreement to sell its  Route
Operations for $45 million in cash.  As a result of the sale, which is
subject to closing conditions and regulatory and other approvals, the
financial position and results of operations of the  Route Operations
have been reported as discontinued operations.  In accordance with
accounting principles generally accepted in the United States of
America applicable to discontinued operations, previously reported
financial statements have been reclassified to reflect the Route
Operations as discontinued.  The Company expects to complete the
closing of the sale during the quarter ending December 31, 2000.

    At various times during the past several years, the Company
engaged in the active consideration of potential acquisitions and
expansion opportunities in both the gaming and nongaming markets,
including most recently in 1999 in connection with the potential
acquisition of Players International, Inc. ("Players") and CRC
Holdings, Inc. d/b/a Carnival Resorts & Casinos ("CRC"), a privately
owned company.  The Company devoted significant management and other
resources to these efforts and incurred substantial expenses in
connection with such activities.  The discussion that follows is based
on giving retroactive effect to the discontinued operations.  Since the
Route Operations was the Company's only business segment from its
inception through February 2000, the following discussion focuses
primarily on Jackpot's continuing operations, which consisted primarily
of the activities of the parent company for the periods discussed in
this report.

Results of Operations
_____________________

    Special Factors Affecting Discontinued Operations:

    Albertson's-Raley's litigation.  In August 1998, Albertson's,
    _______________________________
Inc. ("Albertson's," a retail chain in which Jackpot conducts gaming
operations) and American Stores Company ("American Stores") entered
into a merger agreement that provided for the acquisition of American
Stores by Albertson's.  Approximately 51%, 57% and 55% of revenues
generated by discontinued operations for the fiscal years ended June
30, 2000, 1999 and 1998 (referred to herein as "2000", "1999" and
"1998", respectively) were generated at the locations of those two
entities.  The merger of Albertson's and American Stores was completed
on June 23, 1999.  As a condition to avoiding and/or settling legal
proceedings against the merger by the Federal Trade Commission and the
Attorneys General of California, Nevada and New Mexico, Albertson's
agreed to divest certain of its stores, including 19 stores in southern
Nevada, fifteen of which were Jackpot locations.   In late September
and early October 1999, Albertson's sold those locations to Raley's,
Inc. ("Raley's"), and Raley's has operated them since.

    On August 30, 1999, Jackpot commenced litigation in United States
District Court for the District of Nevada against Albertson's and
Raley's to enforce its rights to remain in the fifteen locations under
its agreement with Albertson's. On September 14, 1999, Jackpot obtained
a preliminary injunction to prevent Albertson's and Raley's from
interfering with its right to occupy the subject premises and conduct
gaming operations.  Albertson's and Raley's appealed the injunction and
made motions for summary judgment.

    In connection with Raley's acquisition of the locations, United
Coin Machine Company ("United Coin"), the slot route operator for
Raley's northern Nevada stores, filed applications with the Nevada
Gaming Control Board to operate the gaming machines at the fifteen
stores.  On September 23, 1999, United Coin commenced an action in
Nevada state court against Jackpot, Albertson's, Raley's and Anchor
Coin ("Anchor"), the slot route operator at the four other Albertson's
southern Nevada locations seeking declaratory and injunctive relief and
money damages.

    On January 26, 2000, Jackpot entered into a Settlement Agreement
and Release (the "Settlement Agreement") with Albertson's, Raley's,
Anchor and United Coin.  Pursuant to the terms of the Settlement
Agreement, the parties agreed to dismiss with prejudice all litigation
pending among them and to the takeover of gaming operations by United
Coin of the 19 stores in southern Nevada, effective February 1, 2000.
Of the 19 stores in southern Nevada operated by Raley's, Jackpot had
operated 246 gaming machines at 15 locations pursuant to its long-term
agreement with Albertson's.  These 15 locations generated approximately
16% of revenues, and a significantly greater percentage of operating
income of discontinued operations in 1999.  Jackpot believed it was in
its best interest to settle the case and thereby preserve and solidify
its long-term relationship with Albertson's, its largest customer,
pursuant to the terms of an amendment to its agreement with
Albertson's, which it had theretofore arranged and which is described
below.  It was also important to Jackpot to avoid further litigation
and fully resolve all claims among and between the parties.  All costs
incurred in connection with the litigation and settlement, including
legal and settlement costs aggregating approximately $950,000, were
recorded in 2000, and are included in the line captioned income from
discontinued operations in the accompanying consolidated statements of
income.

    Settlement agreement with Albertson's.  Prior to the settlement
    ______________________________________
described above, on November 18, 1999, Jackpot and Albertson's had
entered into a settlement agreement (the "Agreement").  The Agreement
amended the license agreement entered in September 1998 between Jackpot
and Albertson's (the "Albertson's Agreement").  The Agreement also
terminated Jackpot's separate license agreements with Lucky Stores,
Inc. and American Drug Stores, Inc.  and incorporates Jackpot's
exclusive rights in Nevada to operate gaming devices at the locations
(including any future locations) of those entities into the Albertson's
Agreement, as amended by the Agreement.  Under the Agreement, Jackpot
has the exclusive option to extend the agreements beyond their initial
terms and will continue to have exclusive gaming rights for new
Albertson's locations.  In addition, Albertson's granted Jackpot
exclusive gaming rights in all drug stores opened by Albertson's or any
of its affiliates in Nevada, and in future fuel center locations, a new
retailing concept that Albertson's will open, in which gaming may be
offered to customers.  Further, pursuant to the terms of the Agreement,
Jackpot received certain immediate credits toward license fees, and
will receive substantial reductions in certain license fees, which are
effective from February 1, 2000 through the initial term of the
Agreement.  Based upon the amended terms and certain assumptions,
management believes that the estimated cost savings over the initial
term of the Agreement will approximate $18 million.

    The Rite Aid dispute.  On December 8, 1999, certain Route
    _____________________
Operations subsidiaries of Jackpot commenced litigation in the United
States District Court for the District of Nevada against Rite Aid
Corporation ("Rite Aid"). The lawsuit is an action for rescission of
two license agreements between those subsidiaries and Rite Aid and for
damages based upon Rite Aid's alleged fraud.  Operations of said
subsidiaries under said agreements resulted in an operating loss of
approximately $3.4 million in 2000.

    On March 27, 2000, Jackpot entered into amendments to the two
license agreements with Rite Aid.  Based on the number of existing
locations at which Jackpot currently operates gaming machines, license
fees payable to Rite Aid have been reduced by approximately $2.5
million annually over the remaining term of the amended agreements. The
amendments are subject to certain administrative approvals from the
Nevada State Gaming Control Board ("Nevada Board") for 31 Rite Aid
locations. The Company has recently received verbal approval from the
Nevada Board for 25 Rite Aid locations, and management expects to
receive verbal approval for the remaining 6 stores shortly.  Based upon
verbal approval of the majority of the Company's Rite Aid locations,
management anticipates that the Company will receive the administrative
approvals from the Nevada Board for the 31 Rite Aid locations in
October 2000.  Upon the receipt of the administrative approvals, the
amendments will become effective.  Based upon management's belief that
such approval will be received shortly, the Company has recorded the
license fees at their reduced rates, effective March 1, 2000.

    Further, upon such approval, all disputes between the parties,
including Jackpot's lawsuit against Rite Aid, will be resolved or
settled.  On April 26, 2000, the Court ordered that all scheduling
deadlines previously set in the case were stayed pending the filing of
a Stipulation and Order of Dismissal by the parties.  Further, because
the amended agreements are conditioned upon certain administrative
approvals by the Nevada Board, the parties were permitted to file the
Stipulation for Dismissal by September 15, 2000, which has been
extended to October 16, 2000.

    Based upon the reduction in license fees described above, the
Company's operating losses at the Rite Aid locations should decrease
substantially. However, even with the license fee reductions,
management believes that the Company will continue to incur losses, and
such losses may be significant, unless revenues increase significantly
at these locations.

2000 compared to 1999
_____________________

    Revenues:

    The Company had no revenues from continuing operations in 2000
and 1999.

    Costs and expenses:

    Costs and expenses of Jackpot's continuing operations, which
consisted principally of parent company general and administrative
activities, increased $3.3 million, from $3.4 million in 1999 to $6.7
million in 2000.  The increase of $3.3 million was due primarily to
$2.8 million of severance costs paid to the former Chief Executive
Officer.

    Other income (expense):

    Other income, net increased $14.1 million, from $1.3 million in
1999 to $15.4 million in 2000.  The increase of $14.1 million was due
principally to the net fee from the terminated merger of $11.1 million
and the gain on the sale of the Players common stock of $2.4 million.

    Federal income tax:

    The effective tax rate for 2000 and 1999 was 28.1% and 28%,
respectively.  These rates were lower than the Federal Statutory rate
of 35% principally because of the tax benefits realized from tax-exempt
interest income.

    Net income (loss) from continuing operations:

    Net income from continuing operations increased $7.3 million,
from a net loss of $1.0 million in 1999 to net income of $6.3 million
in 2000.  Diluted earnings (loss) per share from continuing operations
for 2000 was $.71 per share versus ($.11) per share for 1999.  Such
increases were due principally to the increase in other income relating
to the net fee from the terminated merger and the gain on the sale of
the Players common stock.

    Income from discontinued operations, net of tax:

    Income from discontinued operations, net of tax, decreased $5.3
million, from $5.6 million in 1999 to $.3 million in 2000.  Such
decrease was due principally to three factors:  (1) a significant
decline in income generated at 15 former Albertson's locations in
southern Nevada, which have been operated by Raley's since late
September and early October 1999.  Such decline was due primarily to
(i) significantly lower revenues generated at these locations and (ii)
the loss of such locations on February 1, 2000, (2) an operating loss
of approximately $3.4 million in 2000 incurred at the locations of Rite
Aid, a large customer, resulting from the failure of 12 new locations
to achieve expected revenues, as well as from a decrease in revenues at
existing locations of such customer, and (3) legal and settlement costs
incurred in connection with Jackpot's litigation against Albertson's
and Raley's.

    Net income:

    Net income increased $2.0 million, from $4.6 million in 1999 to
$6.6 million in 2000.  Diluted earnings per share for 2000 was $.75 per
share versus $.53 per share in 1999.  Such increases were due primarily
to the combination of significant items described above.

1999 compared to 1998
_____________________

    Revenues:

    The Company had no revenues from continuing operations in 1999
and 1998.

    Costs and expenses:

    Costs and expenses of Jackpot's continuing operations, which
consisted principally of parent company general and administrative
activities, increased $.6 million, from $2.8 million in 1998 to $3.4
million in 1999.  The increase was due principally to the termination
of the CRC merger agreement in 1999.  As a result of the termination of
the CRC merger agreement, capitalized costs of $.9 million incurred in
connection with the proposed acquisition of CRC were expensed.

    Other income (expense):

    Other income, net decreased $.1 million, from $1.4 million in
1998 to $1.3 million in 1999.  The decrease of $.1 million was due
primarily to a decrease in interest income.

    Federal income tax:

    The effective tax rate for 1999 and 1998 was 28% and 27%,
respectively.  These rates were lower than the Federal Statutory rate
of 35% primarily because of the tax benefits realized from tax-exempt
interest income.

    Net loss from continuing operations:

    Net loss from continuing operations increased $.8 million, from
$.2 million in 1998 to $1.0 million in 1999.  Basic and diluted loss
per share from continuing operations for 1999 was $.11 versus $.02 for
1998.  Such increases were due principally to the charge associated
with the termination of the CRC merger agreement.

    Income from discontinued operations, net of tax:

    Income from discontinued operations, net of tax, decreased $1.8
million, from $7.4 million in 1998 to $5.6 million in 1999.  Such
decrease was due principally to the following:  (1) A charge of $1.2
million in 1999 in connection with the closing of the Owl Club Casino
in Battle Mountain, Nevada, (2) An increase of $.5 million in
amortization expense, (3) A decrease of $.4 million in the Route
Operations margin, from $16.4 million in 1998 to $16.0 million in 1999,
and (4) A decrease in other income of $.4 million in 1999.

    Net income:

    Principally as a result of the Owl Club Casino and the CRC
charges, net income and diluted earnings per share in 1999 decreased to
$4.6 million and $.53 per share, respectively, from $7.2 million and
$.80 per share in 1998.

Capital Resources and Liquidity
_______________________________

    Liquidity:

    On October 29, 1996, Jackpot's Board of Directors authorized
management to repurchase up to 500,000 shares of Jackpot's common stock
at prevailing market prices.  Subsequently, on January 22, 1998, such
authorization was increased from 500,000 to 1,000,000 shares.  From
October 29, 1996 through August 31, 2000, Jackpot has repurchased
800,437 shares at an aggregate cost of approximately $8.5 million.

    On August 16, 1999, Jackpot received a notice from Players
terminating the Agreement and Plan of Merger dated February 8, 1999
(the "Players Agreement").  Such notice contained the terms of a merger
offer for Players from Harrah's Entertainment, Inc.  On August 19,
1999, pursuant to the terms of the Players Agreement, Jackpot received
a break-up fee of $13.5 million.  As a result of the termination of the
Players Agreement, capitalized costs of $2.4 million incurred in
connection with the proposed acquisition of Players were expensed
resulting in a net break-up fee of $11.1 million.

    During 2000, Jackpot sold 1,014,400 shares of Players common
stock for $8.5 million.  As a result of the sale of such shares, which
were purchased on March 10, 1999 at a cost of $6.1 million, Jackpot
realized a gain of $2.4 million.

    As described previously, the Company has recently raised
approximately $23 million through the issuance of unregistered
convertible subordinated notes, and expects to raise an additional $5
million.  Subject to the successful completion of such financing
discussed above, management believes the Company's working capital will
be sufficient to enable Jackpot to fund its $55 million commitment to
Venture I, and to meet its operating and other cash requirements for
the year ending June 30, 2001.

    Cash Flows:

    Jackpot's principal source of cash for 2000, 1999 and 1998 was
the net cash provided by discontinued operations.  In addition, the
break-up fee of $13.5 million from a terminated merger with Players and
proceeds of $14.2 million received in June 2000 from the issuance of
convertible subordinated notes provided other significant sources of
cash.

    Net cash provided by investing activities of continuing
operations in 2000 was $1.2 million. Such inflow resulted primarily
from the receipt of the break-up fee from the terminated merger with
Players and the proceeds from the sale of Players stock described below
less cash used of $19.1 million for investments in Internet-Related
Businesses.  From March 2000 through June 30, 2000, the Company
directly and on behalf of Venture I invested $25.8 million in
Internet-Related Businesses.  Such outflows consisted of $19.1 million
in cash and $6.7 million of non-cash consideration, primarily in the form
of the Company's common stock.

    Net cash provided by financing activities in 2000 was $14.8
million, and consisted of net  proceeds received from the issuance of
unregistered convertible subordinated notes and common stock upon the
exercise of stock options of approximately $14.2 million and $.6
million, respectively.

    As a result of the combination of net cash provided by operating
activities, investing  activities and financing activities of $.9
million, $.2 million and $14.8 million, respectively, cash and cash
equivalents increased $15.9 million in 2000.

    Net cash provided by operating activities in 1999 and 1998
consisted principally of net cash provided by discontinued operations
of $11.0 million and $13.2 million, respectively.  Such proceeds were
used to fund all investing and financing activities in 1999 and 1998.

    With respect to 1999, net cash used in investing activities of
continuing operations was $7.7 million, and resulted primarily from the
purchase of marketable securities of $6.1 million.

    Net cash used in financing activities in 1999 was $1.6 million,
and resulted from payments for repurchases of common stock of $1.7
million, net of proceeds received of approximately $.1 million from the
issuance of common stock upon the exercise of stock options.

    As a result of the combination of net cash provided by operating
activities of $11.0 million less net cash used in investing and
financing activities of $12.0 million and $1.6 million, respectively,
cash and cash equivalents decreased $2.6 million in 1999.

    Net cash used in financing activities in 1998 was $3.6 million,
and resulted from payments for repurchases of common stock of $4.0
million, net of proceeds received of approximately $.4 million from the
issuance of common stock upon the exercise of stock options.

    As a result of the combination of net cash provided by operating
activities of $11.8 million less net cash used in investing activities
of discontinued operations and financing activities of $5.9 million and
$3.6 million, respectively, cash and cash equivalents increased $2.3
million in 1998.

    Recently Issued Accounting Standards:

    In April 1998, the American Institute of Certified Public
Accountants' Accounting Standards Executive Committee issued Statement
of Position No. 98-5, "Reporting on the Costs of Start-Up Activities".
This standard provides guidance on the financial reporting for start-up
costs and organization costs.  This standard requires costs of start-up
activities and organization costs to be expensed as incurred.  The
Company adopted this standard on July 1, 1999.  This statement did not
have any effect on Jackpot's results of operations or its financial
position.

    In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS 133"), as
amended, which is effective for fiscal years beginning after June 15,
2000.  SFAS 133 establishes additional accounting and reporting
standards for derivative instruments and hedging activities.  SFAS 133
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position.  This statement also
defines and allows companies to apply hedge accounting to its designated
derivatives under certain instances.  It also requires that all derivatives be
marked to market on an ongoing basis.  This applies whether the derivatives
are stand-alone instruments, such as warrants or interest rate swaps, or
embedded derivatives, such as call options contained in convertible debt
investments.  Along with the derivatives, in the case of qualifying hedges,
the underlying hedged items are also to be marked to market.  These market
value adjustments are to be included either in the income statement or other
comprehensive income, depending on the nature of the hedged transaction.
The fair value of financial instruments is generally determined by reference to
market values resulting from trading on a national securities exchange or
in an over the counter market.  In cases where derivatives relate to financial
instruments of non public companies, or where quoted market prices are otherwise
not available, such as for derivative financial instruments, fair value is based
on estimates using present value or other valuation techniques.  The Company
will adopt the standard in the quarter ending September 30, 2000 and will record
its derivatives on July 1, 2000 at fair market value.  In addition, any
increase or decrease from historical cost basis of its derivatives on that date
will be recorded as a cumulative effect of a change in accounting principle in
the first quarter ending September 30, 2000.

    Based on management's review, the Company expects the most significant
impact of this standard will be the cumulative effect adjustment as well as
ongoing marked to market adjustments related to the warrants that it received
to purchase TechTrader, Inc. common stock in connection with the Company's
purchase of Series B Preferred Stock.  The value of these warrants can
fluctuate given that TechTrader is a non public company.  At June 30, 2000, the
estimated value of the warrants was approximately $1.6 million.  Under SFAS 133,
the warrants will be revalued each quarter and the change in value of the
warrants will be included in the consolidated statement of income.  Under
current accounting principles, the change in value of these warrants is not
recorded.  The cumulative effect of the adoption of SFAS 133 will be
approximately $15,000.

    In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101").  SAB 101 clarifies existing accounting
principles related to revenue recognition in financial statements.  The
Company is required to comply with the provisions of SAB 101 in its
quarter ending June 30, 2001.  Based upon the current nature of the
Company's continuing operations, management does not believe that SAB
101 will have a significant impact on the Company's results of
operations.

    In March 2000, the FASB issued FASB Interpretation 44 "Accounting
for Certain Transactions involving Stock Compensation" ("FIN 44"),
which provides clarification on the application of Accounting
Principles Board Opinion No. 25 Accounting for Stock Issued to
Employees.  The Company is required to comply with the provisions of
FIN 44 beginning July 1, 2000.  Based upon management's review, the
Company does not expect that the application will have a material
effect on the Company's results of operations.

Factors Which May Affect Future Results
_______________________________________

    With its change in business strategy, the Company will be
operating in a significantly different environment that involves a
number of risks and uncertainties.  Some factors including, but not
limited to the following, may affect the Company's future results of
operations:  (1) the Company's ability to successfully execute its new
business model; (2) the development of the Internet and the infrastructure
that supports it; (3) the Company's success may depend greatly on increased
use of the Internet by businesses and individuals; (4) the ability of
the Company's investees to compete against direct and indirect
competitors; (5) the Company's ability to acquire interests in
additional Internet-Related Businesses, (6) the ability of the Company's
investees to raise additional capital, and (7) changes in the market
for securities of Internet-Related Businesses in general and for
initial public offerings of Internet companies in particular.

     By their very nature, the entities in which the Company has and will
be investing capital will be in an earlier stage of development and maturity,
and therefore a different level of risk and reward.  All of the Company's
investments in Internet-Related Businesses are in non public companies.
Substantially all such companies are development stage companies and are
presently incurring operating losses.  There can be no assurance that such
companies will generate operating income in the future.

Year 2000
_________

    In the past, many computer software programs were written using
two digits rather than four to define the applicable year.  As a
result, date-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000.  This situation has been referred
to as the "Year 2000 Problem".  The Company's essential systems were
Year 2000 compliant prior to December 31, 1999.  All costs related to
the Year 2000 Problem have been expensed as incurred, while the cost of
new hardware is capitalized and amortized over its expected useful
life.  As of December 31, 1999, the Company had incurred approximately
$280,000 of Year 2000 compliance costs, principally for internal costs
and system applications.  Subsequent to December 31, 1999, the Company
has not experienced any significant difficulties, or incurred any
significant costs relating to the Year 2000 Problem, and continues to
monitor its essential computer systems and other systems for potential
problems which may occur.

Item 7A.  Quantitative and Qualitative Disclosure About Market Risk
          _________________________________________________________

    The Company is generally exposed to market risk from adverse
changes in interest rates.  The Company's interest income is affected
by changes in the general level of U.S. interest rates.  Changes in
U.S. interest rates could affect interest earned on the Company's cash
equivalents, debt instruments and money market funds.  A majority of
the interest earning instruments earn a fixed rate of interest over
short periods (7-35 days).  Based upon the invested balances at June
30, 2000, a 10% drop in interest rates would reduce pretax interest
income by approximately $360,000 per year.  Therefore, the Company does
not anticipate that exposure to interest rate market risk will have a
material impact on the Company due to the nature of the Company's
investments.

    During the year ended June 30, 2000, the Company sold a total of
1,014,400 shares of common stock of Players in open market
transactions.  Such shares, which were purchased on March 10, 1999,
were acquired because the purchase price for those shares was
significantly below the per share consideration which the Company had
agreed to pay for all outstanding shares of Players pursuant to the
Agreement and Plan of Merger dated as of February 8, 1999, which
provided for the merger of Players into a wholly-owned subsidiary of
the Company.  As of June 30, 2000, Jackpot did not own any shares of
Players common stock.  For further information concerning the
termination of the  merger with Players and the sale of Players common
stock by the Company, see Note 9 of Notes to Consolidated Financial
Statements in this Form 10-K.

    Except for the purchase described above, Jackpot invests its
available cash in marketable municipal bonds and money market funds.
No trading portfolios are available for the sale of these investments.
Therefore, Item 7A disclosure is not applicable for these investments.

       In June 2000, the Company raised $15,250,000 through the issuance
of unregistered convertible subordinated notes ("the Notes").  The
principal amount of the Notes is payable on March 31, 2007 and bears
interest at 8% per annum, payable on a quarterly basis.    For
financial statement purposes, the Notes were deemed to have been
beneficially converted as the conversion feature was in-the-money at
the commitment date. The Company has calculated the beneficial
conversion feature as the difference between the fair value of the
common stock at the commitment date and the initial conversion price,
multiplied by the number of shares into which the debt is convertible.
Approximately $2,500,000 of the proceeds from issuance of the Notes,
equal to the intrinsic value, has been recorded as debt discount and
allocated to additional paid-in capital.  Management believes that the
carrying value of the Notes approximates fair value.

    Beginning July 1, 2000, with the Company's adoption of SFAS 133,
the Company expects to have one derivative instrument in the form of
warrants to purchase common stock in a non public company.  There is
currently no public market for these warrants.  However, a 10% change
in the value of the warrants based upon the Company's valuation of the
warrants using Black Scholes valuation techniques would affect earnings
by $160,000.

Item 8.  Financial Statements and Supplementary Data
         ___________________________________________

    The Financial Statements and Supplementary Data required by this
Item 8 are set forth as indicated in Item 14(a)(1)(2).

Item 9. Changes in and Disagreements with Accountants on
        ________________________________________________
        Accounting and Financial Disclosure
        ___________________________________

        Not applicable.

                                PART III

Item 10. Directors and Executive Officers of the Registrant
         __________________________________________________

Item 11. Executive Compensation
         ______________________

Item 12. Security Ownership of Certain Beneficial Owners and Management
         ______________________________________________________________

Item 13. Certain Relationships and Related Transactions
         ______________________________________________

    The information required by items 10, 11, 12 and 13 are incorporated
by reference from the 2000 Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days of the end of the
fiscal year covered by this report.

                                 PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
         ________________________________________________________________

   (a) (1) and (2)
  Consolidated Financial Statements and Schedules

            For a list of the consolidated financial statements and
            consolidated financial statement schedules filed as a part of
            this annual report on Form 10-K, see "Index to Financial
            Statements, Supplementary Data and Financial Statement
            Schedules" on page F-1.

   (a) (3)  The exhibits filed and incorporated by reference are listed in
            the index of Exhibits required by Item 601 of Regulation S-K at
            Item (c) below.

   (b)      Reports on Form 8-K

            During the last quarter of the fiscal year ended June 30, 2000,
            Jackpot filed no reports on Form 8-K.

   (c)   Exhibits

            3.1   Articles of Incorporation of the Registrant, as amended (J)
            3.2   By-laws of the Registrant, as amended (A)
            4.1   Stockholder Rights Agreement dated as of July 11, 1994
                  between the Registrant and Continental Stock Transfer &
                  Trust Company, as Rights Agent (D)
           10.1   Indemnification Agreement (Sample) (B)
           10.2   1992 Incentive and Non-qualified Stock Option Plan (C)(M)
           10.3   Employment Agreement with Don R. Kornstein (E)(M)
           10.4   License agreement with American Drug Stores, Inc. (F)
           10.5   License agreement with American Drug Stores, Inc. (F)
           10.6   License agreement with Lucky Stores, Inc. (F)
           10.7   License agreement with Kmart Corporation (G)
           10.8   License agreement with Albertson's, Inc. (G)
           10.9   License agreement with Rite Aid Corporation (H)
           10.10  License agreement with Rite Aid Corporation (H)
           10.11  Settlement Agreement with Albertson's, Inc. (J)
           10.12  First Amendment to Settlement Agreement with Albertson's,
                  Inc. (J)
           10.13  First Amendment to License Agreement between Cardivan
                  Company and Rite Aid Corporation (K)
           10.14  First Amendment to License Agreement between Corral Coin,
                  Inc. and Rite Aid Corporation (K)
           10.15  Termination and Consulting Agreement between the Registrant
                  and Don R. Kornstein (K)(M)
           10.16  Call Agreement, dated as of March 1, 2000, among Keith A.
                  Meister, Todd A. Meister and the Registrant (K)
           10.17  Put Agreement, dated as of March 1, 2000, among Keith A.
                  Meister, Todd A. Meister and the Registrant (K)
           10.18  Employment Agreement between the Registrant and George
                  Congdon (L)(M)
           10.19  Employment Agreement between the Registrant and Robert
                  Torkar (L)(M)
           10.20  Stock Purchase Agreement between E-T-T, Inc. and the
                  Registrant (L)
           10.21  J Net Ventures I, LLC Operating Agreement (L)
           10.22  Subscription Agreement and Investment Representation
                  (Sample) (L)
           10.23  Convertible Subordinated Note (Sample) (L)
           10.24  Registration Rights Agreement (Sample) (L)
           21.1   List of Registrant's subsidiaries (L)
           23.1   Consent of Deloitte & Touche LLP (L)
           27.1   Financial Data Schedule (EDGAR version only)

                  (A) Incorporated by reference to Registrant's Annual
                      Report on Form 10-K for the year ended June 30, 1989.

                  (B) Incorporated by reference to Registrant's Annual
                      Report on Form 10-K for the year ended June 30, 1991.

                  (C) Incorporated by reference to Registrant's 1992 Proxy
                      Statement.

                  (D) Incorporated by reference to Registrant's Form 8-A
                      dated July 12, 1994.

                  (E) Incorporated by reference to Registrant's Form 10-Q
                      for the quarter ended September 30, 1994.

                  (F) Incorporated by reference to Registrant's Annual
                      Report on Form 10-K for the year ended June 30, 1997.

                  (G) Incorporated by reference to Registrant's Annual
                      Report on Form 10-K for the year ended June 30, 1998.

                  (H) Incorporated by reference to Registrant's Form 10-Q
                      for the quarter ended March 31, 1999.

                  (I) Incorporated by reference to Registrant's Annual
                      Report on Form 10-K for the year ended June 30, 1999.

                  (J) Incorporated by reference to Registrant's Form 10-Q
                      for the quarter ended December 31, 1999.

                  (K) Incorporated by reference to Registrant's Form 10-Q
                      for the quarter ended March 31, 2000.

                  (L)  Included herein.

                  (M)  Management contract or compensatory plan or
                       arrangement which is separately identified in
                       accordance with Item 14(a)(3) of Form 10-K.
   (d)   Schedules

         For a list of the financial statement schedules filed as a part
         of this annual report on Form 10-K, see "Index to Financial
         Statements, Supplementary Data and Financial Statement Schedules"
         on page F-1.

                               SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


Dated:  September 28, 2000            JACKPOT ENTERPRISES, INC.
                                             (Registrant)

                                      By:   /s/ Allan R. Tessler
                                      _______________________________
                                      Allan R. Tessler
                                      Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


Signature                            Title                        Date
_________                            _____                        ____


/s/ Allan R. Tessler         Chief Executive Officer and     September 28, 2000
___________________________  Chairman of the Board
Allan R. Tessler

/s/  Steven L. Korby         Executive Vice President and    September 28, 2000
__________________________   Chief Financial Officer
Steven L. Korby              (Principal Financial Officer)

/s/ Bob Torkar               Senior Vice President-Finance,  September 28, 2000
__________________________   Treasurer and Chief Accounting
Bob Torkar                   Officer (Principal Accounting
                             Officer)

/s/ Alan J. Hirschfield      Director                        September 28, 2000
__________________________
Alan J. Hirschfield

/s/ David R. Markin          Director                        September 28, 2000
__________________________
David R. Markin

/s/ Robert L. McDonald, Sr.  Director                        September 28, 2000
__________________________
Robert L. McDonald, Sr.

               JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
            INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA
                    AND FINANCIAL STATEMENT SCHEDULES
                           [ITEMS 8 AND 14(a)]


(1)  FINANCIAL STATEMENTS:

     Independent Auditors' Report

     Consolidated Balance Sheets
       June 30, 2000 and 1999

     Consolidated Statements of Income
       Years Ended June 30, 2000, 1999 and 1998

     Consolidated Statements of Stockholders' Equity
       Years Ended June 30, 2000, 1999 and 1998

     Consolidated Statements of Cash Flows
       Years Ended June 30, 2000, 1999 and 1998

     Notes to Consolidated Financial Statements


(2)  SUPPLEMENTARY DATA:

     Quarterly Financial Information (Unaudited)
       Years Ended June 30, 2000 and 1999

(3)  FINANCIAL STATEMENT SCHEDULES

     Financial Statement Schedules are omitted because of the absence of
     conditions under which they are required or because the required
     information is provided in the consolidated financial statements or
     notes thereto.

INDEPENDENT AUDITORS' REPORT

The Stockholders of
Jackpot Enterprises, Inc.

We have audited the accompanying consolidated balance sheets of Jackpot
Enterprises, Inc. and subsidiaries (the "Company") as of June 30, 2000 and
1999, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended
June 30, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at June 30,
2000 and 1999, and the results of its operations and its cash flows for
each of the three years in the period ended June 30, 2000, in conformity
with accounting principles generally accepted in the United States of
America.

DELOITTE & TOUCHE LLP

Las Vegas, Nevada
September 25, 2000

                JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
          CONSOLIDATED BALANCE SHEETS - JUNE 30, 2000 AND 1999
                         (Dollars in thousands)


           ASSETS                               2000      1999
           ______                             ________   _______

Current assets:
  Cash and cash equivalents                   $ 60,090   $44,137
  Short-term investments, at fair value              -     7,292
  Other current assets                             697       599
  Net assets of discontinued operations         16,645    23,688
                                              ________   _______
    Total current assets                        77,432    75,716
                                              ________   _______

Note receivable - related parties                1,000         -

Investments in internet-related businesses      24,136         -

Excess of costs over equity in underlying net
  assets of investments in internet-related
  businesses, net of amortization                1,657         -

Other non-current assets                           510     2,005
                                              ________   _______

    Total assets                              $104,735   $77,721
                                              ========   =======

See Notes to Consolidated Financial Statements.

                JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
          CONSOLIDATED BALANCE SHEETS - JUNE 30, 2000 AND 1999
                (Dollars in thousands, except share data)
                               (Concluded)


LIABILITIES AND STOCKHOLDERS' EQUITY          2000        1999
____________________________________        _________   ________

Current liabilities:
  Accounts payable                           $      -    $ 1,283
  Other current liabilities                       799        991
                                             ________    _______
      Total current liabilities                   799      2,274

Convertible subordinated notes, net of
  unamortized discount of $2,500               12,750          -
Deferred income tax                               762        833
Minority interest in subsidiary                 2,514          -
                                            _________    _______
      Total liabilities and minority
        interest                               16,825      3,107
                                            _________    _______

Commitments and contingencies (Note 10)

Stockholders' equity:
  Preferred stock - authorized
    1,000,000 shares of $1 par value;
    none issued
  Common stock - authorized
    60,000,000 shares of $.01 par
    value; 10,233,470 and 9,860,252
    shares issued                                102          99
  Additional paid-in capital                  73,875      66,465
  Retained earnings                           27,710      21,069
  Less 1,258,624 and 1,243,714 shares of
    common stock in treasury, at cost        (13,777)    (13,776)
  Unrealized gain on available-for-sale
    securities, net of tax                         -         757
                                            ________    ________
      Total stockholders' equity              87,910      74,614
                                            ________    ________
      Total liabilities and
        stockholders' equity                $104,735    $ 77,721
                                            ========    ========
See Notes to Consolidated Financial Statements.

               JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME
                YEARS ENDED JUNE 30, 2000, 1999 AND 1998
              (Dollars in thousands, except per share data)

                                               2000     1999     1998
                                             _______  _______  _______
Costs and expenses:
  General and administrative                 $ 6,732  $ 2,503  $ 2,774
  Costs of terminated merger                       -      900        -
                                             _______  _______  _______
    Totals                                     6,732    3,403    2,774
                                             _______  _______  _______

Operating loss from continuing operations      6,732    3,403    2,774
                                             _______  _______  _______

Other income (expense):
  Net fee from terminated merger              11,116        -        -
  Gain on sale of short-term investments       2,361        -        -
  Interest and other income                    2,068    1,340    1,432
  Equity in income (loss) of internet-related
    businesses                                  (100)       -        -
                                             _______  _______  _______
    Totals                                    15,445    1,340    1,432
                                             _______  _______  _______

Income (loss) from continuing operations
  before income tax                            8,713   (2,063)  (1,342)
                                             _______  _______  _______

Provision (benefit) for Federal income tax     2,418   (1,085)  (1,148)
                                             _______  _______  _______

Net income (loss) from continuing operations   6,295     (978)    (194)

Income from discontinued operations,
  net of tax                                     346    5,581    7,407
                                             _______  _______  _______

Net income                                   $ 6,641  $ 4,603  $ 7,213
                                             =======  =======  =======

Basic earnings (loss) per share:
Income (loss) from continuing operations     $   .73  $  (.11) $  (.02)
Income from discontinued operations              .04      .64      .82
                                             _______  _______  _______
                                             $   .77  $   .53  $   .80
                                             =======  =======  =======

Dilutive earnings (loss) per share:
Income (loss) from continuing operations     $   .71  $  (.11) $  (.02)
Income from discontinued operations              .04      .64      .82
                                             _______  _______  _______
                                             $   .75  $   .53  $   .80
                                             =======  =======  =======

See Notes to Consolidated Financial Statements.

                   JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    YEARS ENDED JUNE 30, 2000, 1999 AND 1998
            (Dollars and shares in thousands, except per share data)


                                                                                             Accumulated
                                   Common Stock    Additional             Treasury Stock        Other
                                 ________________    Paid-In   Retained   ________________   Comprehensive
                                 Shares    Amount    Capital   Earnings   Shares    Amount      Income       Totals
                                 _______   ______   ________   ________   ______ _________    ____________   _______
                                                                                     

Balance July 1, 1997              9,824     $ 98    $66,033    $ 9,253    (742)  $  (8,103)                  $67,281

Comprehensive income:
  Net loss from continuing
   operations                                                     (194)                                         (194)
  Income from discontinued
   operations, net of tax                                        7,407                                         7,407
                                                                                                             _______
Comprehensive income                                                                                           7,213
Issuance of shares on
  exercise of stock
  options                            30        1        343                                                      344
Repurchases of
  common stock                                                            (338)     (3,967)                   (3,967)
                                _______     ____    _______    _______  _______   ________        ____       _______

Balance June 30, 1998             9,854       99     66,376     16,466  (1,080)    (12,070)                   70,871

Comprehensive income:
  Net loss from continuing
    operations                                                    (978)                                         (978)
  Income from discontinued
    operations, net of tax                                       5,581                                         5,581
  Other comprehensive
    income:
  Unrealized gain on
    available-for-sale
    securities, net of tax
    of $408                                                                                       $757           757
                                                                                                             _______
Comprehensive income                                                                                           5,360
Tax benefit from
  stock options                                          22                                                       22
  Issuance of shares on
  exercise of stock
  options                             6                  67                                                       67
Repurchases of
  common stock                                                            (164)     (1,706)                   (1,706)
                                 ______     ____    _______    _______  _______   ________        ____       _______
Balance June 30, 1999             9,860       99     66,465     21,069   (1,244)   (13,776)        757        74,614

Comprehensive income:
  Net income from
    continuing operations                                        6,295                                         6,295
  Income from discontinued
    operations, net of tax                                         346                                           346
  Other comprehensive
    income:
  Unrealized gain on
    available-for-sale
    securities, net of tax
    and reclassification
    adjustment
    (See Note 9 and
    disclosure below)                                                                             (757)         (757)
                                                                                                             _______
Comprehensive income                                                                                           5,884
Tax benefit from stock
  options                                                83                                                       83
Issuance of shares on
  exercise of stock options          28                 295                                                      295
Repurchases of common stock                                                 (15)        (1)                       (1)
Issuance of shares for
  investments in internet-
  related businesses                325        3      4,233                                                    4,236
Issuance of shares for
  cancellation of stock
  options                            20                 299                                                      299
Amount allocated to
  additional paid-in capital
  in connection with the
  issuance of the 8%
  convertible subordinated
  notes (See Note 2)                                  2,500                                                    2,500
                                 ______     ____    _______    _______  _______   ________        ____       _______
Balance June 30, 2000            10,233     $102    $73,875    $27,710   (1,259)  $(13,777)       $  -       $87,910
                                 ======     ====    =======    =======  =======   ========        ====       =======



Disclosure of reclassification
  amount:
  Unrealized gain for the year
    ended ended June 30, 2000        $   777
  Less reclassification
    adjustment for gain
    included in net income            (1,534)
                                     _______
  Unrealized gain on
    available-for-sale securities,
    net of tax                       $  (757)
                                     =======

See Notes to Consolidated Financial Statements.

                   JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED JUNE 30, 2000, 1999 AND 1998
                             (Dollars in thousands)

                                                     2000      1999      1998
                                                   ________  _______   _______
Operating activities:
  Net income                                       $  6,641  $ 4,603    $ 7,213
  Adjustments to reconcile net income
    to net cash provided by (used in)
    continuing operations:
      Income from discontinued operations,
        net of tax                                     (346)  (5,581)    (7,407)
      Equity in loss of internet-related
        businesses                                      100        -          -
      Net fee from terminated merger                (11,116)       -          -
      Deferred Federal income tax                       (71)     103       (297)
      Gain on sale of short-term investments         (2,361)       -          -
      Increase (decrease) from changes in:
        Prepaid expenses and other current
          assets                                        (15)     316       (111)
        Other non-current assets                       (474)     900        109
        Accounts payable and other current
          liabilities                                   171     (260)      (909)
        Other liabilities                                 -      (61)         -
                                                   ________  ________   _______
          Net cash provided by (used in)
            continuing operations                    (7,471)      20     (1,402)
          Net cash provided by discontinued
            operations                                8,389    10,987    13,238
                                                   ________  ________   _______
            Net cash provided by operating
              activities                                918    11,007    11,836
                                                   ________  ________   _______

Investing activities:
  Purchase of marketable securities                       -    (6,127)        -
  Investments in internet-related businesses        (19,099)        -         -
  Break-up fee from terminated merger                13,500         -         -
  Proceeds from sale of short-term investments        8,488         -         -
  Purchases of property and equipment                   (11)        -         -
  Increase in lease acquisition costs and
    other intangible and non-current assets          (1,669)   (1,622)        -
                                                   ________  ________   _______
        Net cash provided by (used in) continuing
         operations                                   1,209    (7,749)        -
        Net cash used in discontinued operations     (1,001)   (4,257)   (5,883)
                                                   ________  ________   ________
          Net cash provided by (used in) investing
            activities                                  208   (12,006)   (5,883)
                                                   ________  ________   _______

Financing activities:
  Proceeds from convertible subordinated notes       14,250         -         -
  Proceeds from issuance of common stock                594        67       344
  Repurchases of common stock                            (1)   (1,706)   (3,967)
  Other                                                 (16)        -         -
        Net cash provided by (used in) financing   ________  ________   _______
          activities of continuing operations        14,827    (1,639)   (3,623)
                                                   ________  ________   _______
Net increase (decrease) in cash and cash
  equivalents                                        15,953    (2,638)    2,330
Cash and cash equivalents of continuing
  operations at beginning of year                    44,137    46,775    44,445
                                                   ________  ________   _______
Cash and cash equivalents of continuing
  operations at end of year                        $ 60,090  $ 44,137   $46,775
                                                   ========  ========   =======
Supplemental disclosures of cash flow data:
  Cash paid during the year for:
    Federal income tax                             $  2,650  $  2,400   $ 2,750

Non-cash investing and financing activities:
  Tax benefit from exercise of stock options       $     83  $     22   $     -
  Issuance of common stock for investments in
    internet-related businesses                    $  4,236  $      -   $     -
  Debt discount on convertible subordinated notes  $  2,500  $      -   $     -
  Minority interest in subsidiary                  $  2,514  $      -   $     -
  Note receivable - related parties                $  1,000  $      -   $     -

See Notes to Consolidated Financial Statements.

                JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note  1 - Significant accounting policies and business:
  Business:
    On March 8, 2000, Jackpot Enterprises, Inc. ("Jackpot" or the
    "Company"), which was organized in 1980, announced a series of
    actions designed to transform the Company from a gaming entity
    into an Internet infrastructure provider and a manager of
    technology funds (the "Internet-Related Businesses").  On
    March 10, 2000, the Company formed J Net Ventures I, LLC ("Venture
    I"), an entity that will invest primarily in Internet-Related
    Businesses.  As of June 30, 2000, the Company owned 100% of
    Venture I.  Venture I is managed by J Net Venture Partners, LLC (the
    "Manager"), an affiliate of the Company.  Allan R. Tessler, the Company's
    Chief Executive Officer is the chairman of the Manager and Keith Meister
    and Todd Meister are Co-Presidents of the Manager.  In addition, the Board
    of Directors has unanimously adopted a resolution to change the
    name of the Company to J Net Enterprises, Inc.  Such change is
    subject to the approval of the Company's stockholders.

  Principles of consolidation:
    The accompanying consolidated financial statements include the
    accounts of the Company and its controlled subsidiaries.  All
    material intercompany accounts and transactions are
    eliminated.  Unless the context indicates otherwise,
    references to "2000", "1999" and "1998" are for the fiscal
    years ended June 30, 2000, 1999 and 1998, respectively.

  Business segments:
    As of June 30, 2000, the Company operated in a single business
    segment, its Internet-Related Business segment.  During the
    quarter ended June 30, 2000 management formalized its plan to
    sell the gaming machine route operations segment ("Route
    Operations") and commenced activities to dispose of the
    subsidiaries identified with that segment.  On July 8, 2000,
    the Company entered into a definitive agreement to sell its
    Route Operations (see Note 11).  The Company's Route
    Operations segment has been reported as discontinued
    operations.

  Use of estimates:
    The preparation of financial statements in conformity with
    accounting principles generally accepted in the United States
    of America requires management to make estimates and
    assumptions that affect the amounts reported in the
    accompanying consolidated financial statements and notes.
    Actual results could differ from those estimates.

  Cash equivalents:
    Cash equivalents are liquid investments comprised primarily of
    debt instruments and money market accounts with maturities of
    three months or less when acquired and are considered cash
    equivalents for purposes of the consolidated statements of
    cash flows.  Cash equivalents are stated at cost which
    approximates fair value due to their short maturity.  Cash and
    cash equivalents include cash equivalents of $60,090,000 and
    $44,137,000 at June 30, 2000 and 1999.

  Fair value of financial instruments:
    The carrying value of certain of the Company's financial
    instruments, including accounts payable and accrued expenses
    approximates fair value due to their short maturities.  The
    unregistered convertible subordinated notes are not traded in
    the open market and a market price is not available.  However,
    based on the Company's financial position, management believes
    that the carrying value of such debt approximates fair value.

  Investments in Internet-Related Businesses:
    The various interests that the Company acquires in Internet-
    Related Businesses are accounted for under one of three
    methods:  consolidation, equity or cost.  The applicable
    accounting method is generally determined based on the
    Company's voting interest and its ability to influence or
    control the Internet-Related Business.  For investments
    accounted for under the equity method, the excess of the cost
    of the investment over the Company's equity in the underlying
    net assets of such investment is amortized on a straight-line
    basis over 5 years.  Such amortization is included in the line
    captioned equity in income (loss) of internet-related
    businesses in the accompanying consolidated statements of
    income.

  Investments in debt and equity securities:
    The Company accounts for investments in debt and equity
    securities in accordance with Statement of Financial
    Accounting Standards No. 115,  "Accounting for Certain
    Investments in Debt and Equity Securities" ("SFAS 115").  This
    statement addresses the accounting and reporting for
    investments in equity securities that have readily
    determinable fair values and for all investments in debt
    securities, and requires such securities be classified as
    either held to maturity, trading, or available-for-sale.
    Management determines the appropriate classification of its
    investments in securities at the time of purchase and
    reevaluates such classification at each balance sheet date.
    SFAS 115 requires that available-for-sale securities be
    carried at fair value with unrealized gains and losses, net of
    tax, reported as a separate component of stockholders' equity.
    Unrealized gains and losses for available-for-sale securities
    are recorded as comprehensive income and are excluded from
    earnings.  Realized gains from sales of investment securities
    in 2000 were $2,361,000.  There were no realized gains from
    sales of investment securities in 1999 and 1998.  There were
    no realized losses from sales of investment securities in
    2000, 1999 and 1998.

  Stock-based compensation:
    The Company applies Accounting Principles Board Opinion No.
    25, "Accounting for Stock Issued to Employees" ("APB 25") for
    stock options while disclosing pro forma net income and net
    income per share as if the fair value method had been applied
    in accordance with Statement of Financial Accounting Standards
    No. 123, "Accounting for Stock-Based Compensation" ("SFAS
    123").

  Recently issued accounting standards:
    In April 1998, the American Institute of Certified Public
    Accountants' Accounting Standards Executive Committee issued
    Statement of Position No. 98-5, "Reporting on the Costs of
    Start-Up Activities".  This standard provides guidance on the
    financial reporting for start-up costs and organization costs.
    This standard requires costs of start-up activities and
    organization costs to be expensed as incurred.  The Company
    adopted this standard on July 1, 1999.  This statement did not
    have any effect on Jackpot's results of operations or its
    financial position.

    In June 1998, the Financial Accounting Standards Board (the
    "FASB") issued Statement of Financial Accounting Standards No.
    133, "Accounting for Derivative Instruments and Hedging
    Activities" ("SFAS 133"), as amended, which is effective for
    fiscal years beginning after June 15, 2000.  SFAS 133
    establishes additional accounting and reporting standards for
    derivative instruments and hedging activities.  SFAS 133 requires
    that an entity recognize all derivatives as either assets or liabilities in
    the statement of financial position.  This statement also defines and
    allows companies to apply hedge accounting to its designated derivatives
    under certain instances.  It also requires that all derivatives be marked
    to market on an ongoing basis.  This applies whether the derivatives are
    stand-alone instruments, such as warrants or interest rate swaps, or
    embedded derivatives, such as call options contained in convertible
    debt investments.  Along with the derivatives, in the case of qualifying
    hedges, the underlying hedged items are also to be marked to market.  These
    market value adjustments are to be included either in the income statement
    or other comprehensive income, depending on the nature of the hedged
    transaction.  The fair value of financial instruments is generally
    determined by reference to market values resulting from trading on a
    national securities exchange or in an over the counter market.  In cases
    where derivatives relate to financial instruments of non public
    companies, or where quoted market prices are otherwise not available,
    such as for derivative financial instruments, fair value is based on
    estimates using present value or other valuation techniques.  The Company
    will adopt the standard in the quarter ending September 30, 2000 and will
    record its derivatives on July 1, 2000 at fair market value.  In addition,
    any increase or decrease from historical cost basis of its derivatives on
    that date will be recorded as a cumulative effect of a change in accounting
    principle in the first quarter ending September 30, 2000.

    Based on management's review, the Company expects the most significant
    impact of this standard will be the cumulative effect adjustment as well
    as ongoing marked to market adjustments related to the warrant purchased by
    the Company in connection with the Company's purchase of an interest in
    Series B Preferred Stock of TechTrader, Inc.  The value of this warrant can
    fluctuate given that TechTrader is a non public company.  At June 30, 2000,
    the estimated value of the warrant was approximately $1.6 million.  Under
    SFAS 133, the warrants will be revalued each quarter and the change in value
    of the warrants will be included in the consolidated statement of income.
    Under current accounting principles, the change in value of these warrants
    is not recorded.  The cumulative effect of the adoption of SFAS 133 will be
    approximately $15,000.

    In December 1999, the Securities and Exchange Commission
    issued Staff Accounting Bulletin No. 101, "Revenue Recognition
    in Financial Statements" ("SAB 101").  SAB 101 clarifies
    existing accounting principles related to revenue recognition
    in financial statements.  The Company is required to comply
    with the provisions of SAB 101 in its quarter ending June 30,
    2001.  Based upon the current nature of the Company's
    continuing operations, management does not believe that SAB
    101 will have a significant impact on the Company's results of
    operations.

    In March 2000, the Financial Accounting Standards Board of the
    AICPA issued FASB Interpretation 44 Accounting for Certain
    Transactions involving Stock Compensation ("FIN 44"), which
    provides clarification on the application of Accounting
    Principals Board Opinion No. 25 Accounting for Stock Issued to
    Employees.  The Company is required to comply with the
    provisions of FIN 44 beginning July 1, 2000.  Based upon
    management's review, the Company does not expect that the
    application will have a material effect on the Company's
    results of operations.

Note 2  - Convertible subordinated notes:
    The Company is in the final stages of completing its offering
    of up to $28 million of unregistered convertible subordinated
    notes (the "Notes") to a small group of investors.  Certain of
    such investors include officers and directors of the
    Company or entities controlled by such directors and the Co-
    Presidents of the Manager (see Note 7).  The issuance of the
    Notes was approved by the Company's Board of Directors on
    January 31, 2000.  The initial conversion price of $10.75 was
    set by the Company in connection with the limited circulation
    of a Confidential Memorandum prior to the public announcement
    of the Company's intention to effect its business
    transformation and was equal to an 18% premium over the then
    twenty day trailing average market price.  Stockholder
    approval is required with respect to the issuance of a portion
    of the Notes.

    In June 2000, the Company raised $15,250,000 through the
    issuance of the Notes.  The principal amount of the Notes is
    payable on March 31, 2007 and bears interest at 8% per annum,
    payable on a quarterly basis.  The Notes may not be prepaid in
    whole or in part by the Company.  The Notes shall be
    convertible automatically if at any time after April 1, 2004,
    the common stock of the Company shall have a market price (as
    determined by the principal trading market for the Company's
    common stock or as otherwise specified in the Note) of over
    250% of the then current conversion price for a period of ten
    trading days within any twenty consecutive trading day period.
    At the option of the holder of a Note, the Note shall be
    convertible into the Company's common stock at any time after
    June 1, 2001.  The number of shares of common stock to be
    received by a Note holder upon conversion will be determined
    by dividing the principal amount of the Note by the conversion
    price in effect at the time of the conversion, which was
    initially $10.75.  The conversion price is subject to
    adjustment in the event of any subdivision, combination, or
    reclassification of outstanding shares of the Company's common
    stock.

    For financial statement purposes, the Notes were deemed to
    have been beneficially converted as the conversion feature was
    in-the-money at the commitment date. The Company has
    calculated the beneficial conversion feature as the difference
    between the fair value of the common stock at the commitment
    date and the initial conversion price, multiplied by the
    number of shares into which the debt is convertible.
    Approximately $2,500,000 of the proceeds from issuance of the
    Notes, equal to the intrinsic value, has been recorded as debt
    discount and allocated to additional paid-in capital.  Because
    the debt is not convertible until June 1, 2001, the debt
    discount is amortized to interest expense from the date of
    issuance of the Note through June 1, 2001 using the interest method.

Note 3 - Investments in Internet-Related Businesses:
  Meister Brothers Investments, LLC:
    On March 1, 2000, the Company acquired a 1% membership
    interest in and became the managing member of Meister Brothers
    Investments, LLC ("MBI") for $40,000 pursuant to an agreement
    between MBI, the Company, Keith Meister ("KM") and Todd
    Meister ("TM").  KM and TM each own 49.5% of the membership interests
    in MBI.  As managing member, the Company has complete authority and
    responsibility for the operations and management of MBI and its
    ownership interests. Through its ownership interests, MBI owns a
    portfolio of investments (the "Portfolio") in development stage
    Internet-related businesses.  Such investments are accounted for
    under the cost method.

    Prior to the execution of the agreements described above, KM, TM and
    the Company mutually agreed that the estimated Portfolio value was
    $2,500,000.  Based upon such value, the minimum number of shares to be
    received by KM and TM was determined by using a $9.06 per share value of
    Jackpot's common stock, which was the average closing price for the 30
    days prior to the parties mutual agreement of the estimated Portfolio value.

    On March 1, 2000 in connection with the agreement described above, KM, TM
    and the Company entered into a combination of Put and Call Agreements.
    Pursuant to the terms of the Call Agreement, KM and TM granted an option
    to the Company to purchase from KM and TM, and KM and TM are each
    obligated to sell to the Company, upon proper exercise, under such option
    (the "Call Option") all of their membership interests in MBI.  Upon
    exercise of the Call Option by the Company, KM and TM will receive no less
    than 312,500 and no more than 500,000 shares of the Company's common stock,
    as calculated by a predetermined formula in the Call Agreement.  The Call
    Option may be exercised by the Company at any time after March 1, 2002 and
    expires on March 1, 2004.  Pursuant to the terms of the Put Agreement, the
    Company granted an option to each of KM and TM to sell to the Company and
    the Company shall be obligated to purchase from each of KM and TM,
    upon proper exercise, under such option (the "Put Option") any
    or all of the membership interests in MBI held by each of them
    in exchange for a number of common shares of the Company, as
    calculated by a predetermined formula in the Put Option.
    Upon exercise of the Put Option by KM and TM, KM and TM will
    receive no less than 275,938 and no more than 441,501 shares of
    the Company's common stock, as calculated by a predetermined
    formula in the Put Agreement.  The Put Option may be exercised at
    any time after the first to occur of (i) September 1, 2001 or (ii) the
    date the Portfolio Value, as defined in the Put Option, is
    fixed at $4,000,000, but in no event shall the Put Option
    become exercisable any earlier than March 1, 2001.  The Put
    Option expires on March 1, 2004.

    If neither the Put Option nor the Call Option is exercised, KM and
    TM have a further option to purchase, or cause MBI to purchase,
    the Company's interest in MBI at its fair market value as determined by
    appraisal.  This option is exercisable on or after April 1, 2004 and
    expires April 30, 2004.

    Based upon the Company's control over MBI as described above, the Company
    has consolidated MBI in its June 30, 2000 balance sheet and reflected the
    minority interest of MBI owned by KM and TM.  Upon the exercise of the Put
    or the Call, the Company will record the purchase of MBI as a step
    acquisition based upon the fair value of the Jackpot common stock issued.

  Digital Boardwalk, LLC:
    On March 1, 2000, the Company purchased a 35% ownership
    interest and the right to purchase up to 139,256 Common Units
    at an exercise price of $3.59 per Common Unit (the "Warrant")
    in Digital Boardwalk, LLC ("Digital"), a non public company,
    for an aggregate purchase price of $4,746,000.  The
    consideration consisted of $3,000,000 in cash and $1,746,000
    of the Company's common stock (146,342 shares).  The Warrant
    is exercisable commencing on the closing date of Digital's
    next round of equity or convertible debt financing and shall
    be exercisable until the earlier of the consummation of a
    qualified initial public offering, as defined in the purchase
    agreement between the parties, or March 1, 2003.  The Company
    allocated the excess of its cost over the equity acquired,
    which was approximately $132,000, to the Warrant.  The Company
    accounts for its investment in Digital under the equity
    method.

  Alistia, Inc.:
    On May 18, 2000, the Company, on behalf of Venture I, purchased
    a 39.8% ownership interest in Series A Preferred Stock of
    Alistia, Inc. ("Alistia"), a non public development stage
    company for $2,000,000 in cash. In general, the Series A
    Preferred Stockholders are entitled to vote along with the
    common stockholders based on the number of shares of common
    stock into which the Series A Preferred shares could be
    converted.  On an as converted basis, the Company had a 19.95%
    voting interest in Alistia at the date of acquisition.  A
    member of Jackpot's board is a member of Alistia's five member
    Board.  Based on the Company's voting percentage and Board
    representation, the Company accounts for this investment under
    the equity method.

  TechTrader, Inc.:
    On June 12, 2000, the Company purchased a 42.1% interest in
    Series B Preferred Stock and a warrant to acquire 827,796
    shares of common stock at an exercise price of $2.25 per
    common share in TechTrader, Inc. ("TechTrader"), a development
    stage non public company for an aggregate purchase price of
    $8,488,000.  The consideration consisted of $6,000,000 in cash
    and $2,488,000 of the Company's common stock (178,571 shares).
    The value assigned to common stock was based on the closing price of the
    Company's stock on June 12, 2000.  The Company may exercise
    the warrant in whole or in part at any time until June 1,
    2007.  The exercise price of the warrant is subject to adjustment
    upon the occurrence of certain events that would be antidilutive,
    as defined in the Securities Purchase Agreement.  The Company has
    determined that the warrant is a derivative as defined in SFAS 133 and
    will begin accounting for the warrant in accordance with SFAS
    133 in the quarter ending September 30, 2000.  The excess of
    the cost of the investment in TechTrader over the Company's
    equity in the underlying net assets at the acquisition date
    was approximately $3.2 million.  Of the $3.2 million, the
    Company has allocated approximately $1.6 million to the
    warrant using the Black-Scholes pricing model.  The remaining
    excess cost of approximately $1.6 million is being amortized
    over 5 years.

    The Company shall be entitled to receive a dividend of 8% of
    the Series B issue price, as defined, per year.  Such
    dividends shall be cumulative and shall accrue, whether or not
    declared by TechTrader's Board of Directors.  Generally, a
    Series B Preferred stockholder is entitled to vote with the
    common stockholders based upon the number of shares of common
    stock into which the Series B Preferred stock could be
    converted.  On an as converted basis, the Company had a 28.1%
    voting interest at the date of acquisition.  Based upon such
    voting percentage, the Company accounts for its investment in
    TechTrader under the equity method.

  Cyberbills, Inc.:
    On March 10, 2000, the Company purchased 3,385,106 shares of Series C
    Preferred Stock of Cyberbills, Inc. ("Cyberbills"), a non public development
    stage company, at a cost of $3,183,000.  Of such purchase, $3,000,000 was
    made on behalf of Venture I.  The Company accounts for this investment
    under the cost method.

  Other transactions:
    In May 2000, the Company, on behalf of Venture I, invested $4,850,000
    in other Internet-Related Businesses.  Such investments consisted of a
    purchase of 892,500 shares of Series B Preferred Stock of Strategic
    Data Corp., at a cost of $850,000, and a 12% convertible demand loan of
    $4,000,000 to Carta, Inc. ("Carta").  Such loan is convertible in whole or
    in part, at the option of the Company, into common stock of
    Carta.  In addition, upon the occurrence of certain events,
    the loan will convert into preferred stock of Carta.  The
    Company accounts for the investment in Strategic Data Corp.
    under the cost method.  Both Strategic Data Corp. and Carta
    are non public development stage companies.

  Summary of Investments in Internet-Related Businesses:
    As described above, all Investments in Internet-Related
    Businesses were in non public companies as of June 30, 2000.
    Such investments under the applicable accounting methods are
    summarized as follows (dollars in thousands):

                             June 30, 2000
                             _____________

      Consolidation            $ 2,540
      Equity method             13,544
      Cost method                8,052
                               _______
        Total                  $24,136
                               =======

Note 4 - Other current liabilities:
    Other current liabilities consist of the following (dollars in
    thousands):

                                            June 30,
                                        _______________
                                        2000       1999
                                        ____       ____

      Accrued professional fees         $203        $287
      Accrued employee benefits            -         187
      Accrued interest payable            95           -
        Other                            501         517
                                        ____        ____
          Totals                        $799        $991
                                        ====        ====

Note 5 - Earnings (loss) per share:
    Basic earnings (loss) per share from continuing operations for
    2000, 1999 and 1998 and diluted loss per share from continuing
    operations for 1999 and 1998 are computed by dividing net
    income (loss) from continuing operations by the weighted
    average number of common shares outstanding for the respective
    period.  Diluted earnings per share from continuing operations
    for 2000 is computed by dividing net income by the weighted
    average number of common and common equivalent shares
    outstanding.  Options and warrants to purchase common stock,
    whose exercise price was greater than the average market price
    for the respective period, have been excluded from the
    computation of diluted earnings per share from continuing
    operations for 2000.  Such antidilutive options and warrants
    outstanding for 2000 were 364,000.  Since both 1999 and 1998
    had a loss from continuing operations, no potential common
    shares from the assumed exercise of options and warrants have
    been included in the diluted loss per share from continuing
    operations computations pursuant to accounting principles
    generally accepted in the United States of America.  The
    following is the amount of income (loss) and number of shares
    used in the basic and diluted earnings (loss) per share
    computations for continuing operations (dollars and shares in
    thousands, except per share data):

                                                   2000      1999         1998
                                                  ______    ______       ______

      Basic earnings (loss) per share
        from continuing operations:
          Earnings (loss):
            Income (loss) available to
              common stockholders                 $6,295    $ (978)      $ (194)
                                                  ======    ======       ======
          Shares:
            Weighted average number of
              common shares outstanding            8,674     8,641        8,991
                                                  ======    ======       ======

        Basic earnings (loss) per share from
        continuing operations                     $  .73    $ (.11)      $ (.02)
                                                  ======    ======       ======

        Diluted earnings (loss) per share:
          Earnings (loss):
            Income (loss) available to
              common stockholders                 $6,295    $ (978)     $  (194)
            Effect of dilutive securities             63         -            -
                                                  ______    ______      _______
            Income (loss), as adjusted            $6,358    $ (978)     $  (194)
                                                  ======    ======      =======
          Shares:
            Weighted average number of common
              shares outstanding                   8,674     8,641        8,991
            Common shares issuable upon assumed
              exercise of dilutive stock options
                                                   1,516         -            -
            Less common shares assumed to be
              repurchased by application of the
              treasury stock method to the proceeds
              using the average market price for
              the period                          (1,404)        -            -
            Common shares issuable upon assumed
              conversion of 8% convertible
              subordinated notes                     109         -            -
            Common shares issuable upon assumed
              exercise of put option                  92         -            -
                                                  ______    ______      _______

            Weighted average number of common
              shares and common share
                equivalents outstanding            8,987     8,641        8,991
                                                 =======   =======      =======
        Diluted earnings (loss) per share from
          continuing operations                  $   .71   $ (.11)      $  (.02)
                                                 =======   ======       =======

Note 6 - Stockholders' equity:
  Authorized common stock:
    On September 14, 1999, Jackpot's stockholders approved an
    increase in the number of authorized shares of common stock
    from 30,000,000 to 60,000,000.

  Rights plan:
    In June 1994, the Board approved a Stockholder Rights Plan.
    On July 11, 1994, Jackpot declared a dividend distribution of
    one Preferred Stock purchase right (the "Rights") payable on
    each outstanding share of common stock, as of July 15, 1994.
    The Rights become exercisable only in the event, with certain
    exceptions, an acquiring party accumulates 15% or more of
    Jackpot's voting stock, or if a party announces an offer to
    acquire 30% or more of Jackpot's voting stock.  Each Right
    will entitle the holder to purchase one-hundredth of a share
    of a Series A Junior Preferred Stock at a price of $30.  In
    addition, upon the occurrence of certain events, holders of
    the Rights will be entitled to purchase either Jackpot's
    Preferred Stock or shares in an "acquiring entity" at half of
    market value.

    The Rights, which expire on July 15, 2004, may be redeemed by
    Jackpot at $.01 per Right prior to the close of business on
    the tenth day after a public announcement that beneficial
    ownership of 15% or more of Jackpot's shares of voting stock
    has been accumulated by a single acquiror or a group (with
    certain exceptions), under circumstances set forth in the
    Rights Agreement.  As of June 30, 2000 and 1999, 150,000
    shares of unissued Series A Junior Preferred Stock were
    authorized and reserved for issuance upon exercise of the
    Rights.  The issuance of the Rights had no effect on dilutive
    earnings per share in 2000, 1999 and 1998.

  Stock option plans:
    On December 7, 1990, Jackpot's stockholders approved the 1990
    Incentive and Nonqualified Stock Option Plan (the "1990
    Plan").  The 1990 Plan terminated on June 26, 2000.  As of
    such date, no options granted under the 1990 Plan were
    outstanding.  On January 12, 1993, Jackpot's stockholders
    approved the 1992 Incentive and Non-qualified Stock Option
    Plan (the "1992 Plan").  On August 17, 1994, the Board adopted
    certain amendments (the "Amendments") to the 1992 Plan which
    were approved by Jackpot's stockholders on January 10, 1995.
    The Amendments increased the number of shares of Jackpot's
    common stock (the "Common Stock") authorized for issuance
    pursuant to the 1992 Plan from 1,045,000 to 2,545,000.

    The 1992 Plan provides that each individual who is a member of
    the Board on June 30 of any year, including any future
    director on any such date, will automatically be granted
    nonqualified stock options to purchase 27,500 shares of Common
    Stock on each such June 30.  The option price for each June 30
    grant will be 100% of the fair market value of the Common
    Stock on the following September 30.  Each option granted to
    a director will become exercisable after September 30 of each
    year, and expire five years from the date of grant.  Under the
    1992 Plan, options granted to Jackpot's directors to purchase
    an aggregate of 440,000 shares of Common Stock were
    outstanding, of which 330,000 were exercisable at June 30,
    2000.

    The 1992 Plan terminates on the earlier of (i) the date all
    shares subject to the 1992 Plan have been issued upon the
    exercise of options granted under such plans, or (ii)
    September 30, 2002, or on such earlier date as the Board may
    determine.  Any option outstanding at the termination date remains
    outstanding until it has either expired or has been exercised.

    On January 31, 2000, a new director was added to the Company's
    Board of Directors.  In connection with the appointment, such
    director was granted a nonqualified stock option to purchase
    27,500 shares of common stock.  On May 1, 2000, pursuant to
    the terms of the grant, the exercise price was vested at
    $10.63 per share, the fair market value of the stock on that
    date.  The option expires five years from the date of grant.
    Also, on January 31, 2000, nonqualified stock options to
    purchase an aggregate of 450,000 shares of common stock were
    granted to three directors (150,000 each) at an exercise price
    of $10.13 per share, the fair market value on the date of
    grant.  The option granted to each director will vest in
    thirds on each of the first, second and third anniversaries of
    the date of grant.  Such options expire ten years from date of
    grant.

    Changes in options outstanding under the 1992 stock option plan
    are summarized below (shares in thousands):

                              2000               1999               1998
                        _________________  _________________  ________________
                                 Weighted           Weighted          Weighted
                                 Average            Average           Average
                                 Exercise           Exercise          Exercise
                        Shares    Price    Shares    Price    Shares   Price
                        ______   ________  ______   ________  ______  ________


    Fixed options:
    Outstanding at
     beginning of
       year             1,422    $ 9.79    1,486    $10.23     1,580   $10.89
    Granted               757     10.25       55     12.25        60    11.00
    Exercised             (48)    12.31       (6)     8.56       (30)   11.34
    Cancelled            (109)     9.88     (223)    12.80      (234)   14.15
    Automatic grant
     to directors         110      (A)       110      8.75       110     9.94
                        _____    ______    _____    ______     _____   ______
    Outstanding at
      end of year       2,132      9.47    1,422      9.79     1,486    10.23
                        =====    ======    =====    ======     =====   ======
    Options exercisable
      at year-end       1,292      9.76    1,290      9.83     1,336    10.23
    Weighted average
      fair value of
      options granted
      during the year             $4.12             $ 2.47             $ 2.99

   (A)  To be determined on September 30, 2000.

    The following table summarizes information about stock options
    outstanding at June 30, 2000:

                 Options Outstanding                 Options Exercisable
    ______________________________________________   _____________________

                            Weighted
                            Average       Weighted               Weighted
    Range of     Number     Remaining      Average     Number     Average
    Exercise  Outstanding  Contractual    Exercise   Exercisable  Exercise
     Prices   at 6/30/00      Life          Price    at 6/30/00     Price
    ________  ___________  ___________    ________   ___________ _________

   $ 8.63 to
   $10.50       1,800       4.1 years      $ 9.07     1,030       $ 9.35

   $10.51 to
   $12.63         332       4.6 years       11.64       262       $11.38

  Other nonqualified stock options:
    On September 14, 1999, nonqualified stock options to purchase
    an aggregate of 120,000 shares of common stock were granted to
    the Company's Board of Directors (30,000 each to four
    directors) at an exercise price of $9.00 per share, the fair
    market value on the date of grant.  The option granted to each
    director will vest 50% on each of the first and second
    anniversaries of the date of grant and shall be subject to
    accelerated vesting under certain circumstances.  Such options
    expire ten years from date of grant.

    On January 31, 2000, nonqualified stock options to purchase an
    aggregate of 150,000 shares of common stock were granted to
    the Co-Presidents of the Manager (75,000 each) at an exercise
    price of $10.13 per share, the fair market value on the date
    of grant.  Such options will vest in thirds on each of the
    first, second and third anniversaries of the date of grant and
    expire ten years from date of grant.

    Changes in options outstanding under the nonqualified stock
    option plan is summarized below (shares in thousands):

                              2000               1999               1998
                        _________________  _________________  ________________
                                 Weighted           Weighted          Weighted
                                 Average            Average           Average
                                 Exercise           Exercise          Exercise
                        Shares   Price     Shares   Price     Shares  Price
                        ______   ________  ______   ________  ______  ________

    Fixed options:
    Outstanding at
      beginning of
      year               221      $ 9.19     352    $ 9.72      379    $ 9.67
    Granted              640       12.22       -                  -
    Exercised              -                   -                  -
    Cancelled           (221)       9.19    (131)    10.63      (27)     9.02
                        ____                ____               ____
    Outstanding at
      end of year        640       12.22     221      9.19      352      9.72
                        ====                ====               ====
    Options exercisable
      at year-end          -                 221      9.19      352      9.72
    Weighted average
      fair value of
      options granted
      during the year             $ 4.89            $    -             $    -

    The following table summarizes information about nonqualified
    stock options outstanding at June 30, 2000:


                 Options Outstanding                 Options Exercisable
    ______________________________________________   _____________________

                            Weighted
                            Average       Weighted               Weighted
    Range of     Number     Remaining      Average     Number     Average
    Exercise  Outstanding  Contractual    Exercise   Exercisable  Exercise
     Prices   at 6/30/00      Life          Price    at 6/30/00     Price
    ________  ___________  ___________    ________   ___________ _________
    $9.00 to
    13.125       640        1.9 years      $12.22         -        $  -

  Shares reserved for issuance:
    Shares of Common Stock were reserved for the exercise of the
    following (in thousands):

                                              June 30,
                                          _______________
                                          2000      1999
                                          _____     _____
      Stock option plans:
        Outstanding                       2,132     1,422
        Available for grant                 340     1,078
      Other nonqualified stock options      640       221
                                          _____     _____
          Totals                          3,112     2,721
                                          =====     =====
  Accounting for stock-based compensation:
    The following table discloses pro forma amounts for net income
    and basic and dilutive earnings per share for 2000, 1999 and
    1998 assuming compensation cost for employee stock options had
    been determined using the fair value-based method prescribed
    by SFAS 123.  The table also discloses the weighted average
    assumptions used in estimating the fair value of each option
    grant on the date of grant using the Black-Scholes option
    pricing model, and the estimated weighted average fair value
    of the options granted.  The model assumes no expected future
    dividend payments on Jackpot's Common Stock for the options
    granted in 2000, 1999 and 1998 (dollars in thousands, except
    per share data):
                                                    2000    1999     1998
                                                   ______  ______   ______

         Net income:
           As reported                             $6,641  $4,603   $7,213
           Pro forma                               $5,507  $4,167   $6,837

         Basic earnings per share:
           As reported                             $  .77  $  .53   $  .80
           Pro forma                               $  .63  $  .48   $  .76

         Diluted earnings per share:
           As reported                             $  .75  $  .53   $  .79
           Pro forma                               $  .62  $  .48   $  .74

         Weighted average assumptions:
           Expected stock price volatility           50.0%   30.0%    30.0%
           Risk-free interest rate                    6.4%    5.6%     5.8%
           Expected option lives (in years)           3.0     3.0      2.5
           Estimated fair value of options granted $ 4.35  $ 3.02   $ 2.99

Note 7 - Related party transactions:
    One director of Jackpot is a partner in a law firm that has
    provided various legal services for which Jackpot incurred
    legal fees aggregating approximately $190,000, $170,000 and
    $121,000 in 2000, 1999 and 1998. As of June 30, 2000, three
    directors of Jackpot, or entities controlled by such
    directors, and Meister Brothers Holdings, LLC, have invested
    $7 million and $3 million, respectively, in the Notes
    described in Note 2.  In connection with the issuance of a $3
    million Note to Meister Brothers Holdings, LLC, the Company
    loaned $1 million to such entity on June 28, 2000.  Interest
    on the loan accrues at 8% per annum.  The principal amount and
    accrued interest is payable on June 30, 2002.  The obligations
    of Meister Brothers Holdings, LLC are secured by the right,
    title and interest in and to the $3 million Note dated June
    28, 2000.

Note 8 - Federal income tax:
    The components of Federal income tax expense (benefit) are as
    follows (dollars in thousands):

                                           2000      1999      1998
                                          ______    ______    ______
    Federal:
      Current expense (benefit)           $1,641    $  (744)  $(1,196)
      Deferred expense (benefit)             777       (341)       48
                                          ______    _______   _______
    Federal income tax expense (benefit)
      on income (loss) from continuing
      operations                           2,418     (1,085)   (1,148)
    Federal income tax expense of
      discontinued operations                177      2,875     3,816
                                          ______    _______   _______
    Total Federal income tax expense      $2,595    $ 1,790   $ 2,668
                                          ======    =======   =======

    A reconciliation of the Federal statutory income tax rate to
    the effective income tax rate based on income (loss) from
    continuing operations before income tax follows:

                                             2000     1999     1998
                                             ____    ______   ______

         Statutory rate                      35.0%    (35.0)%  (35.0)%
         Increase (decrease) in
           tax resulting from:
         Surtax exemption                    (1.0)      1.0      1.0
         Tax-exempt interest                 (7.6)    (22.5)   (37.1)
         Other                                1.4       3.9    (14.4)
                                             ____     _____    _____
         Effective rate                      27.8%    (52.6)%  (85.5)%
                                             ====     =====    =====

    The tax items comprising Jackpot's net deferred tax liability
    as of June 30, 2000 and 1999 are as follows (dollars in
    thousands):

                                             2000     1999
                                             ____    ______


           Deferred tax liabilities:
           Unrealized gain on
             available-for-sale securities      -      408
           Other                              762      425
                                             ____     ____
         Net deferred tax liability          $762     $833
                                             ====     ====

Note 9  - Other events:
  Terminated mergers:
    On February 17, 1999, Jackpot and CRC Holdings, Inc. d/b/a
    Carnival Resorts & Casinos ("CRC"), a privately owned company,
    entered into a definitive agreement providing for the
    acquisition of CRC by Jackpot.  On April 15, 1999, Jackpot and
    CRC mutually agreed to terminate the agreement.  As a result
    of the termination of the agreement, capitalized costs incurred
    in connection with the proposed acquisition of CRC of $900,000 were
    expensed in 1999.

    On August 16, 1999, Jackpot received a notice from Players
    International, Inc. ("Players") terminating the Agreement and
    Plan of Merger dated February 8, 1999 (the "Players
    Agreement").  Such notice contained the terms of a merger
    offer for Players from Harrah's Entertainment, Inc.  On August
    19, 1999, pursuant to the terms of the Players Agreement,
    Jackpot received a break-up fee of $13,500,000.  As a result
    of the termination of the Players Agreement, capitalized costs
    of $2,384,000 incurred in connection with the proposed
    acquisition of Players were expensed resulting in a net break-
    up fee of $11,116,000.  During 2000, Jackpot sold 1,014,400
    shares of Players common stock for $8,488,000 ($8.37 per
    share).  As a result of the sale of such shares, which were
    purchased on March 10, 1999 at a cost of $6,127,000 ($6.04 per
    share), Jackpot realized a gain of $2,361,000.

  Termination and Consulting Agreement:
    On February 29, 2000, the Company and Don R. Kornstein,
    President, Chief Executive Officer and Director, entered into
    a Termination and Consulting Agreement (the "Termination
    Agreement").  Pursuant to the terms of the Termination
    Agreement, Mr. Kornstein and the Company mutually agreed that
    his employment and position on the Board of Directors
    terminated on February 29, 2000.  On March 10, 2000, pursuant
    to the terms of Mr. Kornstein's employment agreement and the
    Termination Agreement, the Company paid $2,906,000 to Mr.
    Kornstein for severance and accrued vacation costs.  Of such
    amount, $2,835,000 was expensed in 2000, and is included in
    the line captioned general and administrative in the
    accompanying consolidated statements of income.

Note 10 - Commitments and contingencies:
  Employment agreements:
    Jackpot has employment agreements with George Congdon, Senior
    Vice President - Operations and Bob Torkar, Senior Vice
    President - Finance, which expire on June 30, 2001.  In the
    event of termination of Mr. Congdon and Mr. Torkar's
    employment, as defined in their employment agreements, Mr.
    Congdon and Mr. Torkar would receive severance payments.  The
    aggregate contingent liability at June 30, 2000 under such
    agreements is $1,140,000.

  Financial instruments with concentration of credit risk:
    The financial instruments that potentially subject Jackpot to
    concentrations of credit risk consist principally of cash and
    cash equivalents.  Jackpot maintains cash and certain cash
    equivalents with financial institutions in amounts which, at
    times, may be in excess of the FDIC insurance limits.
    Jackpot's cash equivalents are invested in several high-grade
    securities which limits Jackpot's exposure to concentrations
    of credit risk.

  Legal matters:
    Jackpot is a party to various other claims, legal actions and
    complaints arising in the ordinary course of business or
    asserted by way of defense or counterclaim in actions filed by
    Jackpot.  Management believes that its defenses are
    substantial in each of these matters and that Jackpot's legal
    position can be successfully defended without material adverse
    effect on its consolidated financial statements.  See Note 11
    for information regarding a litigation settlement and a legal
    dispute that is part of the discontinued operations.

  Leases:
    Jackpot has a noncancelable office lease in New York, New
    York.  Future minimum payments (dollars in thousands) under
    such lease is $4,699 at June 30, 2000, payable as follows:
    $354 in 2001; $438 in 2002; $438 in 2003; $438 in 2004; $438
    in 2005; and $2,593 thereafter.  See Note 11 for information
    concerning commitments and contingencies of the discontinued
    operations.

Note 11 - Discontinued operations:
  Definitive agreement:
    On July 8, 2000, the Company entered into a definitive
    agreement to sell its Route Operations for $45 million in
    cash.  As a result of management's plan to dispose of the
    Route Operations and of the sale, which is subject to closing
    conditions and regulatory and other approvals, the financial
    position and the results of operations for the Route
    Operations have been reported as discontinued operations.  In
    accordance with accounting principles applicable to
    discontinued operations, previously reported financial
    statements have been reclassified to reflect the Route
    Operations as discontinued.  The Company expects to complete
    the closing of the sale during the quarter ending December 31,
    2000.

  Litigation settlement:
    In August 1998, Albertson's, Inc. ("Albertson's," a retail
    chain in which Jackpot conducts gaming operations) and
    American Stores Company ("American Stores") entered into a
    merger agreement that provided for the acquisition of American
    Stores by Albertson's.  Approximately 51%, 57% and 55% of
    revenues generated by discontinued operations for 2000, 1999
    and 1998, respectively, were generated at the locations of
    those two entities.  The merger of Albertson's and American
    Stores was completed on June 23, 1999.  As a condition to
    avoiding and/or settling legal proceedings against the merger
    by the Federal Trade Commission and the Attorneys General of
    California, Nevada and New Mexico, Albertson's agreed to
    divest certain of its stores, including 19 stores in southern
    Nevada, fifteen of which were Jackpot locations.  In late
    September and early October 1999, Albertson's sold those
    locations to Raley's, Inc. ("Raley's"), and Raley's has
    operated them since.

    On August 30, 1999, Jackpot commenced litigation in United
    States District Court for the District of Nevada against
    Albertson's and Raley's to enforce its rights to remain in the
    fifteen locations under its agreement with Albertson's.  On
    September 14, 1999, Jackpot obtained a preliminary injunction
    to prevent Albertson's and Raley's from interfering with its
    right to occupy the subject premises and conduct gaming operations.
    Albertson's and Raley's appealed the injunction and made motions
    for summary judgment.

    In connection with Raley's acquisition of the locations,
    United Coin Machine Company ("United Coin"), the slot route
    operator for Raley's northern Nevada stores, filed
    applications with the Nevada Gaming Control Board to operate
    the gaming machines at the fifteen stores.  On September 23,
    1999, United Coin commenced an action in Nevada state court
    against Jackpot, Albertson's, Raley's and Anchor Coin
    ("Anchor"), the slot route operator at the four other
    Albertson's southern Nevada locations seeking declaratory and
    injunctive relief and money damages.

    On January 26, 2000, Jackpot entered into a Settlement
    Agreement and Release (the "Settlement Agreement") with
    Albertson's, Raley's, Anchor and United Coin.  Pursuant to the
    terms of the Settlement Agreement, the parties agreed to
    dismiss with prejudice all litigation pending among them and
    to the takeover of gaming operations by United Coin of the 19
    stores in southern Nevada, effective February 1, 2000.  Of the
    19 stores in southern Nevada operated by Raley's, Jackpot had
    operated 246 gaming machines at 15 locations pursuant to its
    long-term agreement with Albertson's.  Jackpot believed it was
    in its best interest to settle the case and thereby preserve
    and solidify its long-term relationship with Albertson's, its
    largest customer, pursuant to the terms of an amendment to its
    agreement with Albertson's, which it had theretofore arranged
    and which is described below in this note.  It was also
    important to Jackpot to avoid further litigation and fully
    resolve all claims among and between the parties.  All costs
    incurred in connection with the litigation and settlement,
    including legal and settlement costs aggregating approximately
    $950,000, were recorded in fiscal 2000, and are included in
    the line captioned income from discontinued operations in the
    accompanying consolidated statements of income.

  Settlement agreement with Albertson's:
    Prior to the settlement described above, on November 18, 1999,
    Jackpot and Albertson's had entered into a settlement
    agreement (the "Agreement").  The Agreement amended the
    license agreement entered in September 1998 between Jackpot
    and Albertson's (the "Albertson's Agreement").  The Agreement
    also terminated Jackpot's separate license agreements with
    Lucky Stores, Inc. and American Drug Stores, Inc.  and
    incorporates Jackpot's exclusive rights in Nevada to operate
    gaming devices at the locations (including any future
    locations) of those entities into the Albertson's Agreement,
    as amended by the Agreement.  Under the Agreement, Jackpot has
    the exclusive option to extend the agreements beyond their
    initial terms and will continue to have exclusive gaming
    rights for new Albertson's locations.  In addition,
    Albertson's granted Jackpot exclusive gaming rights in all
    drug stores opened by Albertson's or any of its affiliates in
    Nevada, and in future fuel center locations, a new retailing
    concept that Albertson's will open, in which gaming may be
    offered to customers.  Further, pursuant to the terms of the
    Agreement, Jackpot will received certain immediate credits
    toward license fees and will receive substantial reductions in
    certain license fees, which are effective from February 1, 2000
    through the initial term of the Agreement.

  The Rite Aid dispute:
    On December 8, 1999, certain Gaming Machine Route Operations
    subsidiaries of Jackpot commenced litigation in the United
    States District Court for the District of Nevada against Rite
    Aid Corporation ("Rite Aid"). The lawsuit is an action for
    rescission of two license agreements between those
    subsidiaries and Rite Aid and for damages based upon Rite
    Aid's alleged fraud.  Operations of said subsidiaries under
    said agreements resulted in an operating loss of approximately
    $3.4 million in 2000.

    On March 27, 2000, Jackpot entered into amendments to the two
    license agreements with Rite Aid.  Based on the number of
    existing locations at which Jackpot currently operates gaming
    machines, license fees payable to Rite Aid have been reduced
    by approximately $2.5 million annually over the remaining term
    of the amended agreements. The amendments are subject to
    certain administrative approvals from the Nevada State Gaming
    Control Board ("Nevada Board") for 31 Rite Aid locations. The
    Company has recently received verbal approval from the Nevada
    Board for 25 Rite Aid locations, and management expects to
    receive verbal approval for the remaining 6 stores shortly.
    Based upon verbal approval of the majority of the Company's
    Rite Aid locations, management anticipates that the Company
    will receive the administrative approvals from the Nevada
    Board for the 31 Rite Aid locations in October 2000.  Upon the
    receipt of the administrative approvals, the amendments will
    become effective.  Based upon management's belief that such
    approval will be received shortly, the Company has recorded
    the license fees at their reduced rates, effective March 1,
    2000.

    Further, upon such approval, all disputes between the parties,
    including Jackpot's lawsuit against Rite Aid, will be resolved
    or settled.  On April 26, 2000, the Court ordered that all
    scheduling deadlines previously set in the case were stayed
    pending the filing of a Stipulation and Order of Dismissal by
    the parties.  Further, because the amended agreements are
    conditioned upon certain administrative approvals by the
    Nevada Board, the parties were permitted to file the
    Stipulation for Dismissal by September 15, 2000, which has
    been extended to October 16, 2000.

    Based upon the reduction in license fees described above, the
    Company's operating losses at the Rite Aid locations should
    decrease substantially. However, even with the license fee
    reductions, management believes that the Company will continue
    to incur losses, and such losses may be significant, unless
    revenues increase significantly at these locations.

  Leases:
    Jackpot's discontinued operations has noncancelable location
    license, lease and sublease agreements (referred to as
    "leases") for space at various locations for its gaming machines
    with terms expiring at various dates through 2010. Leases are
    generally at fixed rentals, although certain leases require payments
    based on percentages of revenues generated by gaming machines at the
    leased locations.  In addition, office and warehouse space is utilized
    under noncancelable leases with terms expiring at various dates
    through 2006.

    Future minimum payments (dollars in thousands) under
    noncancelable operating leases or licenses for Jackpot's
    discontinued operations aggregated approximately $112,654 at
    June 30, 2000, payable as follows:  $31,468 in 2001; $31,584
    in 2002; $31,783 in 2003; $8,963 in 2004; $7,690 in 2005; and
    $1,166 thereafter.

    Rent expense for Jackpot's discontinued operations was
    comprised as follows (dollars in thousands):

                                        2000      1999      1998
                                       _______   _______   _______
        Location leases:
          Fixed rentals                $38,569   $39,689   $36,866
          Percentage rentals            18,537    17,181    16,883
        Office and equipment leases        447       442       453
                                       _______   _______   _______
            Totals                     $57,553   $57,312   $54,202
                                       =======   =======   =======

    The following are the summary operating results of the
    discontinued operations (dollars in thousands):

                                         2000      1999      1998
                                       _______   _______   _______

        Revenues                       $86,949   $95,669   $93,013
        Costs and expenses              86,563    87,264    82,276
                                       _______   _______   _______
        Operating income                   386     8,405    10,737
        Other income                       137        51       486
                                       _______   _______   _______
        Income before income tax           523     8,456    11,223
        Provision for income tax           177     2,875     3,816
                                       _______   _______   _______
        Income from discontinued
          operations, net of tax       $   346   $ 5,581   $ 7,407
                                       =======   =======   =======

    The following are the net assets of the discontinued
    operations (dollars in thousands):

                                                   June 30,
                                               _________________
                                                 2000       1999
                                               _______    ______
        Assets:
          Cash                                 $ 3,500    $ 3,500
          Prepaid expenses                       1,209      1,438
          Other current assets                   1,020      1,463
          Deferred income tax                      384        500
          Property and equipment at
            cost, net                           11,907     13,757
          Lease acquisition costs and
            other intangible assets, net         5,190      8,104
                                               _______    _______
              Total assets                     $23,210    $28,762
                                               =======    =======

        Liabilities:
          Accounts payable and other current
            liabilities                          2,516      2,520
          Deferred rent                          4,049      2,554
                                               _______    _______
              Total liabilities                $ 6,565    $ 5,074
                                               _______    _______
        Net assets of discontinued operations  $16,645    $23,688
                                               =======    =======

Note 12 - Subsequent events:
    In August 2000, the Company, on behalf of Venture I, acquired an interest
    in Series C Preferred Stock of Jasmine Networks, Inc., a non public
    development stage company for approximately $5 million in cash.  In
    addiiton, the Company, on behalf of Venture I, invested $2 million in
    cash in Tellme Networks, Inc., a non public development stage
    company in September 2000.

    With respect to the convertible subordinated notes described
    in Note 2, the Company raised an additional $8.5 million in
    August and September 2000.  Including the $8.5 million, gross
    proceeds raised to date from the issuance of the Notes
    aggregated $23.75 million.

             JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
                 QUARTERLY FINANCIAL INFORMATION
                YEARS ENDED JUNE 30, 2000 AND 1999
          (Dollars in thousands, except per share data)
                           (Unaudited)

    Summarized quarterly financial information for 2000 and 1999
    follows:

                                                          Quarter
                                         ______________________________________

                                         First     Second      Third    Fourth
                                         ______   ________    ________ ________

            2000
            ____

    Revenues                             $    -   $     -     $     -  $     -
    Operating loss from continuing
      operations                           (679)     (908)     (3,322)  (1,823)
    Income (loss) from continuing
      operations                          7,437     1,383      (1,670)    (855)
    Income (loss) from discontinued
      operations                           (144)     (506)        281      715
    Net income (loss)                     7,293       877      (1,389)    (140)

    Basic earnings (loss) per share:
    Income (loss) from continuing
      operations                            .86       .16        (.19)    (.10)
    Income (loss) from discontinued
      operations                           (.01)     (.06)        .03      .08
    Net income (loss)                       .85       .10        (.16)    (.02)

    Dilutive earnings (loss) per share:
    Income (loss) from continuing
      operations                            .86       .16        (.19)    (.12)
    Income (loss) from discontinued
      operations                           (.01)     (.06)        .03      .08
    Net income (loss)                       .85       .10        (.16)    (.04)

            1999
            ____

    Revenues                             $    -   $     -     $     -  $     -
    Operating loss from continuing
      operations                           (588)     (653)       (618)  (1,544)
    Income loss from continuing
      operations                            (59)      (82)        (31)    (806)
    Income from discontinued
      operations                          1,167     1,472       1,842    1,100
    Net income                            1,108     1,390       1,811      294

    Basic earnings (loss) per share:
    Income (loss) from continuing
      operations                           (.01)     (.01)          -     (.09)
    Income from discontinued
      operations                            .14       .17         .21      .12
    Net income                              .13       .16         .21      .03

    Dilutive earnings (loss) per share:
    Income (loss) from continuing
      operations                           (.01)     (.01)          -     (.09)
    Income from discontinued
      operations                            .14       .17         .21      .12
    Net income                              .13       .16         .21      .03

EX-10

                                                            EXHIBIT 10.18

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is being made as of
the 1st day of June 2000 between JACKPOT ENTERPRISES, INC., a Nevada
corporation (the "Company"), with its principal offices located at 1110
Palms Airport Drive, Las Vegas, Nevada, and GEORGE CONGDON (the
"Executive"), an individual residing at 924 Nawkee Drive, N. Las Vegas,
Nevada 89301.

                                 WITNESSETH:

WHEREAS, the former Chief Executive Officer's employment with the
Company terminated on February 29, 2000, and the Company believes it is in the
best interest to secure the continued employment of the Executive as Senior
Vice President-Operations of the Company, and to be jointly responsible with
the Company's Senior Vice President - Finance for the Company's business
comprising gaming machine route operations (the "Route Operations");

WHEREAS, this Agreement supersedes any prior employment agreement or
arrangement that the Executive has with the Company, and any of its
subsidiaries or affiliates;

WHEREAS, the Executive is involved with confidential and proprietary
information of the Company, and the Company desires to maintain such
information and materials as confidential and proprietary; and

NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and intending to be legally bound hereby, the Executive and the
Company have agreed and do hereby agree as follows:

1.  Nature of Employment; Term of Employment.  The Company hereby
employs the Executive and the Executive agrees to serve the Company, and any
of its subsidiaries and affiliates, upon the terms and conditions contained
herein, for a term commencing as of the Effective Date of this Agreement,
and continuing until the occurrence of a Termination Event (as defined
below), but in no event later than June 30, 2001 except as hereinafter
provided (the "Employment Term").  The parties agree that, if a Termination
Event has not occurred prior to June 30, 2001, this Agreement shall continue
in full force and effect, provided that the parties have mutually agreed
prior thereto upon new compensation arrangements for the fiscal year
beginning July 1, 2001.

2.  Duties and Powers as Executive.  During the Employment Term,
the Company will continue to employ and engage the Executive as Senior Vice
President - Operations of the Company and President of Cardivan Company,
Corral Coin, Inc., Corral United, Inc. and Corral Coin, Inc., wholly-owned
subsidiaries of the Company (collectively, the "Subsidiaries"), and
Executive agrees to serve the Company and the Subsidiaries, upon the terms
and conditions herein stated.  The Executive agrees to perform such services
as are consistent with his positions, and such other executive or
administrative services as may arise and the Executive does hereby accept
and agree to such engagement and employment.  The Executive agrees to
perform any and all other duties and to assume any and all responsibilities
that may be assigned to him from time to time by the Chief Executive Officer
of the Company and Executive shall report directly to the Chief Executive
Officer of the Company. The Executive will devote his full time (at least 40
hours per week) to the performance of his duties for the Company and for the
benefit of the Company.  Furthermore, the Executive will exercise his due
diligence and care in the performance of his duties to the Company under
this Agreement, and shall at all times conduct his duties on behalf of the
Company in good faith.  The Executive shall be available to travel as the
needs of the business require.

3.  Compensation.

(a)  The Company shall pay the Executive, and the Executive agrees
to accept from the Company, in full payment for his services and promises to
the Company and the Subsidiaries the following base salary (the "Base
Salary"), less all applicable payroll withholding taxes and deductions for
insurance contributions and the like, payable in accordance with the
Company's payroll practices: (i) from the Effective Date through June 30,
2000, at a rate of One Hundred and Seventy-Five Thousand Dollars ($175,000)
per year; and (ii) from July 1, 2000 through June 30, 2001, or until the
occurrence of a Termination Event, at a rate of One Hundred and Eighty-Five
Thousand Dollars ($185,000) per year.

(b)  The Company shall pay the following bonuses to the Executive
during the Employment Term: (i) for the fiscal year ending June 30, 2000 a
bonus in the amount of One Hundred Thousand Dollars ($100,000), less all
applicable payroll withholding taxes, payable on June 30, 2000 (the "2000
Bonus"); (ii) for the fiscal year ending June 30, 2001 ("Fiscal 2001"), a
bonus in the amount of One Hundred and Fifty Thousand Dollars ($150,000),
less all applicable payroll withholding taxes, payable on June 30, 2001 (the
"2001 Bonus"); provided that, if a Termination Event occurs prior to June
30, 2001, the Executive shall receive a portion of the 2001 Bonus equal to
$150,000 divided by 365 days and multiplied by the number of calendar days
in Fiscal 2001 occurring prior to the Termination Event.

(c)  The Company shall grant to the Executive, on June 30, 2000, a
nonqualified stock option (the "2000 Option") to purchase 30,000 shares of
common stock of the Company, at an exercise price per share of common stock
of the Company equal to the fair market value at the close of business on
June 30, 2000.  The 2000 Option shall be evidenced by a separate Stock
Option Agreement between the Executive and the Company.  The 2000 Option
shall have a ten year term and shall become vested and exercisable on June
30, 2001.

(d)  The Company shall also grant to the Executive, on June 30,
2001, a nonqualified stock option (the "2001 Option") to purchase 30,000
shares of common stock of the Company.  The 2001 Option shall have an
exercise price per share of common stock of the Company equal to the fair
market value at the close of business on the date of grant.  The 2001 Option
shall be evidenced by a separate Stock Option Agreement between the
Executive and the Company.  The 2001 Option shall have a ten year term and
shall become vested and exercisable as follows:  (i) one-half of the 2001
Option shall become exercisable six months after grant, and (ii) the
remaining one-half of the 2001 Option shall become exercisable one year from
the date of grant; provided that, if a Termination Event occurs prior to
June 30, 2001, the Executive shall receive only a portion of the 2001 Option
equal to 30,000 divided by 365 days and multiplied by the number of calendar
days in Fiscal 2001 occurring prior to the Termination Event.

4.  Benefits. The Executive shall be entitled to standard medical,
life, vacation, holiday and other employee benefits payable or otherwise
extended in accordance with the normal benefits policies of the Company and
to participate in any other benefit programs adopted from time to time by
the Company for the benefit of its employees commensurate with the
Executive's position, subject to the Company's right to amend, modify or
terminate any such benefit programs, excluding any change to the Company's
present vacation policies.  During the Employment Term, the Company shall
continue to pay a $600 per month car allowance to the Executive.  The
Executive shall receive such other benefits as may be granted to him from
time to time by the Company's Board of Directors.

5.  Representations and Warranties of Executive.  The Executive
represents and warrants to the Company that (a) he is under no contractual
or other restriction or obligation which is inconsistent with the execution
of this Agreement, the performance of his duties hereunder, or the other
rights of the Company hereunder; and (b) he is under no physical or mental
disability that, with or without reasonable accommodation, would hinder his
performance of duties under this Agreement.

6.  Non-Competition.  The Executive agrees that, during the period
he is employed under this Agreement, he will not engage in, or otherwise
directly or indirectly be employed by, or act as a consultant or lender to,
be a director, officer, employee, owner, or partner of, any other business
or organization that is or shall then be competing with the Company.

7.  Confidential Information.  All confidential information which
the Executive may now possess, may obtain during the Employment Term, or may
create prior to the end of the period he is employed by the Company under
this Agreement, relating to the business of the Company or of any customer
or supplier of the Company shall not be published, disclosed, or made
accessible by him to any other person, form, or corporation during the
Employment Term or any time thereafter without the prior written consent of
the Company.  The Executive shall return all tangible evidence of such
confidential information to the Company prior to or at the termination of
his employment.

8.  Termination.  Subparagraphs (b), (c), (d), (e) and (f) of this
paragraph 8 are collectively referred to herein as the "Termination Events."

(a)  Termination for Cause.  Notwithstanding anything herein
contained, if on or after the date hereof and prior to the end of the
Employment Term, the Executive is terminated "For Cause" (as defined below)
then the Company shall have the right to give notice of termination of the
Executive's services hereunder as of a date to be specified in such notice,
and this Agreement shall terminate on the date so specified.  Termination
"For Cause" shall mean the Executive shall (i) be convicted of a felony
crime or securities violation, (ii) commit an act of fraud against the
Company, (iii) materially breach any term of this Agreement and, if such
breach is capable of being corrected, fail to correct such breach within
thirty (30) days after commission thereof, (iv) be found unsuitable for
licensing by the applicable regulatory agency, or (v) voluntarily resign his
employment.

(b)  Disability.  In the event that the Executive shall be
physically or mentally incapacitated or disabled or otherwise unable fully
to discharge his essential duties hereunder, with or without reasonable
accommodation, for at least ninety (90) consecutive calendar days or for at
least one hundred and twenty (120) calendar days, whether or not
consecutive, in any one hundred and eighty (180) calendar day period, or is
likely to do so, as certified by a physician reasonably and mutually agreed
upon by the Executive and Company, then this Agreement shall terminate on
the date of the receipt by the Company of the certification of disability
from such physician.

(c)  Death.  In the event that the Executive shall die, then this
Agreement shall terminate on the date of the Executive's death.

(d)  Change in Control.  The Executive's employment hereunder
shall terminate on the occurrence of a Change in Control, which shall be
deemed to have occurred if:
(i)  any "person, as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than (A) the Executive or Bob Torkar; (B) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or (C) any corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportion as their ownership of
Shares), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding voting securities;

(ii)  individuals who at the Effective Date constitute the
Board, and any new director whose election by the Board or nomination for
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;

(iii)  the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving or parent entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effect to
implement a recapitalization of the Company (or similar transaction) in
which no "person" as hereinabove defined) acquires 20% or more of the
combined voting power of the Company's then outstanding securities;

(iv)  the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets (or any transaction having a similar effect).

(e)  Closing Date.  In the event that the Company sells that
portion of its business comprising the Route Operations, then this Agreement
shall terminate on the closing date of the sale of the Route Operations.

(f)  Termination Without Cause.  In the event that the
Company terminates the Executive for any reason other than "For Cause," then
this Agreement shall terminate upon receipt by the Executive of notice of
such termination.  Termination under this subparagraph (f) does not include
terminations pursuant to subparagraphs (b), (c), (d) or (e).

(g)  Effect of Termination.

        (i)  In the event that this Agreement is terminated "For
Cause" pursuant to Section 8(a), the Company shall have no further
obligation to the Executive hereunder except to pay to the Executive, within
10 days following the date of termination, his accrued but unpaid Base
Salary (at the then-applicable rate) to the date of termination and payment
for accrued but unused vacation, each of which will be less applicable
withholdings, and any unreimbursed, reasonable business expenses.

        (ii)  In the event that (A) this Agreement is terminated
pursuant to Sections 8(b), (c), (d), (e) or (f), or (B) no Termination Event
has occurred prior to December 31, 2001, then the Executive, or the
Executive's beneficiary (as the case may be), shall be entitled to receive
at the earlier of his termination or December 31, 2001, (i) a lump-sum
payment for accrued but unpaid Base Salary, and accrued but unused vacation
through the date of termination, each of which will be less applicable
withholdings, and any unreimbursed, reasonable business expenses, (ii) a
lump sum payment of two (2) years' Base Salary, at the then-applicable rate,
and two (2x) times the average annual bonus paid by the Company to the
Executive for the immediately preceding two (2) fiscal years, provided that
such average annual bonus amount shall not be less than One Hundred Thousand
Dollars ($100,000), each of which will be less applicable withholdings;
(iii) the portion of the Executive's 2000 Bonus or 2001 Bonus and 2000
Option or 2001 Option as provided in paragraphs 3(b), (c), and (d), (iv)
should the Executive elect such coverages, payment of the Executive's COBRA
premiums for health insurance benefits and premiums for life insurance
benefits equivalent to the life insurance benefits that the Company
maintains for the Executive at the time of termination, such that all costs
for such coverages will be paid by the Company and the Executive will not be
required to make any payments for such coverages, and both such coverages to
commence on the date of termination and continue to the earlier of (x)
eighteen (18) months from the date of termination, (y) the earlier
termination of the Executive's health insurance benefits as required by
COBRA, or (z) the date the Executive becomes covered by another employer's
health insurance plan; and (v) all unvested options held by the Executive,
including the 2000 Option and 2001 Option, shall vest immediately, and the
Executive, or the Executive's beneficiary (as the case may be), shall have
the right to exercise said options for a period of twenty-four (24) months
following the date of termination, but in no event beyond the expiration
date of any such options.  The Executive understands and agrees that any
rights derived solely by reason of this subparagraph are subject to his
execution of a release agreement, satisfactory to the Company, which shall
release the Company, its subsidiaries and affiliates, from any and all
claims whatsoever (including but not limited to claims arising under the Age
Discrimination in Employment Act, as amended) and that any rights under this
subparagraph shall not accrue until the appropriate revocation period
provided in the release agreement has expired without revocation of same by
the Executive.  The Executive further understands and agrees that the
accrual of any rights under this subparagraph shall be in full and complete
satisfaction of any and all obligations owed by the Company to the
Executive.

(h)  Nothing contained in this Section 8 shall be deemed to limit
any other right the Company may have to terminate the Executive's employment
hereunder upon any ground permitted by law.

9.  Successors; Binding Agreement.  In the event of a future
disposition of (or including) the properties and business of the Company,
substantially as an entirety, by merger, consolidation, sale of assets, or
otherwise, the Company shall assign this letter and all of its rights and
obligations hereunder to the acquiring or surviving corporation, such
corporation shall assume in writing all of the obligations of the Company,
and the Company shall remain liable for the performance of its obligations
hereunder in the event of an unjustified failure of the acquiring
corporation to perform its obligations under this letter.

10.  Costs and Expenses.  The Company shall pay directly or
reimburse the Executive for any reasonable costs and expenses incurred by
the Executive in connection with the negotiation, preparation and
enforcement of this Agreement, or any amendments hereto.

11.  Indemnification. During the term of this Agreement, and
subsequent thereto with respect to any claim arising out of or in connection
with his employment with the Company or any subsidiary of the Company, the
Company shall indemnify and hold the Executive harmless from all claims and
liability, loss or damage (including but not limited to judgements, fines
and amounts paid in settlement), asserted against the Executive or incurred
by the Executive, including reasonable attorneys fees and investigation
costs (the "Indemnification"). The Indemnification provided for herein shall
be in addition to and not in substitution of any and all rights to
indemnification which the Executive may be entitled to under the laws of the
State of Nevada or the Certificate of Incorporation and By-laws of the
Company. To the extent permitted under the laws of the State of Nevada, and
the Company's Certificate of Incorporation and By-Laws, all expenses,
including reasonable attorneys fees, incurred by the Executive in defending
any civil, criminal, administrative or investigative action, shall upon
request by the Executive, be paid and advanced by the Company in advance of
the final disposition of such action, suit or proceeding.

12.   Survival.  The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive the
Executive's termination of employment, irrespective of any investigation
made by or on behalf of any party.

13.  Modification.  This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
terminates and supersedes all existing agreements (written, oral or
otherwise) between them concerning such subject matter, and may be modified
only by a written instrument duly executed by each party.  The Executive
acknowledges that no other representations, oral or written, have been made
regarding the subject matter hereof, other than those explicitly provided
herein.  The Executive further acknowledges that he has not relied on any
oral or written representations not explicitly contained herein in executing
this Agreement.

14.  Notices.  Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to
the party to whom it is to be given at the address of such party set forth
in the preamble to this Agreement (or to such other address as the party
shall have furnished in writing in accordance with the provisions of this
Section 13).  In the case of a notice to the Company, a copy of such notice
(which copy shall not constitute notice) shall be delivered to Camhy
Karlinsky & Stein LLP, 1740 Broadway, New York, New York 10019-4315, Attn.
Alan I. Annex, Esq.  Notice to the estate of the Executive shall be
sufficient if addressed to the Executive as provided in this Section 13.
Any notice or other communication given by certified mail shall be deemed
given at the time of certification thereof, except for a notice changing a
party's address which shall be deemed given at the time of receipt thereof.

15.  Waiver.  Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement.  The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not
be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement.  Any waiver must be in writing.

16.  Binding Effect.  The Executive's rights and obligations under
this Agreement shall not be transferable by assignment or otherwise except
as provided herein, such rights shall not be subject to encumbrance or the
claims of the Executive's creditors, and any attempt to do any of the
foregoing shall be void.  The provisions of this Agreement shall be binding
upon and inure to the benefit of the Executive and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Company and its successors and those who are its assigns under Section 9.

17.  Headings.  The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.

18.  Counterparts; Governing Law.  This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.  It
shall be governed by, and construed in accordance with, the laws of the
State of Nevada, without giving effect to the rules governing the conflicts
of laws.

IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first written above.

JACKPOT ENTERPRISES, INC.




By:   /s/ Allan R. Tessler
      ___________________________
      Name:  Allan R. Tessler
      Title: CEO


      /s/ George Congdon
      ____________________________________
      GEORGE CONGDON

EX-10

                                                         EXHIBIT 10.19

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (the "Agreement") is being made as of
the 1st day of June 2000 between JACKPOT ENTERPRISES, INC., a Nevada
corporation (the "Company"), with its principal offices located at 1110
Palms Airport Drive, Las Vegas, Nevada, and ROBERT TORKAR (the "Executive"),
an individual residing at 650 Whitney Ranch Drive #2322, Henderson, Nevada
89014.

                                 WITNESSETH:

        WHEREAS, the former Chief Executive Officer's employment with the
Company terminated on February 29, 2000, and the Company believes it is in
the best interest to secure the continued employment of the Executive as
Senior Vice President-Finance, Treasurer and Chief Accounting Officer of the
Company, and to be jointly responsible with the Company's Senior Vice
President - Operations for the Company's business comprising gaming machine
route operations (the "Route Operations");

        WHEREAS, this Agreement supersedes any prior employment agreement
or arrangement that the Executive has with the Company, and any of its
subsidiaries or affiliates;

        WHEREAS, the Executive is involved with confidential and
proprietary information of the Company, and the Company desires to maintain
such information and materials as confidential and proprietary; and

        NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and intending to be legally bound hereby, the
Executive and the Company have agreed and do hereby agree as follows:

                  1.  Nature of Employment; Term of Employment.  The Company
hereby employs the Executive and the Executive agrees to serve the Company,
and any of its subsidiaries and affiliates, upon the terms and conditions
contained herein, for a term commencing as of the Effective Date of this
Agreement, and continuing until the occurrence of a Termination Event (as
defined below), but in no event later than June 30, 2001 except as
hereinafter provided (the "Employment Term").  The parties agree that, if a
Termination Event has not occurred prior to June 30, 2001, this Agreement
shall continue in full force and effect, provided that the parties have
mutually agreed prior thereto upon new compensation arrangements for the
fiscal year beginning July 1, 2001.

                  2.  Duties and Powers as Executive.  During the Employment
Term, the Company will continue to employ and engage the Executive as Senior
Vice President - Finance, Treasurer and Chief Accounting Officer of the
Company and Secretary/Treasurer of Cardivan Company, Corral Coin, Inc.,
Corral United, Inc. and Corral Coin, Inc., wholly-owned subsidiaries of the
Company (collectively, the "Subsidiaries"), and Executive agrees to serve
the Company and the Subsidiaries, upon the terms and conditions herein
stated.  The Executive acknowledges that the Company has hired a Chief
Financial Officer.  The Executive agrees to perform such services as are
consistent with his positions, and such other executive or administrative
services as may arise and the Executive does hereby accept and agree to such
engagement and employment.  The Executive agrees to perform any and all
other duties and to assume any and all responsibilities that may be assigned
to him from time to time by the Chief Executive Officer of the Company and
Executive shall report directly to the Chief Executive Officer, the Chief
Financial Officer and the Chief Operating Officer of the Company. The
Executive will devote his full time (at least 40 hours per week) to the
performance of his duties for the Company and for the benefit of the
Company.  Furthermore, the Executive will exercise his due diligence and
care in the performance of his duties to the Company under this Agreement,
and shall at all times conduct his duties on behalf of the Company in good
faith.  The Executive shall be available to travel as the needs of the
business require.

                  3.  Compensation.

          (a)  The Company shall pay the Executive, and the Executive agrees
to accept from the Company, in full payment for his services and promises to
the Company and the Subsidiaries the following base salary (the "Base
Salary"), less all applicable payroll withholding taxes and deductions for
insurance contributions and the like, payable in accordance with the
Company's payroll practices: (i) from the Effective Date through June 30,
2000, at a rate of One Hundred and Sixty-Five Thousand Dollars ($165,000)
per year; and (ii) from July 1, 2000 through June 30, 2001, or until the
occurrence of a Termination Event, at a rate of One Hundred and Eighty-Five
Thousand Dollars ($185,000) per year.

          (b)  The Company shall pay the following bonuses to the Executive
during the Employment Term: (i) for the fiscal year ending June 30, 2000 a
bonus in the amount of One Hundred Thousand Dollars ($100,000), less all
applicable payroll withholding taxes, payable on June 30, 2000 (the "2000
Bonus"); (ii) for the fiscal year ending June 30, 2001 ("Fiscal 2001"), a
bonus in the amount of One Hundred and Fifty Thousand Dollars ($150,000),
less all applicable payroll withholding taxes, payable on June 30, 2001 (the
"2001 Bonus"); provided that, if a Termination Event occurs prior to June
30, 2001, the Executive shall receive a portion of the 2001 Bonus equal to
$150,000 divided by 365 days and multiplied by the number of calendar days
in Fiscal 2001 occurring prior to the Termination Event.

          (c)  The Company shall grant to the Executive, on June 30, 2000, a
nonqualified stock option (the "2000 Option") to purchase 30,000 shares of
common stock of the Company, at an exercise price per share of common stock
of the Company equal to the fair market value at the close of business on
June 30, 2000.  The 2000 Option shall be evidenced by a separate Stock
Option Agreement between the Executive and the Company.  The 2000 Option
shall have a ten year term and shall become vested and exercisable on June
30, 2001.

          (d)  The Company shall also grant to the Executive, on June 30,
2001, a nonqualified stock option (the "2001 Option") to purchase 30,000
shares of common stock of the Company.  The 2001 Option shall have an
exercise price per share of common stock of the Company equal to the fair
market value at the close of business on the date of grant.  The 2001 Option
shall be evidenced by a separate Stock Option Agreement between the
Executive and the Company.  The 2001 Option shall have a ten year term and
shall become vested and exercisable as follows:  (i) one-half of the 2001
Option shall become exercisable six months after grant, and (ii) the
remaining one-half of the 2001 Option shall become exercisable one year from
the date of grant; provided that, if a Termination Event occurs prior to
June 30, 2001, the Executive shall receive only a portion of the 2001 Option
equal to 30,000 divided by 365 days and multiplied by the number of calendar
days in Fiscal 2001 occurring prior to the Termination Event.

          4.  Benefits. The Executive shall be entitled to standard medical,
life, vacation, holiday and other employee benefits payable or otherwise
extended in accordance with the normal benefits policies of the Company and
to participate in any other benefit programs adopted from time to time by
the Company for the benefit of its employees commensurate with the
Executive's position, subject to the Company's right to amend, modify or
terminate any such benefit programs, excluding any change to the Company's
present vacation policies.  During the Employment Term, the Company
shall continue to pay a $500 per month car allowance to the Executive.  The
Executive shall receive such other benefits as may be granted to him from
time to time by the Company's Board of Directors.

          5.  Representations and Warranties of Executive.  The Executive
represents and warrants to the Company that (a) he is under no contractual
or other restriction or obligation which is inconsistent with the execution
of this Agreement, the performance of his duties hereunder, or the other
rights of the Company hereunder; and (b) he is under no physical or mental
disability that, with or without reasonable accommodation, would hinder his
performance of duties under this Agreement.

          6.  Non-Competition.  The Executive agrees that, during the period
he is employed under this Agreement, he will not engage in, or otherwise
directly or indirectly be employed by, or act as a consultant or lender to,
be a director, officer, employee, owner, or partner of, any other business
or organization that is or shall then be competing with the Company.

          7.  Confidential Information.  All confidential information which
the Executive may now possess, may obtain during the Employment Term, or may
create prior to the end of the period he is employed by the Company under
this Agreement, relating to the business of the Company or of any customer
or supplier of the Company shall not be published, disclosed, or made
accessible by him to any other person, form, or corporation during the
Employment Term or any time thereafter without the prior written consent of
the Company.  The Executive shall return all tangible evidence of such
confidential information to the Company prior to or at the termination of
his employment.

          8.  Termination.  Subparagraphs (b), (c), (d), (e) and (f) of this
paragraph 8 are collectively referred to herein as the "Termination Events."

              (a)  Termination for Cause.  Notwithstanding anything herein
contained, if on or after the date hereof and prior to the end of the
Employment Term, the Executive is terminated "For Cause" (as defined below)
then the Company shall have the right to give notice of termination of the
Executive=s services hereunder as of a date to be specified in such notice,
and this Agreement shall terminate on the date so specified.  Termination
"For Cause" shall mean the Executive shall (i) be convicted of a felony
crime or securities violation, (ii) commit an act of fraud against the
Company, (iii) materially breach any term of this Agreement and, if such
breach is capable of being corrected, fail to correct such breach within
thirty (30) days after commission thereof, (iv) be found unsuitable for
licensing by the applicable regulatory agency, or (v) voluntarily resign his
employment.

              (b)  Disability.  In the event that the Executive shall be
physically or mentally incapacitated or disabled or otherwise unable fully
to discharge his essential duties hereunder, with or without reasonable
accommodation, for at least ninety (90) consecutive calendar days or for at
least one hundred and twenty (120) calendar days, whether or not
consecutive, in any one hundred and eighty (180) calendar day period, or is
likely to do so, as certified by a physician reasonably and mutually agreed
upon by the Executive and Company, then this Agreement shall terminate on
the date of the receipt by the Company of the certification of disability
from such physician.

             (c)  Death.  In the event that the Executive shall die, then
this Agreement shall terminate on the date of the Executive's death.

             (d)  Change in Control.  The Executive's employment hereunder
shall terminate on the occurrence of a Change in Control, which shall be
deemed to have occurred if:  (i)  any person, as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than (A) the Executive or George Congdon; (B)
any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or (C) any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportion as
their ownership of Shares), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 20% or more of the combined voting power
of the Company's then outstanding voting securities;

                  (ii)  individuals who at the Effective Date constitute the
Board, and any new director whose election by the Board or nomination for
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;

                  (iii)  the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving or parent entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effect to
implement a recapitalization of the Company (or similar transaction) in
which no "person" as hereinabove defined) acquires 20% or more of the
combined voting power of the Company=s then outstanding securities;

                  (iv)  the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets (or any transaction having a similar effect).

             (e)  Closing Date.  In the event that the Company sells that
portion of its business comprising the Route Operations, then this Agreement
shall terminate on the closing date of  the sale of the Route Operations.

             (f)  Termination Without Cause.  In the event that the Company
terminates the Executive for any reason other than "For Cause," then this
Agreement shall terminate upon receipt by the Executive of notice of such
termination.  Termination under this subparagraph (f) does not include
terminations pursuant to subparagraphs (b), (c), (d) or (e).

             (g)  Effect of Termination.

                  (i)  In the event that this Agreement is terminated "For
Cause" pursuant to Section 8(a), the Company shall have no further
obligation to the Executive hereunder except to pay to the Executive, within
10 days following the date of termination, his accrued but unpaid Base
Salary (at the then-applicable rate) to the date of termination and payment
for accrued but unused vacation, each of which will be less applicable
withholdings, and any unreimbursed, reasonable business expenses.

                  (ii)  In the event that (A) this Agreement is terminated
pursuant to Sections 8(b), (c), (d), (e) or (f), or (B) no Termination Event
has occurred prior to December 31, 2001, then the Executive, or the
Executive=s beneficiary (as the case may be), shall be entitled to receive
at the earlier of his termination or December 31, 2001, (i) a lump-sum
payment for accrued but unpaid Base Salary, and accrued but unused vacation
through the date of termination, each of which will be less applicable
withholdings, and any unreimbursed, reasonable business expenses, (ii) a
lump sum payment of two (2) years' Base Salary, at the then-applicable rate,
and two (2x) times the average annual bonus paid by the Company to the
Executive for the immediately preceding two (2) fiscal years, provided that
such average annual bonus amount shall not be less than One Hundred Thousand
Dollars ($100,000), each of which will be less applicable withholdings;
(iii) the portion of the Executive's 2000 Bonus or 2001 Bonus and 2000
Option or 2001 Option as provided in paragraphs 3(b), (c), and (d), (iv)
should the Executive elect such coverages, payment of the Executive's COBRA
premiums for health insurance benefits and premiums for life insurance
benefits equivalent to the life insurance benefits that the Company
maintains for the Executive at the time of termination, such that all costs
for such coverages will be paid by the Company and the Executive will not be
required to make any payments for such coverages, and both such coverages to
commence on the date of termination and continue to the earlier of (x)
eighteen (18) months from the date of termination, (y) the
earlier termination of the Executive's health insurance benefits as required
by COBRA, or (z) the date the Executive becomes covered by another
employer's health insurance plan; and (v) all unvested options held by the
Executive, including the 2000 Option and 2001 Option, shall vest
immediately, and the Executive, or the Executive=s beneficiary (as the case
may be), shall have the right to exercise said options for a period of
twenty-four (24) months following the date of termination, but in no event
beyond the expiration date of any such options.
The Executive understands and agrees that any rights derived solely by
reason of this subparagraph are subject to his execution of a release
agreement, satisfactory to the Company, which shall release the Company, its
subsidiaries and affiliates, from any and all claims whatsoever (including
but not limited to claims arising under the Age Discrimination in Employment
Act, as amended) and that any rights under this subparagraph shall not
accrue until the appropriate revocation period provided in the release
agreement has expired without revocation of same by the Executive.  The
Executive further understands and agrees that the accrual of any rights
under this subparagraph shall be in full and complete satisfaction of any
and all obligations owed by the Company to the Executive.

             (h)  Nothing contained in this Section 8 shall be deemed to
limit any other right the Company may have to terminate the Executive's
employment hereunder upon any ground permitted by law.

             9.   Successors; Binding Agreement.  In the event of a future
disposition of (or including) the properties and business of the Company,
substantially as an entirety, by merger, consolidation, sale of assets, or
otherwise, the Company shall assign this letter and all of its rights and
obligations hereunder to the acquiring or surviving corporation, such
corporation shall assume in writing all of the obligations of the Company,
and the Company shall remain liable for the performance of its obligations
hereunder in the event of an unjustified failure of the acquiring
corporation to perform its obligations under this letter.

             10.       Costs and Expenses.  The Company shall pay directly
or reimburse the Executive for any reasonable costs and expenses incurred by
the Executive in connection with the negotiation, preparation and
enforcement of this Agreement, or any amendments hereto.

             11.       Indemnification. During the term of this Agreement,
and subsequent thereto with respect to any claim arising out of or in
connection with his employment with the Company or any subsidiary of the
Company, the Company shall indemnify and hold the Executive harmless from
all claims and liability, loss or damage (including but not limited to
judgements, fines and amounts paid in settlement), asserted against the
Executive or incurred by the Executive, including reasonable attorneys fees
and investigation costs (the "Indemnification"). The Indemnification
provided for herein shall be in addition to and not in substitution of any
and all rights to indemnification which the Executive may be entitled to
under the laws of the State of Nevada or the Certificate of Incorporation
and By-laws of the Company. To the extent permitted under the laws of the
State of Nevada, and the Company's Certificate of Incorporation and By-Laws,
all expenses, including reasonable attorneys fees, incurred by the Executive
in defending any civil, criminal, administrative or investigative action,
shall upon request by the Executive, be paid and advanced by the Company in
advance of the final disposition of such action, suit or proceeding.

             12.        Survival.  The covenants, agreements,
representations, and warranties contained in or made pursuant to this
Agreement shall survive the Executive=s termination of employment,
irrespective of any investigation made by or on behalf of any party.

             13.       Modification.  This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
terminates and supersedes all existing agreements (written, oral or
otherwise) between them concerning such subject matter, and may be modified
only by a written instrument duly executed by each party.  The Executive
acknowledges that no other representations, oral or written, have been made
regarding the subject matter hereof, other than those explicitly provided
herein.  The Executive further acknowledges that he has not relied on any
oral or written representations not explicitly contained herein in executing
this Agreement.

             14.       Notices.  Any notice or other communication required
or permitted to be given hereunder shall be in writing and shall be mailed
by certified mail, return receipt requested, or delivered against receipt to
the party to whom it is to be given at the address of such party set forth
in the preamble to this Agreement (or to such other address as the party
shall have furnished in writing in accordance with the provisions of this
Section 13).  In the case of a notice to the Company, a copy of such notice
(which copy shall not constitute notice) shall be delivered to Camhy
Karlinsky & Stein LLP, 1740 Broadway, New York, New York
10019-4315, Attn. Alan I. Annex, Esq.  Notice to the estate of the Executive
shall be sufficient if addressed to the Executive as provided in
this Section 13.  Any notice or other communication given by certified mail
shall be deemed given at the time of certification thereof, except for a
notice changing a party=s address which shall be deemed given at the time of
receipt thereof.

             15.       Waiver.  Any waiver by either party of a breach of
any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement.  The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not
be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement.  Any waiver must be in writing.

             16.       Binding Effect.  The Executive=s rights and
obligations under this Agreement shall not be transferable by assignment or
otherwise except as provided herein, such rights shall not be subject to
encumbrance or the claims of the Executive=s creditors, and any attempt to
do any of the foregoing shall be void.  The provisions of this Agreement
shall be binding upon and inure to the benefit of the Executive and his
heirs and personal representatives, and shall be binding upon and inure to
the benefit of the Company and its successors and those who are its assigns
under Section 9.

             17.       Headings.  The headings in this Agreement are solely
for the convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.

             18.       Counterparts; Governing Law.  This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  It shall be governed by, and construed in accordance with, the
laws of the State of Nevada, without giving effect to the rules governing
the conflicts of laws.

             IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.

                  JACKPOT ENTERPRISES, INC.




                  By:   /s/ Allan R. Tessler
                        ___________________________
                        Name:  Allan R. Tessler
                        Title: CEO


                        /s/ Robert Torkar
                        ____________________________________
                        ROBERT TORKAR

EX-10

                                                  EXHIBIT 10.20

                   STOCK PURCHASE AGREEMENT
                           BETWEEN
                         E-T-T, INC.
                            AND
                   JACKPOT ENTERPRISES, INC.

                    Dated as of July 8, 2000

                          STOCK PURCHASE AGREEMENT

          STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of July 8,
2000 (the "Effective Date"), by and between E-T-T, Inc., a Nevada
corporation (the "Purchaser"), and Jackpot Enterprises, Inc., a Nevada
corporation (the "Seller") and the sole shareholder of each of the
subsidiaries set forth on Exhibit A attached hereto, each such company a
Nevada corporation (and collectively, the "Companies").

                            W I T N E S S E T H:

          WHEREAS, each of the Companies is engaged in the business of
operating gaming machines in local establishments in Nevada (the
"Business");

          WHEREAS, the Seller owns the number of shares of common stock,
(the "Shares"), of each of the Companies as set forth opposite the name of
such Company on Exhibit A, which Shares constitute all of the issued and
outstanding shares of capital stock of each of the Companies; and

          WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, the Shares for the purchase
price and upon the terms and conditions hereinafter set forth; and

          WHEREAS, certain terms used in this Agreement are defined in
Section 10.1;

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
                                  ARTICLE I

                         SALE AND PURCHASE OF SHARES

            1.1  Sale and Purchase of Shares.  Upon the terms and subject to
the conditions contained herein, on the Closing Date the Seller shall sell,
assign, transfer, convey and deliver to the Purchaser, and the Purchaser
shall purchase from the Seller, the Shares free and clear of any mortgage,
imperfection of title, lien, pledge, option, security interest, claim, deed
of trust, hypothecation, charge or other encumbrance of any kind whatsoever.

                                 ARTICLE II

                          PURCHASE PRICE AND PAYMENT

            2.1  Amount of Purchase Price.  The purchase price for the Shares
shall be an amount equal to $45,000,000 (the "Purchase Price").

            2.2  Payment of Purchase Price.

            (a) On the Effective Date, the Purchaser shall pay a sum equal to
twenty (20%) percent of the Purchase Price, $9,000,000 (the "Initial
Payment"), to McDonald Carano Wilson McCune Bergin Frankovich & Hicks LLP,
(the "Escrow Agent") subject to the terms and conditions set forth in the
Escrow Agreement attached hereto as Exhibit B, which shall be paid by the
delivery to the Escrow Agent of, at the election of the Purchaser, a
certified or bank cashier's check in New York Clearing House Funds, payable
to the order of the Escrow Agent or by wire transfer of immediately
available funds into an account designated by the Escrow Agent.  The Initial
Payment shall be deposited by the Escrow Agent in an interest bearing
account or instrument (which interest shall not be credited against the
Purchase Price) until such time as the Escrow Agent is required to pay such
deposit to the Seller or the Purchaser, as the case may be, pursuant to
Section 2.2(b) or Section 3.3(b) as applicable.

            (b) On the Closing Date, (i) the Escrow Agent shall pay the
Initial Payment to the Seller and (ii) the Purchaser shall pay a sum equal
to the Purchase Price less the Initial Payment, $36,000,000 (the "Final
Payment"), to the Seller, both payments of which shall be paid by the
delivery to the Seller of certified or bank cashier's checks by each of the
Escrow Agent and the Purchaser in New York Clearing House Funds, payable to
the order of Seller or, at the Seller's option, by wire transfers of
immediately available funds into an account designated by the Seller.

            (c) On the Closing Date, the Escrow Agent shall pay to the
Purchaser a sum equal to all of the accrued interest on the Initial Payment.

                                 ARTICLE III

                           CLOSING AND TERMINATION

            3.1  Closing Date.  Subject to the satisfaction of the conditions
set forth in Sections 7.1 and 7.2 hereof (or the waiver thereof by the party
entitled to waive that condition), the closing of the sale and purchase of
the Shares provided for in Section 1.1 hereof (the "Closing") shall take
place at 10:00 a.m. at the offices of Kummer Kaempfer Bonner & Renshaw
located at 3800 Howard Hughes Parkway, Seventh Floor, Las Vegas, Nevada
89109 (or at such other place as the parties may designate in writing)
within seventy-two (72) hours of the receipt by the Seller of the Gaming
Approvals, or on such other date as the Seller and the Purchaser may
designate in writing.  The date on which the Closing shall be held is
referred to in this Agreement as the "Closing Date."

            3.2  Termination of Agreement.  This Agreement may be terminated
prior to the Closing as follows:

            (a) At the election of the Seller or the Purchaser on or after
the twelve (12) month anniversary of the Effective Date, if the Closing
shall not have occurred by the close of business on such date, provided that
the Seller is not in default of any of its obligations hereunder;

            (b) by mutual written consent of the Seller and the Purchaser;

            (c) by the Seller or the Purchaser if there shall be in effect a
final nonappealable Order of a Governmental Body of competent jurisdiction
(other than an order by a Governmental Body specifically mentioned in
subsection (e) or (h) hereof) restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby; it
being agreed that the parties hereto shall promptly appeal any adverse
determination which is not nonappealable (and pursue such appeal with
reasonable diligence);

            (d) by the Seller, in the event of termination and abandonment by
the Purchaser for any reason directly attributable to an act or omission to
act of the Purchaser or any affiliates in breach of this Agreement,
including without limitation, the provisions related to the Purchaser's
inability to receive financing pursuant to Section 5.7, or the Escrow
Agreement;

            (e) by the Seller anytime after any Gaming Approval is denied or
otherwise refused to be granted by any Governmental Body to Purchaser, or
after an application filed by the Purchaser with any Governmental Body for
approval to purchase the Shares or any other material Gaming Approval is
withdrawn by the Purchaser; or

            (f) by the Seller if, after a Compliance Review, it is determined
in good faith by the Seller's board of directors that the Seller should not
proceed with the sale of the Shares to the Purchaser because the Seller
reasonably believes that the Purchaser or any of its principals are
"unsuitable persons" or that the sale of the Shares will result in an
"unsuitable situation" as such terms are defined in the Compliance Plan.

            (g) by the Purchaser, in the event of termination and abandonment
by the Seller for any reason directly attributable to an act or omission to
act of the Seller or any affiliate in breach of this Agreement or the Escrow
Agreement;

            (h) by the Seller or the Purchaser if the Federal Trade
Commission, the Department of Justice or any state agency does not approve
of the transaction under the HSR Act or any similar state anti-trust
statute.

            3.3  Procedure Upon Termination.

            (a) In the event of termination and abandonment by the Purchaser
or the Seller, or both, pursuant to Section 3.2 hereof, written notice
thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the purchase of the Shares hereunder shall be
abandoned, without further action by the Purchaser or the Seller.

            (b) In the event of termination and abandonment, for any reason
other than a termination pursuant to Section 3.2(b), 3.2(c), 3.2(f), 3.2(g)
or 3.2(h), the Purchaser shall pay the Seller a termination fee (the
"Termination Fee") in an amount equal to the Initial Payment plus accrued
interest thereon.

            (c) In the event of termination and abandonment for any reason,
each party shall redeliver all documents, work papers and other material of
any other party relating to the transactions contemplated hereby, including
all copies thereof, whether so obtained before or after the execution
hereof, to the party furnishing the same, including, but not limited to,
information furnished to the Purchaser relating to the business of the
Companies, slot location leases, licenses, operating agreements, financial
information and financial projections.

            3.4   Effect of Termination.  In the event that this Agreement is
validly terminated as provided herein and in accordance with Article IX
hereof, then each of the parties shall be relieved of their duties and
obligations arising under this Agreement after the date of such termination
and such termination shall be without liability to the Purchaser, the
Companies or the Seller; provided, however, that the obligations of the
parties set forth in Section 9.1 hereof shall survive any such termination
and shall be enforceable hereunder; provided, further, however, that nothing
in this Section 3.4 shall relieve the Purchaser or the Seller of any
liability for a breach of this Agreement.  If the Seller shall, pursuant to
Section 3.3(b) hereof, be entitled to the Termination Fee and accrued
interest thereon, then the parties shall so notify the Escrow Agent in
writing within five (5) business days of such termination and the Initial
Payment shall be paid to the Seller by the Escrow Agent within twenty (20)
business days of such termination.  If the Seller shall, pursuant to Section
3.3(b) hereof, not be entitled to a Termination Fee, then the parties shall
so notify the Escrow Agent in writing within five (5) business days of such
termination and the Initial Payment and accrued interest thereon shall be
returned in full by the Escrow Agent to the Purchaser within twenty (20)
business days of the date of such termination.

                                 ARTICLE IV

                REPRESENTATIONS AND WARRANTIES OF THE SELLER

               The Seller hereby represents and warrants to the Purchaser that:

            4.1 Organization and Good Standing.

               Each of the Companies and the Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation as set forth above and has all requisite
corporate power and authority, including all necessary licenses and permits,
to own, lease and operate its properties and assets and to carry on its
business as now conducted.  Each of the Companies is duly qualified or
authorized to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which it owns or leases real property
and each other jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or authorization.
The Companies' assets are sufficient in all material respects to carry out
the Business as presently conducted.  There are no assets material to the
operation of the Business that are not owned or leased by the Company.

            4.2 Authorization of Agreement.  Subject to the receipt of all
Gaming Approvals, the Seller has all requisite power, authority and legal
capacity to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to
be executed by the Seller in connection with the consummation of the
transactions contemplated by this Agreement (together with this Agreement,
the "Seller Documents"), and to consummate the transactions contemplated
hereby and thereby.  This Agreement has been, and each of the Seller
Documents will be at or prior to the Closing, duly and validly authorized by
all required corporate action on the part of the Seller and duly and validly
executed and delivered by the Seller and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this
Agreement constitutes, and each of the Seller Documents when so executed and
delivered will constitute, legal, valid and binding obligations of the
Seller, enforceable against the Seller in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding at
law or in equity).

            4.3   Capitalization.

            (a) The Seller owns of record and beneficially all of the issued
and outstanding capital stock of the Companies.  The authorized capital
stock of each of the Companies is as set forth on Exhibit A attached hereto
(collectively, the "Common Stock").  As of the date hereof, the shares of
Common Stock issued and outstanding of each of the Companies is as set forth
opposite the name of such Company on Exhibit A.  All of the issued and
outstanding shares of Common Stock of each of the Companies was duly
authorized for issuance and are validly issued, fully paid and non-
assessable.  All of such shares have been issued in transactions exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act") and the Companies have not violated the Securities Act or any state
securities or Blue Sky laws in connection with the issuance of any such
shares.

            (b) There is no existing option, warrant, call, right, commitment
or other agreement of any character to which the Seller or any of the
Companies is a party requiring, and there are no securities of any of the
Companies outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional shares of capital stock or
other equity securities of any of the Companies or other securities
convertible into, exchangeable for or evidencing the right to subscribe for
or purchase shares of capital stock or other equity securities of any of the
Companies. Neither the Seller nor any of the Companies are a party to any
voting trust or other voting agreement with respect to any of the shares of
Common Stock or to any agreement relating to the issuance, sale, redemption,
transfer or other disposition of the capital stock of any of the Companies.

            4.4   Subsidiaries. The Companies do not, directly or indirectly,
own or control any investment (whether equity or debt) in any corporation,
partnership, joint venture, business organization, trust or other entity.

            4.5            Corporate Records.

            (a) The Seller has delivered to the Purchaser true, correct and
complete copies of the articles of incorporation (each certified by the
Secretary of State or other appropriate official of the applicable
jurisdiction of organization) and by-laws (each certified by the secretary,
assistant secretary or other appropriate officer) or comparable
organizational documents of each of the Companies.

            (b) The minute books of each of the Companies previously made
available to the Purchaser contain complete and accurate records of all
meetings and accurately reflect all other corporate action of the
stockholders and board of directors (including committees thereof) of each
of the Companies.  The stock certificate books and stock transfer ledgers of
each of the Companies previously made available to the Purchaser are true,
correct and complete.  Since the date the Seller made the minute books and
stock transfer letters available to the Purchaser, there have been no
modifications, amendments, corrections or other changes made to, approved or
authorized with respect to the foregoing documents.  All stock transfer
taxes levied or payable with respect to all transfers of shares of each of
the Companies prior to the date hereof have been paid and appropriate
transfer tax stamps affixed.

            4.6 Conflicts; Consents of Third Parties.

            (a) Subject to compliance with the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (the "HSR Act"), and subject to the receipt
of all Gaming Approvals, neither the execution and delivery by the Seller of
this Agreement and the Seller Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Seller with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach
of, any provision of the articles of incorporation or by-laws or comparable
organizational documents of any of the Companies; (ii) conflict with,
violate, result in the breach or termination of, or constitute a default
under any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which any of the Companies is a party or by
which any of them or any of their respective properties or assets is bound;
(iii) violate any statute, rule, regulation, writ, injunction, judgment,
ruling, law, order or decree of any governmental body or authority by which
any of the Companies is bound; or (iv) result in the creation of any Lien
upon the properties or assets of any of the Companies except, in the case of
clauses (ii), (iii) and (iv), for such violations, breaches or defaults as
would not, individually or in the aggregate, have a Material Adverse Effect.

            (b)  Except for compliance with the applicable requirements of the
HSR Act, receipt of all Gaming Approvals and as set forth in Schedule 4.6(b)
hereto, no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental
Body is required on the part of the Seller, or any of the Companies in
connection with the execution and delivery of this Agreement or the Seller
Documents, or the compliance by the Seller or any of the Companies as the
case may be, with any of the provisions hereof or thereof.

            4.7 Ownership and Transfer of Shares. The Seller is the record
and beneficial owner of the Shares, free and clear of any and all Liens.
Except for compliance with the applicable requirements of the HSR Act and
subject to the receipt of all Gaming Approvals, the Seller has the corporate
power and authority to sell, transfer, assign and deliver such Shares as
provided in this Agreement, and such delivery will convey to the Purchaser
good and marketable title to such Shares, free and clear of any and all
Liens.
            4.8 Financial Statements.  The Seller has delivered to the
Purchaser true and complete copies of (i) the audited consolidated balance
sheets of the Seller as at June 30, 1998 and 1999 and the related audited
consolidated statements of income and of cash flows of the Seller for the
years then ended and (ii) the unaudited consolidated balance sheet of the
Companies as at March 31, 2000 (such audited and unaudited statements,
including the related notes and schedules thereto, are referred to herein as
the "Financial Statements").  Each of the Financial Statements is complete
and correct in all material respects, has been (or will be) prepared in
accordance with GAAP (subject to normal year-end adjustments in the case of
the unaudited statements) and in conformity with the practices consistently
applied by the Companies without modification of the accounting principles
used in the preparation thereof and presents fairly the financial position,
results of operations and cash flows of the Companies as at the dates and
for the periods indicated.

            For the purposes hereof, the unaudited consolidated balance sheet
of the Companies as at March 31, 2000 is referred to as the "Balance Sheet"
and March 31, 2000 is referred to as the "Balance Sheet Date."

            4.9 No Undisclosed Liabilities.  None of the Companies have any
indebtedness, obligations or liabilities of any kind (whether accrued,
absolute, contingent or otherwise, and whether due or to become due) that
would have been required to be reflected in, reserved against or otherwise
described on the Balance Sheet or in the notes thereto in accordance with
GAAP which was not fully reflected in, reserved against or otherwise
described in the Balance Sheet or the notes thereto or was not incurred in
the ordinary course of business consistent with past practice since the
Balance Sheet Date.

            4.10 Absence of Certain Developments.  Except as expressly
contemplated by this Agreement or as set forth on Schedule 4.10, since the
Balance Sheet Date:

          (i)  there has not been any Material Adverse Change nor has
       there occurred any event which is reasonably likely to result in a
       Material Adverse Change;

          (ii) there has not been any damage, destruction or loss, not
       covered by insurance, with respect to the property and assets of the
       Companies having a replacement cost of more than $50,000 for any single
       loss or $150,000 for all such losses;

          (iii) there has not been any declaration, setting aside or
       payment of any dividend or other distribution in respect of any shares
       of capital stock of the Companies or any repurchase, redemption or
       other acquisition by the Seller or the Companies of any outstanding
       shares of capital stock or other securities of, or other ownership
       interest in, the Companies;

          (iv)  none of the Companies increased rates of compensation
       (including bonuses) payable or to become payable to their employees,
       officers, agents or consultants with respect to the Business, except to
       the extent accrued on the Balance Sheet or entered into any employment,
       deferred compensation, severance or similar agreement (nor amended any
       such agreement) or agreed to increase the compensation payable or to
       become payable by it to any of the Companies' directors, officers,
       employees, agents or representatives or agreed to increase the coverage
       or benefits available under any severance pay, termination pay,
       vacation pay, Companies awards, salary continuation for disability,
       sick leave, deferred compensation, bonus or other incentive
       compensation, insurance, pension or other employee benefit plan,
       payment or arrangement made to, for or with such directors, officers,
       employees, agents or representatives, except as to all of the above,
       other than normal increases in the ordinary course of business
       consistent with past practice;

          (v) there has not been any change by any of the Companies in
       accounting or Tax reporting principles, methods or policies;

          (vi) none of the Companies have entered into any transaction
       or Contract or conducted its business other than in the ordinary course
       consistent with past practice;

          (vii)   none of the Companies have failed to promptly pay and
       discharge current liabilities except where disputed in good faith by
       appropriate proceedings;

          (viii)  none of the Companies have made any loans, advances or
       capital contributions to, or investments in, any Person or paid any
       fees or expenses to the Seller or any Affiliate of the Seller;

          (ix)    none of the Companies have mortgaged, pledged or
       subjected to any Lien any of its assets, or acquired any assets or
       sold, assigned, transferred, conveyed, leased or otherwise disposed of
       any assets of the Companies, except for assets acquired or sold,
       assigned, transferred, conveyed, leased or otherwise disposed of in the
       ordinary course of business consistent with past practice;

          (x)     none of the Companies have discharged or satisfied any
       Lien, or paid any obligation or liability (fixed or contingent), except
       in the ordinary course of business consistent with past practice and
       which, in the aggregate, would not be material to the Companies;

          (xi)    none of the Companies have canceled or compromised any
       debt or claim or amended, canceled, terminated, relinquished, waived or
       released any Contract or right except in the ordinary course of
       business consistent with past practice and which, in the aggregate,
       would not be material to any of the Companies;

          (xii)   none of the Companies have made or committed to make any
       capital expenditures or capital additions or betterments in excess of
       $50,000 individually or $150,000 in the aggregate except in the
       ordinary course of business, and consistent with past practices;

          (xiii)  none of the Companies have instituted or settled any
       material Legal Proceeding; and

          (xiv)   neither the Seller nor the Companies have agreed to take
       any actions set forth in this Section 4.10.

          (xv)    There has not been any loan or advance by the Companies
       to any person, except a normal travel advance or other reasonable
       expense advance to an officer or employee of the Companies on normal
       trade terms extended to customers except in the ordinary course of
       business and consistent with past practice;

          (xvi)   There has not been any sale or transfer of any
       properties or assets, other than in the ordinary course of business and
       consistent with past practice or any cancellation of any debts or
       claims of the Companies;

          (xvii)  There has not been any amendment, modification or
       termination of any material contract or agreement to which the
       Companies are a party or pursuant to which their properties or assets
       may be bound;

          (xviii) There has not been any sale or granting to any party or
       parties of any license, franchise, option or other right of any nature
       whatsoever with respect to the Companies' business or termination of
       any such rights.

            4.11 Taxes.  (a) Except as set forth in Schedule 4.11:

           (i)  Each of the Companies, and any combined, consolidated,
       unitary or affiliated group of which the Companies are or have been a
       member prior to the Closing Date: (x) have paid all Taxes required to
       be paid on or prior to the Closing Date (including, without limitation,
       payments of estimated Taxes) for which the Companies could be held
       liable; and (y) have accurately and timely filed (or timely filed an
       extension for) all federal, state, local, and foreign tax returns,
       reports and forms with respect to such Taxes required to be filed by
       them on or before the Closing Date.

            (ii) All Taxes attributable to all taxable periods ending on
       or before the Closing Date, to the extent not required to be previously
       paid have been fully and adequately reserved for (as taxes payable or
       accrued taxes) on the Financial Statements and the Seller will not
       accrue a Tax liability from the date of the Financial Statements up to
       and including the Closing Date other than a Tax Liability accrued in
       the ordinary course of business.

            (iii)     There is no material dispute or claim, or any
       action, suit, proceeding, audit or investigation concerning any
       liability for Taxes of the Companies either (x) claimed or raised by
       any authority in writing or (y) as to which each of the Companies has
       knowledge based upon personal contact with any agent of such authority.
       Except as set forth in Schedule 4.11, there are no deficiencies for any
       Taxes and none has been asserted or assessed in writing for which the
       Seller or the Companies could be liable, which remain unpaid or
       unsettled.

            (iv) Neither the Seller nor any of the Companies have waived
       or extended any statute of limitations in respect of Income Taxes or
       agreed to any extension of time with respect to an Income Tax
       assessment or deficiency.

            (v)  None of the Companies have made any material payments,
       is obligated to make any material payments, or is a party to any
       agreement that under certain circumstances could obligate it to make
       any material payments that will not be deductible under Code 280G and
       (z) none of the Companies will have any liability on or after the
       Closing Date pursuant to any tax allocation or sharing agreement.

          Neither the Seller nor the Companies have taken any action
          that would require an adjustment pursuant to Section 481 of the Code,
          by reason of a change in accounting method or otherwise.  The Company
          has not filed a Consent under Section 341(f)(1) of the Code or agreed
          to have the provisions of Section 341(f)(2) of the Code apply to any
          disposition of "subsection (f) assets" as such term is defined in
          Section 341(f)(4) of the Code.

          It is the intent of the Seller and the Purchaser to qualify
          this acquisition under 338(h)(10) of the Code and both the Seller
          and the Purchaser agree to file such consents as may be necessary to
          effectuate such intent.  The Seller and the Purchaser agree to
          promptly prepare a schedule allocating the Purchase Price to the
          assets of the Companies.

          No Tax assessment or deficiency which has not been paid or
          for which an adequate reserve has not been set aside, has been made
          or proposed against the Companies, nor are any of the Tax Returns not
          being or, to the best knowledge of Seller, threatened to be examined
          or audited, and no consents waiving or extending any applicable
          statutes of limitations for the Tax Returns, or any Taxes required
          to be paid thereunder, been filed.  The Seller shall promptly notify
          the Purchaser of any notice of pending action or proceeding involving
          Taxes relating to the Companies between the date of this Agreement
          and the Effective Date.  All Tax deficiencies determined as a result
          of any past completed audit have been satisfied.  The Seller has
          delivered to the Purchaser complete and correct copies of all audit
          reports and statements of deficiencies with respect to any Tax
          assessed against or agreed to by the Companies for the three most
          recent taxable periods for which such audit reports and statements of
          deficiencies have been received by the Seller.

          Without limiting the foregoing representations in any way,
          the Companies have collected all sales, use, transaction privilege and
          value added Taxes required to be collected, and has remitted, or will
          remit in a timely basis, such amounts to the appropriate governmental
          authorities and has furnished properly completed exemption
          certificates for all exempt transactions.

          Without limiting the foregoing representations in any way,
          the Companies have properly withheld income and social security or
          other similar Taxes and paid payroll Taxes with respect to all persons
          properly characterized as employees for federal, state or local Tax
          purposes. None of the assets of the Companies are subject to any liens
          in respect of Taxes (other than for current Taxes not yet due and
          payable).

          (b)  Schedule 4.11 sets forth all federal, state, local and
foreign Income Tax Returns filed with respect to each of the Companies for
taxable periods ended on or after June 30, 1999, indicates those Income Tax
Returns that have been audited, and indicates those Income Tax Returns that
currently are the subject of audit.  Each of the Companies has delivered or
made available to the Purchaser correct and complete copies of all federal
Income Tax Returns, examination reports, and statements of deficiencies
assessed against, or agreed to by each of the Companies since January 1,
2000.

            4.12 Real Property.

            (a)  None of the Companies own any real property.  Schedule 4.12
sets forth a complete list of all real property and interests in real
property leased by the Companies (individually, a "Real Property Lease" and
the real properties specified in such leases being referred to herein
individually as a "Company Property" and collectively as the "Company
Properties") as lessee or lessor.  In addition each of the Companies
utilizes the properties described in Schedule 7.2(i) leased by the Seller,
which lease shall be assumed by the Purchaser (or an Affiliate) prior to the
Closing Date.  Except as set forth in Schedule 4.12 hereto, the Company
Property constitutes all interests in real property currently used or
currently held for use in connection with the business of the Companies and
which are necessary for the continued operation of the business of the
Companies as the business is currently conducted.  Each of the Companies has
a valid and enforceable leasehold interest under each of the Real Property
Leases, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity), and the Companies have not received any notice of any default or
event that with notice or lapse of time, or both, would constitute a default
by the Companies under any of the Real Property Leases.  All of the Company
Property, buildings, fixtures and improvements thereon owned or leased by
the Companies are in good operating condition and repair (subject to normal
wear and tear).  The Seller has delivered to the Purchaser true, correct and
complete copies of the Real Property Leases, together with all amendments,
modifications or supplements, if any, thereto.

            (b)  Each of the Companies has all material certificates of
occupancy and Permits of any Governmental Body necessary or useful for the
current use and operation of each Company Property, and each of the
Companies has fully complied with all material conditions of the Permits
applicable to them.  No default or violation, or event that with the lapse
of time or giving of notice or both would become a default or violation, has
occurred in the due observance of any Permit.

            (c) There does not exist any actual or, to the best knowledge of
the Seller, threatened or contemplated condemnation or eminent domain
proceedings that affect any Company Property or any part thereof, and the
Seller has not received any notice, oral or written, of the intention of any
Governmental Body or other Person, or been made aware of any existing fact
related thereto, to take or use all or any part thereof.

            (d)  Neither the Seller nor the Companies have received any
written notice from any insurance Companies that has issued a policy with
respect to any Company Property requiring performance of any structural or
other repairs or alterations to such Company Property.

            (e)  None of the Companies own or hold, and is not obligated under
or a party to, any option, right of first refusal or other Contractual right
to purchase, acquire, sell, assign or dispose of any real estate or any
portion thereof or interest therein.

            4.13  Tangible Personal Property.

            (a)  Schedule 4.13 sets forth all leases of personal property
("Personal Property Leases") involving annual payments in excess of $10,000
relating to personal property used in the business of the Companies to which
the Companies are a party or by which the properties or assets of the
Companies are bound.  The Seller has delivered or otherwise made available
to the Purchaser true, correct and complete copies of the Personal Property
Leases, together with all amendments, modifications or supplements thereto.

            (b)  Each of the Companies has a valid leasehold interest under
each of the Personal Property Leases under which it is a lessee, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
default under any Personal Property Lease by any of the Companies or by any
other party thereto, and no event has occurred that with the lapse of time
or the giving of notice or both would constitute a default thereunder.

            (c)  Each of the Companies has good, valid and marketable title to
all of the items of tangible personal property reflected in the Balance
Sheet (except as sold or disposed of subsequent to the date thereof in the
ordinary course of business consistent with past practice) free and clear of
any and all Liens other than the Permitted Exceptions.  All such items of
tangible personal property which, individually or in the aggregate, are
material to the operation of the business of the Companies are in good
condition and in a state of good maintenance and repair (ordinary wear and
tear excepted) and are suitable for the purposes used.

            (d) All of the items of tangible personal property used by the
Companies under the Personal Property Leases are in good condition and
repair (ordinary wear and tear excepted) and are suitable for the purposes
used, and there are no material defects in the physical condition or
operability of such tangible personal property that would impair the use of
such tangible personal property as it is currently used.

          4.14  Intangible Property.  Schedule 4.14 contains a complete and
correct list of each patent, trademark, trade name, service mark, trade
secret and copyright owned, licensed or used by the Companies as well as all
registrations thereof and pending applications therefor, and each license or
other agreement relating thereto.  Except as set forth on Schedule 4.14,
each of the foregoing is owned by the party shown on such Schedule as owning
the same, free and clear of all mortgages, claims, liens, security
interests, charges and encumbrances and is in good standing and not the
subject of any challenge.  There have been no claims made and neither the
Seller nor any of the Companies have received any notice or otherwise knows
or has reason to believe that any of the foregoing is invalid or conflicts
with the asserted rights of others, and the Companies are not infringing
upon or otherwise acting adversely to the right or claimed right of any
person or entity with respect to the intangible property.  Each of the
Companies possess all patents, patent licenses, trade names, trademarks,
service marks, brand marks, brand names, copyrights, know-how, formulae and
other proprietary and trade rights necessary for the conduct of its business
as now conducted, not subject to any restrictions and without any known
conflict with the rights of others, and the Companies have not forfeited or
otherwise relinquished any such patent, patent license, trade name,
trademark, service mark, brand mark, brand name, copyright, know-how,
formulae or other proprietary right necessary for the conduct of its
business as conducted on the date hereof.  None of the Companies are under
any obligation to pay any royalties or similar payments in connection with
any license to the Seller or any affiliate thereof.  Except as set forth on
Schedule 4.14, to the Seller's knowledge, none of the patents, trademarks,
trade names, service marks and copyrights are being infringed upon or
appropriated by others, and none is subject to any outstanding litigation or
judgment affecting the scope of free and unrestricted use by the Companies
or is used contrary to the provisions of any licensing or other contract.
Except as set forth on Schedule 4.14, there exist no material geographic
restrictions on the use by the Companies of such marks.

          4.15  Material Contracts.  Schedule 4.15 sets forth all of the
following Contracts to which the Companies are a party or by which they are
bound (collectively, the "Material Contracts"):  (i) Contracts with the
Seller or any current officer or director or agent of the Companies;
(ii) Contracts with any labor union or association representing any employee
of the Companies; (iii) Contracts pursuant to which any party is required to
purchase or sell a stated portion of its requirements or output from or to
another party; (iv) Contracts for the sale of any of the assets of the
Companies other than in the ordinary course of business or for the grant to
any person of any preferential rights to purchase any of its assets; (v)
joint venture agreements; (vi) material Contracts containing covenants of
the Companies not to compete in any line of business or with any person in
any geographical area or covenants of any other person not to compete with
the Companies in any line of business or in any geographical area; (vii)
Contracts relating to the acquisition by the Companies of any operating
business or the capital stock of any other person; (viii) Contracts relating
to the borrowing of money; or (ix) any other Contracts, other than Real
Property Leases, which involve the expenditure of more than $50,000 in the
aggregate or $10,000 annually or require performance by any party more than
one year from the date hereof.  There have been made available to the
Purchaser, its affiliates and their representatives true and complete copies
of all of the Material Contracts.  Except as set forth on Schedule 4.15, all
of the Material Contracts and other agreements are in full force and effect
and are the legal, valid and binding obligation of the Companies,
enforceable against them in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).  Except as set
forth on Schedule 4.15, none of the Companies are in default in any material
respect under any Material Contracts, nor, to the knowledge of the Seller,
is any other party to any Material Contract in default thereunder in any
material respect, and there are no facts or circumstances known to the
Seller or the Companies that would reasonably indicate that the Seller, the
Companies, or any other party to any Material Contract will or may be in
breach thereof.

          4.16  Employee Benefits.
          (a)   Schedule 4.16(a) sets forth a complete and correct list of
(i) all "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all other
pension plans or employee benefit arrangements, programs or payroll
practices (including, without limitation, severance pay, vacation pay,
company awards, salary continuation for disability, sick leave, retirement,
deferred compensation, bonus or other incentive compensation, stock purchase
arrangements or policies, hospitalization, medical insurance, life insurance
and scholarship programs) maintained by the Companies or to which the
Companies contribute or are obligated to contribute thereunder with respect
to employees of the Companies ("Employee Benefit Plans") and (ii) all
"employee pension plans", as defined in Section 3(2) of ERISA, maintained by
the Companies or any trade or business (whether or not incorporated) which
are under control, or which are treated as a single employer, with the
Companies under Section 414(b), (c), (m) or (o) of the ("ERISA Affiliate")
or to which the Companies, or any ERISA Affiliate contributed or is
obligated to contribute thereunder ("Pension Plans").  Schedule 4.16(a)
clearly identifies, in separate categories, Employee Benefit Plans or
Pension Plans that are (i) subject to Section 4063 and 4064 of ERISA
("Multiple Employer Plans"), (ii) multiemployer plans (as defined in Section
4001(a)(3) of ERISA) ("Multiemployer Plans") or (iii) "benefit plans",
within the meaning of Section 5000(b)(1) of the Code providing continuing
benefits after the termination of employment (other than as required by
Section 4980B of the Code or Part 6 of Title I of ERISA and at the former
employee's or his beneficiary's sole expense).

          (b)   None of the Companies have any withdrawal or other liability
(contingent or otherwise) under Title IV of ERISA with respect to any
Multiple Employer Plan or Multiemployer Plan.

          (c)   Each of the Employee Benefit Plans and Pension Plans intended
to qualify under Section 401 of the Code ("Qualified Plans") so qualify and
the trusts maintained thereto are exempt from federal income taxation under
Section 501 of the Code, and, except as disclosed on Schedule 4.16(c),
nothing has occurred with respect to the operation of any such plan which
could cause the loss of such qualification or exemption or the imposition of
any liability, penalty or tax under ERISA or the Code.

          (d)   All contributions and premiums required by law or by the
terms of any Employee Benefit Plan or Pension Plan which are defined benefit
plans or money purchase plans or any agreement relating thereto have been
timely made (without regard to any waivers granted with respect thereto) to
any funds or trusts established thereunder or in connection therewith, and
no accumulated funding deficiencies exist in any of such plans subject to
Section 412 of the Code.  All contributions that have not been paid have
been properly recorded on the books of the Companies.

          (e)   The benefit liabilities, as defined in Section 4001(a)(16) of
ERISA, of each of the Employee Benefit Plans and Pension Plans subject to
Title IV of ERISA using the actuarial assumptions that would be used by the
Pension Benefit Guaranty Corporation (the "PBGC") in the event it terminated
each such plan do not exceed the fair market value of the assets of each
such plan.  The liabilities of each Employee Benefit Plan that has been
terminated or otherwise wound up, have been fully discharged in full
compliance with applicable Law.

          (f)   There has been no "reportable event" as that term is defined
in Section 4043 of ERISA and the regulations thereunder with respect to any
of the Employee Benefit Plans or Pension Plans subject to Title IV of ERISA
which would require the giving of notice, or any event requiring notice to
be provided under Section 4041(c)(3)(C) or 4063(a) of ERISA.

          (g)   There has been no violation of ERISA with respect to the
filing of applicable returns, reports, documents and notices regarding any
of the Employee Benefit Plans or Pension Plans with the Secretary of Labor
or the Secretary of the Treasury or the furnishing of such notices or
documents to the participants or beneficiaries of the Employee Benefit Plans
or Pension Plans.

          (h)   True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans and Pension Plans (as
applicable), have been delivered to the Purchaser (A) any plans and related
trust documents, and all amendments thereto, (B) the most recent Forms 5500
for the past three years and schedules thereto, (C) the most recent
financial statements and actuarial valuations for the past three years, (D)
the most recent Internal Revenue Service determination letter, (E) the most
recent summary plan descriptions (including letters or other documents
updating such descriptions) and (F) written descriptions of all non-written
agreements relating to the Employee Benefit Plans and Pension Plans.

          (i)   There are no pending Legal Proceedings which have been
asserted or instituted against any of the Employee Benefit Plans or Pension
Plans, the assets of any such plans or the Companies, or the plan
administrator or any fiduciary of the Employee Benefit Plans or Pension
Plans with respect to the operation of such plans (other than routine,
uncontested benefit claims), and there are no facts or circumstances which
could form the basis for any such Legal Proceeding.

          (j)   Each of the Employee Benefit Plans and Pension Plans has been
maintained, in all material respects, in accordance with its terms and all
provisions of applicable Law.  All amendments and actions required to bring
each of the Employee Benefit Plans and Pension Plans into conformity in all
material respects with all of the applicable provisions of ERISA and other
applicable Laws have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken until a
date after the Closing Date and such amendments or actions are disclosed on
Schedule 4.16(j).

          (k)   Each of the Companies and any ERISA Affiliate which maintains
a "benefits plan" within the meaning of Section 5000(b)(1) of ERISA have
complied with the notice and continuation requirements of Section 4980B of
the Code or Part 6 of Title I of ERISA and the applicable regulations
thereunder.

          (l)   None of the Seller, any ERISA Affiliate or any organization
to which any is a successor or parent corporation, has divested any business
or entity maintaining or sponsoring a defined benefit pension plan having
unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of
ERISA) or transferred any such plan to any person other than the Seller or
any ERISA Affiliate during the previous five-year period ending on the
Closing Date.

          (m)   None of the Companies or "party in interest" or "disqualified
person" with respect to the Employee Benefit Plans or Pension Plans has
engaged in a "prohibited transaction" within the meaning of Section 4975 of
the Code or Section 406 of ERISA or which could subject it to a material
civil penalty imposed pursuant to Section 4975 or 4976 or ERISA.

          (n)   None of the Companies, or any ERISA Affiliate have terminated
any Employee Benefit Plan or Pension Plan subject to Title IV of ERISA, or
incurred any outstanding liability under Section 4062 of ERISA to the
Pension Benefit Guaranty Corporation or to a trustee appointed under Section
4042 of ERISA.

          (o)   Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee of the Companies; (ii) increase any
benefits otherwise payable under any Employee Benefit Plan or Pension Plan;
or (iii) result in the acceleration of the time of payment or vesting of any
such benefits.

          (p)   No stock or other security issued by the Companies form or
has formed a material part of the assets of any Employee Benefit Plan or
Pension Plan.

          (q)   Except as set forth on Schedule 4.16(q), there are no
proceedings or lawsuits, and to the knowledge of the Seller, there are no
investigations, either currently in progress or expected to be instituted in
the future, relating to any Benefit Plan, by any administrative agency,
whether local, state or federal.

          (r)   Except as set forth on Schedule 4.16(r), there are no pending
or threatened lawsuits or other claims (other than routine claims for
benefits under the plan) against or involving (i) any Benefit Plan or (ii)
any Fiduciary of such Benefit Plan (within the meaning of Section 3(21)(A)
of ERISA) brought on behalf of any participant, beneficiary or Fiduciary
thereunder, nor to the knowledge of the Seller is there any reasonable basis
for any such claim.

          (s)   The Seller has no intention or commitment, whether legally
binding or not, to create any additional Benefit Plan, or to modify or
change any existing Benefit Plan.  The benefits under all Benefit Plans are
as represented, and except in the ordinary course of business and consistent
with past practices or as required by law, have not been, and will not be
increased subsequent to the date documents are provided to Purchaser.

          (t)   Except as set forth on Schedule 4.16(t), none of the Benefit
Plans or any other employment agreement or arrangement entered into by the
Seller or the Companies will entitle any current or former employee to any
benefits or other compensation that become payable solely as a result of the
consummation of this transaction.

          (u)   None of the Benefit Plans are subject to the tax on unrelated

business taxable income or unrelated debt-financed income under Section 511
of the Code.

          (v)   Except as set forth on Schedule 4.16(v), no Benefit Plan has
any interest in any annuity contract or other investment or insurance
contract issued by an insurance company that is the subject of bankruptcy,
conservatorship, rehabilitation or similar proceeding.

          4.17  Labor.  Schedule 4.17 attached hereto contains a complete,
current and correct list of all of the Companies' employees ("Employees"),
which includes the job, position and compensation payable to each of the
Employees.

          (a)   None of the Companies are party to any labor or collective
bargaining agreement and there are no labor or collective bargaining
agreements which pertain to employees of the Companies.

          (b)   No employees of the Companies are represented with respect to
the Companies by any labor organization.  No labor organization or group of
employees of the Companies have made a pending demand for recognition, and
there are no representation proceedings or petitions seeking a
representation proceeding presently pending or, to the best knowledge of the
Seller, threatened to be brought or filed, with the National Labor Relations
Board or other labor relations tribunal.  There is no organizing activity
involving the Companies pending or, to the best knowledge of the Seller,
threatened by any labor organization or group of employees of the Companies.

          (c)   There are no (i) strikes, work stoppages, slowdowns, lockouts
or arbitrations or (ii) material grievances or other labor disputes pending
or, to the best knowledge of the Seller, threatened against or involving the
Companies.  There are no unfair labor practice charges, grievances or
complaints pending or, to the best knowledge of the Seller, threatened by or
on behalf of any employee or group of employees of the Companies.

          (d)   The Companies are in material compliance with all laws,
statutes, ordinances, rules, regulations, orders and other requirements
relating to the employment of labor, including without limitation Title V11
of the federal Civil Rights Act of 1964, the federal Age Discrimination in
Employment Act of 1967, the federal Americans with Disabilities Act, and any
and all provisions thereof relating to wages, hours, collective bargaining
and the payment of social security and similar Taxes;

          (e)   There is no pending or, to the knowledge of the Seller,
threatened charge, complaint, allegation, application or other process or
claim against the Companies with respect to the statutes referenced in sub-
section (d) above before any federal, territorial, state or local or other
governmental or administrative agency or other entity other than in the
ordinary course of business consistent with past practices;

          (f)   The Companies have paid and performed all obligations when
due with respect to its employees, consultants, agents, officers and
directors, including without limitation the payment when due in the ordinary
course of business of any accrued and payable wages, severance pay, vacation
pay, benefits and commissions, except those obligations which are in good
faith being challenged by the Companies as not valid obligations of the
Companies as more fully described on Schedule 4.17;

          (g)   To the knowledge of the Seller, none of the persons
performing services for the Companies have been improperly classified as
independent contractors or as being exempt from the payment of wages for
overtime;

          (h)   Schedule 4.17(h) lists each individual who is absent from
active employment with the Companies by reason of (i) short-term or long-
term disability, (ii) leave of absence under the Family and Medical Leave
Act of 1933 (or comparable state statute), (iii) military leave (under
conditions that give the employee re-employment rights) or (iv) other
approved leave of absence; and

          (i)   Schedule 4.17(i) lists each individual who has elected to
continue participating in a group health plan of the Companies pursuant to
an election under COBRA.

          4.18  Litigation.  Except as set forth in Schedule 4.18, there is
no suit, action, proceeding, investigation, claim, arbitration or order
pending or, to the knowledge of the Seller or the Companies, threatened
against the Companies, their assets or business' (or to the knowledge of the
Seller or the Companies, pending or threatened, against any of the officers,
directors or key employees of the Companies with respect to their business
activities on behalf of the Companies), or to which the Seller or the
Companies are otherwise a party, which, if adversely determined, would have
a Material Adverse Effect, before any court, or before any governmental
department, commission, board, agency, or instrumentality; nor to the
knowledge of the Seller nor the Companies is there any reasonable basis for
any such action, proceeding, or investigation against the Seller, the
Companies or any officers, directors or key employees of the Companies.
None of the Companies are subject to any judgment, order or decree of any
court or governmental agency except to the extent the same are not
reasonably likely to have a Material Adverse Effect and none of the
Companies are engaged in any legal action to recover monies due it or for
damages sustained by it.

          4.19  Compliance with Laws; Permits.

          Each of the Companies is in compliance with all Laws applicable to
the Companies or to the conduct of the business or operations of the
Companies or the use of their respective properties (including any leased
properties) and assets, except for such non-compliances as would not,
individually or in the aggregate, have a Material Adverse Effect.  None of
the Companies have received any written notification of any asserted present
or past failure by the Companies to comply with such laws, statutes,
ordinances, rules, regulations, orders or other requirements.  Each of the
Companies has all governmental permits and approvals from state, federal or
local authorities which are required for the Companies to operate its
business. Schedule 4.19 attached hereto contains a complete, current and
correct list of all material governmental licenses, permits, franchises,
rights and privileges necessary for the present conduct of the Business (the
"Licenses"). Except as set forth in Schedule 4.19, the Companies possess all
such Licenses. Each of the Licenses is in full force and effect, and there
are no pending or, to the knowledge of the Seller, threatened claims or
proceedings challenging the validity of or seeking to revoke or discontinue,
any of the Licenses.  Prior to the date hereof, the Companies have delivered
to the Purchaser a complete, current and correct copy of each of the
Licenses.

          4.20  Environmental Matters.  Except as set forth on Schedule 4.20
hereto:

          (a)   the operations of the Companies are in compliance with all
applicable Environmental Laws and all permits issued by other governmental
authorities pursuant to Environmental Laws or otherwise;

          (b)   each of the Companies has obtained all permits required under
all applicable Environmental Laws necessary to operate its business;

          (c)   none of the Companies are the subject of any outstanding
written order or Contract with any governmental authority or person
respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any Release
or threatened Release of a Hazardous Material;

          (d)   none of the Companies have received any written communication
alleging that the Companies may be in violation of any Environmental Law, or
any permit issued pursuant to Environmental Law, or may have any liability
under any Environmental Law;

          (e)   none of the Companies have any current contingent liability
in connection with any Release of any Hazardous Materials into the indoor or
outdoor environment (whether on-site or off-site);

          (f)   to the Seller's knowledge, there are no investigations of the
business, operations, or currently or previously owned, operated or leased
property of the Companies pending or threatened which could lead to the
imposition of any liability pursuant to Environmental Law;

          (g)   there is not located at any of the properties of the
Companies any (i) underground storage tanks, (ii) asbestos-containing
material or (iii) equipment containing polychlorinated biphenyls; and,

          (h)   the Seller has provided to the Purchaser all environmentally
related audits, studies, reports, analyses, and results of investigations
that have been performed with respect to the currently or previously owned,
leased or operated properties of the Companies.

          (i)   Neither the Seller nor the Companies have discovered or, to
their knowledge, caused, and, to the knowledge of the Seller, no other
person has discovered or caused, any discharge, emission, disposal or
release of Hazardous Substances on the Companies' premises, or any
occurrence or condition on such premises or in the vicinity of such
premises, which could make such premises subject to restrictions on the
ownership, occupancy, transferability or use under any Hazardous Materials
Laws.

          4.21  Insurance.  Schedule 4.21 sets forth a complete and accurate
list of all policies of insurance of any kind or nature covering the
Companies or any of their respective employees, properties or assets,
including, without limitation, policies of life, disability, fire, theft,
workers compensation, employee fidelity and other casualty and liability
insurance.  Schedule 4.21 details each policy, carrier, the amount of
coverage, its expiration date, and the date through which premiums have been
paid.  All such policies are in full force and effect, and, to the Seller's
knowledge, none of the Companies are in default of any provision thereof,
except for such defaults as would not, individually or in the aggregate,
have a Material Adverse Effect.

         To the knowledge of the Seller, such policies (i) are adequate for
compliance with all agreements or instruments to which the Companies are a
party, or pursuant to which their business, properties or assets may be
subject, (ii) are valid, outstanding and enforceable policies, (iii) provide
insurance coverage in the amounts indicated in such policies for the
Companies' business, properties, assets and operations of the Companies as
presently conducted and (iv) will remain in full force and effect through
the respective dates set forth on Schedule 4.21, without the payment of
additional premiums, other than additional premiums paid in the ordinary
course of business or additional premiums required as a result of an audit.
Schedule 4.21 also describes all claims of the Companies which are pending
under such insurance policies or have been paid to the Companies since
January 1, 1998. Since January 1, 1998, the Companies have not been refused
coverage by any insurance carrier with respect to its properties, assets or
operations, nor has its coverage been limited, by any insurance carrier to
which it has applied for any such insurance or with which it has carried
insurance.  Prior to the date hereof, the Seller shall have delivered to the
Purchaser complete, current and correct copies, in all material respects, of
all of the policies of insurance which are maintained by or for the benefit
of the Companies.

          4.22  Inventories; Receivables; Payables.

          (a)   The inventories of the Companies are in good and marketable
condition, and are saleable in the ordinary course of business.  All
inventories owned by the Companies have been purchased in the ordinary
course of business and consistent with anticipated requirements of the
Business.  Adequate reserves have been reflected in the Balance Sheet for
obsolete or otherwise unusable inventory, which reserves were calculated in
a manner consistent with past practice and in accordance with GAAP
consistently applied.

          (b)   All accounts receivable of the Companies have arisen from
bona fide transactions in the ordinary course of business consistent with
past practice.  All accounts receivable of the Companies reflected on the
Balance Sheet are good and collectible at the aggregate recorded amounts
thereof, net of any applicable reserve for returns or doubtful accounts
reflected thereon, which reserves are adequate and were calculated in a
manner consistent with past practice and in accordance with GAAP
consistently applied.  All accounts receivable arising after the Balance
Sheet Date are good and collectible at the aggregate recorded amounts
thereof, net of any applicable reserve for returns or doubtful accounts,
which reserves are adequate and were calculated in a manner consistent with
past practice and in accordance with GAAP consistently applied.

          (c)   All accounts payable of the Companies reflected in the
Balance Sheet or arising after the date thereof are the result of bona fide
transactions in the ordinary course of business and have been paid or are
not yet due and payable.

          4.23  Customers and Suppliers.  Schedule 4.23 sets forth a list of
the largest customers and the largest suppliers of the Companies, as
measured by the dollar amount of purchases therefrom or thereby representing
at least 5% of the Companies' consolidated revenues, during the fiscal year
ended June 30, 1999 and the eleven month period ended May 31, 2000, showing
the approximate total purchases by the Companies from each such supplier and
the approximate total revenues by the Companies from each such customer,
during such period.  Since the Balance Sheet Date, there has not been any
Material Adverse Change in the business relationship of the Companies with
any customer or supplier listed on Schedule 4.23.

          4.24  Financial Advisors.  Except as set forth on Schedule 4.24, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Seller or the Companies in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee,
commission, compensation or like payment in respect thereof.

          4.25  Transactions with Affiliates.  Except as set forth on
Schedule 4.25, neither the Seller nor any of its Affiliates (as defined
below), has any interest, directly or indirectly, in any material lease,
lien, contract, license, encumbrance, loan or other agreement to which the
Companies are a party, any interest (other than as a shareholder) in any
properties or assets of the Companies or any interest in any competitor,
supplier or customer of the Companies. "Affiliate" shall mean, with respect
to any person, any other person controlling, controlled by or under common
control with the subject person, with control being evidenced by ownership
of more than 50% of the capital stock of a person or the ability to direct
the management or policies of another person through any other means.

          4.26  Bank Accounts. Schedule 4.26 sets forth the names and
locations of all banks, trust companies, savings and loan associations and
other financial institutions at which the Companies maintain safe deposit
boxes or accounts of any nature.

          4.27  Technology.

          (a)   The current software applications used by the Companies in
the operation of their business are set forth and described on Schedule 4.28
hereto (the "Software").

          (b)   To the extent that any of the Software has been designed or
developed by the Seller's management information or development staff or by
consultants on the Seller's behalf, such Software is original and capable of
copyright protection in the United States, and the Companies have complete
rights to and ownership of such Software, including possession of, or ready
access to, the source code for such Software in its most recent version.  No
part of any such Software is an imitation or copy of, or infringes upon the
software of any other person or entity, or violates or infringes upon any
common law or statutory rights of any other person or entity, including,
without limitation, rights relating to defamation, contractual rights,
copyrights, trade secrets, and rights of privacy or publicity.  Neither the
Seller nor the Companies have sold, assigned, licensed, distributed or in
any other way disposed of or encumbered any of the Software.

          (c)   Except as set forth on Schedule 4.28, the Software, to the
extent it is licensed from any third party licensor or constitutes "off-the-
shelf" software, is held by the Companies legitimately and is fully
transferable hereunder without any third party consent.  All of the
Companies' computer hardware has legitimately licensed software installed
therein.

          (d)   The Companies have not knowingly altered its data, or any
Software or supporting software which may, in turn, damage the integrity of
the data, stored in electronic optical, or magnetic or other form.  Except
as set forth on Schedule 4.28 hereto, neither the Seller nor the Companies
have any knowledge of the existence of any bugs or viruses with respect to
the Software.

          (e)   The Companies shall, to the maximum possible extent, pass
through to the Purchaser all manufacturer's and supplier's warranties and
support contracts for the Software that are owned by the Companies, and the
Companies shall execute each document that is necessary or appropriate to
effectuate the Purchaser's obtaining and enjoying the benefits of any such
pass-through warranty.

          (f)   The Seller has furnished to the Purchaser true and accurate
copies of all existing documentation (end user or otherwise) relating to the
use, maintenance and operation of the Software.

                           ARTICLE V

      REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

       The Purchaser hereby represents and warrants to the Seller that:

          5.1    Organization and Good Standing.  The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada.

          5.2    Authorization of Agreement.  The Purchaser has full corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by the Purchaser in connection with the
consummation of the transactions contemplated hereby and thereby (the
"Purchaser Documents"), and to consummate the transactions contemplated
hereby and thereby, subject to the receipt of Gaming Approvals.  The
execution, delivery and performance by the Purchaser of this Agreement and
each Purchaser Document have been duly authorized by all necessary corporate
action on behalf of the Purchaser.  This Agreement has been, and each
Purchaser Document will be at or prior to the Closing, duly executed and
delivered by the Purchaser and (assuming the due authorization, execution
and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each Purchaser Document when so executed and delivered will
constitute, legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).

          5.3    Conflicts; Consents of Third Parties.

          (a)   Other than compliance with the applicable requirements of the
HSR Act and the receipt of all Government Approvals, neither the execution
and delivery by the Purchaser of this Agreement and of the Purchaser
Documents, nor the compliance by the Purchaser with any of the provisions
hereof or thereof will (i) conflict with, or result in the breach of, any
provision of the articles of incorporation or by-laws of the Purchaser, (ii)
conflict with, violate, result in the breach of, or constitute a default
under any note, bond, mortgage, indenture, license, agreement or other
obligation to which the Purchaser is a party or by which the Purchaser or
its properties or assets are bound or (iii) violate any statute, rule,
regulation, order or decree of any governmental body or authority by which
the Purchaser is bound, except, in the case of clauses (ii) and (iii), for
such violations, breaches or defaults as would not, individually or in the
aggregate, have a material adverse effect on the business, properties,
results of operations, prospects, conditions (financial or otherwise) of the
Purchaser and its subsidiaries, taken as a whole.

          (b)   Except for compliance with the applicable requirements of the
HSR Act, the receipt of the Gaming Approvals and as set forth on Schedule
5.3 hereto, no consent, waiver, approval, Order, Permit or authorization of,
or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of the Purchaser in connection
with the execution and delivery of this Agreement or the Purchaser Documents
or the compliance by the Purchaser with any of the provisions hereof or
thereof.

          5.4    Litigation.  There are no Legal Proceedings pending or, to
the best knowledge of the Purchaser, threatened that are reasonably likely
to prohibit or restrain the ability of the Purchaser to enter into this
Agreement or consummate the transactions contemplated hereby.

          5.5    Investment Intention.  The Purchaser is acquiring the Shares
for its own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act of
1933, as amended (the "Securities Act") thereof.  The Purchaser understands
that the Shares have not been registered under the Securities Act and cannot
be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available.

          5.6    Financial Advisors.  No Person has acted, directly or
indirectly, as a broker, finder or financial advisor for the Purchaser in
connection with the transactions contemplated by this Agreement and no
person is entitled to any fee or commission or like payment in respect
thereof.

          5.7    Financing.  The Purchaser has received a letter from a
recognized financial institution acceptable to the Seller providing for the
financing necessary to consummate the transactions contemplated herein which
letters have been previously provided to the Seller.  The Purchaser has no
reason to believe that such financing will not be available at the Closing.

                                 ARTICLE VI

                                  COVENANTS

          6.1   Access to Information.
          (a)   The Seller agrees that, prior to the Closing Date, the
Purchaser shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal advisors and
accountants), to make such investigation of the properties, businesses and
operations of the Companies and such examination of the books, records and
financial condition of the Companies as it reasonably requests and to make
extracts and copies of such books and records.  Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances, and the Seller shall cooperate, and shall cause
the Companies to cooperate, fully therein.  No investigation by the
Purchaser prior to or after the date of this Agreement shall diminish or
obviate any of the representations, warranties, covenants or agreements of
the Seller contained in this Agreement or the Seller Documents.  In order
that the Purchaser may have full opportunity to make such physical,
business, accounting and legal review, examination or investigation as it
may reasonably request of the affairs of the Companies, the Seller shall
cause the officers, employees, consultants, agents, accountants, attorneys
and other representatives of the Companies to cooperate fully with such
representatives in connection with such review and examination.

          (b)   From the date hereof to the Closing Date, the Seller shall
use its, and cause the Companies to use their, reasonable efforts to keep
the Purchaser informed from time to time concerning any material changes
that may occur affecting the Companies.  For a period of up to sixty (60)
calendar days prior to the Closing Date, the senior executives of the Seller
shall meet with the Purchaser on a biweekly basis to provide the Purchaser
with an overview and assessment of the Companies' business.  The Purchaser
acknowledges, agrees and understands that such meetings are to provide
information about the Companies and that the Purchaser shall not be entitled
to supervise, instruct or manage the business of the Companies.

          6.2    Conduct of the Business Pending the Closing.

          (a)   Except as otherwise expressly contemplated by this Agreement
or with the prior written consent of the Purchaser, the Seller shall, and
shall cause the Companies to:

                (i)     conduct the respective businesses of the
          Companies only in the usual, ordinary course consistent with past
          practice;

                (ii)    use its best efforts to (A) preserve its
          present business operations, organization (including, without
          limitation, management and the sales force) and goodwill of the
          Companies and (B) preserve its present relationship with Persons,
          customers, suppliers, distributors and others having business
          dealings with the Companies;

                (iii)   maintain (A) all of the assets and properties
          of the Companies in their current condition and in good working
          order, ordinary wear and tear excepted and (B) insurance upon all
          of the properties and assets of the Companies in such amounts and
          of such kinds comparable to that in effect on the date of this
          Agreement;

                (iv)    (A) maintain the books, accounts and records
          of the Companies in the ordinary course of business consistent
          with past practices, (B) continue to collect accounts receivable
          and pay accounts payable utilizing normal procedures and without
          discounting or accelerating payment of such accounts, and (C)
          comply with all contractual and other obligations applicable to
          the operation of the Companies and continue to perform its
          obligations under the Material Contracts; and

                 (v)     comply in all material respects with
          applicable laws, including, without limitation, Environmental
          Laws.

          (b)   Except as otherwise expressly contemplated by this Agreement
or with the prior written consent of the Purchaser, the Seller shall not,
and shall cause the Companies not to:
                 (i)     declare, set aside, make or pay any dividend
          or other distribution in respect of the capital stock of the
          Companies or repurchase, redeem or otherwise acquire any
          outstanding shares of the capital stock or other securities of, or
          other ownership interests in, the Companies;

                 (ii)    transfer, issue, pledge, sell or dispose of or
          authorize the transfer, issuance, sale, pledge or disposal of any
          shares of capital stock or other securities of the Companies or
          grant options, warrants, calls or other rights to purchase or
          otherwise acquire shares of the capital stock or other securities
          of the Companies;

                 (iii)   effect any recapitalization, reclassification,
           stock split or like change in the capitalization of the Companies;

                 (iv)    amend the articles of incorporation or by-laws
          of the Companies;

                  (v)     (A) materially increase the annual level of
          compensation of any employee of the Companies, (B) materially
          increase the annual level of compensation payable or to become
          payable by the Companies to any of their respective executive
          officers, (C) grant any unusual or extraordinary bonus, benefit or
          other direct or indirect compensation to any employee, director or
          consultant, other than in the ordinary course consistent with past
          practice and in such amounts as are fully reserved against in the
          Financial Statements, (D) materially increase the coverage or
          benefits available under any (or create any new) severance pay,
          termination pay, vacation pay, company awards, salary continuation
          for disability, sick leave, deferred compensation, bonus or other
          incentive compensation, insurance, pension or other employee
          benefit plan or arrangement made to, for, or with any of the
          directors, officers, employees, agents or representatives of the
          Companies or otherwise modify or amend or terminate any such plan
          or arrangement other than in the ordinary course of business, and
          consistent with past practice or (E) enter into any employment,
          deferred compensation, severance, consulting, non-competition or
          similar agreement (or amend any such agreement) to which the
          Companies are a party or involving a director, officer or employee
          of the Companies in his or her capacity as a director, officer or
          employee of the Companies, except as to all of the above other
          than normal increases in the ordinary course of business
          consistent with past practice;

                  (vi)    except for trade payables and for indebtedness
          for borrowed money incurred in the ordinary course of business and
          consistent with past practice, borrow monies for any reason or
          draw down on any line of credit or debt obligation, or become the
          guarantor, surety, endorser or otherwise liable for any debt,
          obligation or liability (contingent or otherwise) of any other
          Person;

                  (vii)   sell, grant, dispose of or authorize the sale,
          grant, disposal or subject (except for leases that do not
          materially impair the use of the property subject thereto in their
          respective businesses as presently conducted) any of the
          properties or assets (whether tangible or intangible) of the
          Companies to any Lien;

                  (viii)  acquire any material properties or assets or
          sell, assign, transfer, convey, lease or otherwise dispose of any
          of the material properties or assets (except for fair
          consideration in the ordinary course of business consistent with
          past practice) of the Companies;

                  (ix)    cancel or compromise any debt or claim or
          waive or release any material right, direct or indirect, of the
          Companies except in the ordinary course of business consistent
          with past practice;

                   (x)     except as set forth on Schedule 6.2(b)(x),
          enter into, any commitment for capital expenditures of the
          Companies (other than in the ordinary course of business, and
          consistent with past practice) in excess of $50,000 for any
          individual commitment and $150,000 for all commitments in the
          aggregate, or incur, assume or pre-pay any long-term debt or
          assume, guarantee, endorse or otherwise become liable or
          responsible (whether directly, contingently or otherwise) for the
          obligations of any other Person except in the ordinary course of
          business, and consistent with past practices;

                   (xi)    enter into, modify or terminate any labor or
          collective bargaining agreement of the Companies or, through
          negotiation or otherwise, make any commitment or incur any
          liability to any labor organization with respect to the Companies;

                   (xii)   introduce any material change with respect to
          the operation of the Companies, including any material change in
          the types, nature, composition or quality of its products or
          services, experience any material change in any contribution of
          its product lines to its revenues or net income, or, other than in
          the ordinary course of business, make any change in product
          specifications or prices or terms of distributions of such
          products;

                  (xiii)  permit the Companies to enter into any
          transaction or to make or enter into any Contract which by reason
          of its size or otherwise is not in the ordinary course of business
          consistent with past practice;

                  (xiv)   permit the Companies to enter into or agree to
          enter into any merger or consolidation with, any corporation or
          other entity, and not engage in any new business or invest in,
          make a loan, advance or capital contribution to, or otherwise
          acquire the securities of any other Person;

                  (xv)    except for transfers of cash pursuant to
          normal cash management practices, permit the Companies to make any
          investments in or loans to, or pay any fees or expenses to, or
          enter into or modify any Contract with, the Seller or any
          Affiliate of the Seller;

                  (xvi)   agree to do anything prohibited by this
          Section 6.2 or anything which would make any of the
          representations and warranties of the Seller in this Agreement or
          the Seller Documents untrue or incorrect in any material respect
          as of any time through and including the Effective Date;

                  (xvii)  amend any Material Contract in any material
          respect;

                  (xviii) authorize, recommend, propose or announce an
          intention to adopt a plan of complete or partial liquidation or
          dissolution of the Companies;

                  (xix)   make or rescind any material express or deemed
          election relating to Taxes, settle or compromise any material
          claim, action, suit litigation, proceeding, arbitration,
          investigation, audit or controversy relating to Taxes, or except
          as may be required by applicable law, make any change to any of
          its materials, methods of reporting income or deductions
          (including, without limitation, any change to its methods or basis
          or write-offs of accounts receivables) for federal income tax
          purposes;

                  (xx)    take any action, other than reasonable and
          usual actions in the ordinary course of business and consistent
          with past practice, with respect or accounting policies or
          procedures, unless required by GAAP;

                  (xxi)   close, shut down, or otherwise eliminate the
          Business of the Companies except for such closures, shut downs or
          eliminations which are (i) required by action, order, writ,
          injunction, judgment or decree of otherwise required by law, or
          (ii) due to acts of God or other force majeure events; or

                  (xxii)  settle any litigation relating to the
          transactions contemplated hereby other than any settlement which
          would not (i) be reasonably likely to have a Material Adverse
          Effect or (ii) materially adversely affect the consummation of the
          transactions contemplated hereby.

          6.3    Consents.  The Seller shall use its best efforts, and the
Purchaser shall cooperate with the Seller, to obtain at the earliest
practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including, without limitation,
the consents and approvals referred to in Section 4.6(b) hereof; provided,
however, that neither the Seller nor the Purchaser shall be obligated to pay
any consideration therefor to any third party from whom consent or approval
is requested.

          6.4    Filings with Governmental Bodies.

          (a)   As promptly as practicable after the execution of this
Agreement, each party shall, in cooperation with the other, file or cause to
be filed any reports, notifications or other information that may be
required to comply with the applicable requirements of the HSR Act, the
Gaming Approvals and as described in Schedules 4.6 and 5.3 and shall furnish
or cause to be furnished to the other all such information in its possession
as may be reasonably necessary for the completion of the reports,
notifications or submissions to be filed by the other.  Each party hereto
agrees to use its best efforts to comply and cause its Affiliates to comply
in a full and timely manner with any request from a Governmental Body for
additional information.

          6.5    Compliance Review.  The Seller agrees to diligently conduct
the Compliance Review of the Purchaser and its principals, as soon as
practicable after the Effective Date but in no event more than fifteen days
after the Effective Date.  The Purchaser agrees to provide such information
as may reasonably be requested by the Seller or its compliance review
representatives and to cooperate with the Seller during the Compliance
Review process.

          6.6    Other Actions.  Each of the Seller and the Purchaser shall
use its best efforts to (i) take all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement and (ii) cause
the fulfillment at the earliest practicable date of all of the conditions to
their respective obligations to consummate the transactions contemplated by
this Agreement.

          6.7    No Solicitation.

          (a)   The Seller will not, and will not cause or permit the
Companies or any of the Companies' directors, officers, employees,
representatives or agents (collectively, the "Representatives") to, directly
or indirectly, (i) discuss, negotiate, undertake, authorize, recommend,
propose or enter into, either as the proposed surviving, merged, acquiring
or acquired corporation, any transaction involving a merger, consolidation,
business combination, purchase or disposition of any amount of the assets or
capital stock or other equity interest in the Companies other than the
transactions contemplated by this Agreement (an "Acquisition Transaction"),
(ii) facilitate, encourage, solicit or initiate discussions, negotiations or
submissions of proposals or offers in respect of an Acquisition Transaction,
(iii) furnish or cause to be furnished, to any Person, any information
concerning the business, operations, properties or assets of the Companies
in connection with an Acquisition Transaction, or (iv) otherwise cooperate
in any way with, or assist or participate in, facilitate or encourage, any
effort or attempt by any other Person to do or seek any of the foregoing.
The Seller will inform the Purchaser in writing immediately following the
receipt by the Seller, the Companies or any Representative of any proposal
or inquiry in respect of any Acquisition Transaction.

          (b)   The Purchaser will not, and will not cause or permit any of
its Representatives to, directly or indirectly, (i) discuss, negotiate,
undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any
Acquisition Transaction, (ii) discuss, negotiate, undertake, authorize,
recommend, propose or enter into, either as the proposed surviving, merged,
acquiring or acquired corporation, any transaction involving a merger,
consolidation, business combination, purchase or disposition of any amount
of the assets or capital stock or other equity interest in any entity
engaged in the Business (a "Competing Acquisition Transaction") (iii)
facilitate, encourage, solicit or initiate discussions, negotiations or
submissions of proposals or offers in respect of an Acquisition Transaction
or a Competing Acquisition, (iv) furnish or cause to be furnished, to any
Person, any information concerning the business, operations, properties or
assets of the Companies or any of its Subsidiaries in connection with an
Acquisition Transaction, or (v) otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by
any other Person to do or seek any of the foregoing.  Notwithstanding the
foregoing, the Purchaser may engage in a Competing Acquisition Transaction
with the prior written consent of the Seller, such consent not to be
unreasonably withheld.  Without limiting the foregoing, it shall be
reasonable to withhold consent if such Competing Acquisition Transaction
could reasonably be expected to adversely affect the consummation of the
transactions contemplated by, or a party's performance under, this Agreement
or any Purchaser Documents or materially adversely affect the Seller or the
Companies.  The Purchaser will inform the Seller in writing immediately
following the receipt by the Purchaser or any Representative of any proposal
or inquiry in respect of any Acquisition Transaction or Competing
Acquisition Transaction.

          6.8    Preservation of Records.  Subject to Section 9.8(e) hereof
(relating to the preservation of Tax records), the Seller and the Purchaser
agree that each of them shall preserve and keep the records held by it
relating to the business of the Companies for a period of six years from the
Closing Date and shall make such records and personnel available to the
other as may be reasonably required by such party in connection with, among
other things, any insurance claims by, legal proceedings against or
governmental investigations of the Seller or the Purchaser or any of their
Affiliates or in order to enable the Seller or the Purchaser to comply with
their respective obligations under this Agreement and each other agreement,
document or instrument contemplated hereby or thereby.  In the event the
Seller or the Purchaser wishes to destroy such records after that time, such
party shall first give ninety (90) days prior written notice to the other
and such other party shall have the right at its option and expense, upon
prior written notice given to such party within that ninety (90) day period,
to take possession of the records within one hundred and eighty (180) days
after the date of such notice.

          6.9   Publicity.  Neither the Seller nor the Purchaser shall issue
any press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written
approval of the other party hereto, which approval will not be unreasonably
withheld or delayed, unless, in the sole judgment of the Purchaser or the
Seller, disclosure is otherwise required by applicable Law or by the
applicable rules of any stock exchange on which the Purchaser or the Seller
lists securities, provided that, to the extent required by applicable law,
the party intending to make such release shall use its best efforts
consistent with such applicable law to consult with the other party with
respect to the text thereof.

          6.10  Repayment of Loans.  On or prior to the Closing Date, all
loans or other advances to the Seller or any of its Affiliates listed on
Schedule 6.10 (the "Affiliate Loans"), including any accrued and unpaid
interest thereon, shall be repaid in full to the Companies.

          6.11  Cash.  The Seller hereby agrees that, on or prior to the
Closing Date, the Companies shall have approximately $3.5 million of cash
necessary for the immediate continued operation of the Business.
Notwithstanding anything herein to the contrary, the parties hereto hereby
acknowledge that, all cash above $3.5 million shall be distributed to the
Seller immediately prior to the Closing.  Each of the Purchaser and the
Seller agree to develop a mutually acceptable ownership transition plan
prior to the Closing to address gaming device drop procedures and other cash
transfer procedures to be applied as of the Closing in order to effectuate a
fair and equitable accounting of cash and the transfer of possession of cash
retained for the business of the Companies.

          6.12  Environmental Matters.

          (a)   The Seller shall permit the Purchaser to conduct such
investigations (including investigations known as "Phase I" and "Phase II"
environmental audits) of the environmental conditions of the Seller's
properties and facilities as the Purchaser, in its sole discretion, shall
deem necessary.  Such investigations shall be conducted in a manner that
minimizes the disruption of the operations of the Seller.

          (b)   The Seller shall promptly file all materials required under
Environmental Laws (including, without limitation, foreign or state property
transfer laws) and all requests required for the issuance, transfer or
reissuance to the Purchaser of Permits necessary to conduct the Seller's
business prior to the Closing Date.

          6.13    Nonenticement.  The Purchaser will, for a period of one year
from the Closing Date, refrain from, either alone or in conjunction with any
other Person, or directly or indirectly through its present or future
Affiliates employing, engaging or seeking to employ or engage any Person who
within the prior six months had been an officer or employee of the Seller or
its Affiliate (other than the Companies), unless such officer or employee
resigns voluntarily (without any solicitation from the Purchaser or any of
its Affiliates) or is terminated by the Seller after the Closing Date.

          6.14    Financing.  The Purchaser will use commercially reasonable
efforts to enter into a definitive financing agreement providing for the
financing referred to in Section 5.7 and to obtain by the earlier of six
months from the date of this Agreement or the Closing Date the financing
contemplated by such definitive financing agreements.  The Purchaser will
keep the Seller apprised of the status of such efforts and of the
Purchaser's communications with any sources of such financing.

                                ARTICLE VII

                            CONDITIONS TO CLOSING

          7.1    Conditions Precedent to Obligations of the Purchaser.  The
obligation of the Purchaser to consummate the transactions contemplated by
this Agreement is subject to the fulfillment, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be waived
by the Purchaser in whole or in part to the extent permitted by applicable
law):

          (a)   all representations and warranties of the Seller contained
herein shall be true and correct as of the date hereof;

          (b)   all representations and warranties of the Seller contained
herein qualified as to materiality shall be true and correct, and the
representations and warranties of the Seller contained herein not qualified
as to materiality shall be true and correct in all material respects, at and
as of the Closing Date with the same effect as though those representations
and warranties had been made again at and as of that time;

          (c)   the Seller shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date;

          (d)   the Purchaser shall have been furnished with certificates
(dated the Closing Date and in form and substance reasonably satisfactory to
the Purchaser) executed by the Seller certifying as to the fulfillment of
the conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof;

          (e)   the Purchaser shall have been furnished with a certificate of
the Seller (in form and substance reasonably satisfactory to the Purchaser)
executed by the Seller that the First Amendment has become effective (five
days prior to the Closing Date) or that the Companies waived this condition
and that the Rite Aid Corporation rent reductions have gone into effect as
an amendment);

          (f)      Certificates representing 100% of the Shares shall have been,
or shall at the Closing be, validly delivered and transferred to the
Purchaser, free and clear of any and all Liens;

          (g)      there shall not have been or occurred any Material Adverse
Change;

          (h)      the Seller shall have obtained all consents and waivers
referred to in Section 4.6 hereof, in a form reasonably satisfactory to the
Purchaser, with respect to the transactions contemplated by this Agreement
and the Seller Documents;

          (i)      no proceedings by or on behalf of any Governmental Body shall
have been instituted or threatened or claim or demand made against the
Seller, the Companies or the Purchaser seeking to restrain or prohibit the
consummation of the transactions contemplated hereby, and there shall not be
in effect any Order by a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby;

          (j)          the Purchaser shall have received the written
resignations of each director and officer of the Companies;

          (k)    the waiting period under the HSR Act shall have expired or
early termination shall have been granted; and

          (l)          all Affiliate Loans shall have been repaid to the
Companies prior to the Closing Date.

          7.2    Conditions Precedent to Obligations of the Seller.  The
obligations of the Seller to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, prior to or on the Closing
Date, of each of the following conditions (any or all of which may be waived
by the Seller in whole or in part to the extent permitted by applicable
law):

          (a)   all representations and warranties of the Purchaser contained
herein shall be true and correct as of the date hereof;

          (b)   all representations and warranties of the Purchaser contained
herein qualified as to materiality shall be true and correct, and all
representations and warranties of the Purchaser contained herein not
qualified as to materiality shall be true and correct in all material
respects, at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that date;

          (c)   the Purchaser shall have performed and complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Purchaser on or prior to the
Closing Date;

          (d)   the Seller shall have been furnished with certificates (dated
the Closing Date and in form and substance reasonably satisfactory to the
Seller) executed by the Chief Executive Officer and Chief Financial Officer
of the Purchaser certifying as to the fulfillment of the conditions
specified in Sections 7.2(a), 7.2(b) and 7.2(c);

          (e)   there shall not be in effect any Order by a Governmental Body
of competent jurisdiction restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby;

          (f)   the Purchaser shall have obtained all consents including the
Gaming Approvals and waivers referred to in Section 5.3 hereof with respect
to the transactions contemplated by this Agreement and the Purchaser
Documents;

          (g)    the waiting period under the HSR Act shall have expired or
early termination shall have been granted;

          (h)   the Purchaser shall have obtained the Gaming Approvals;
          (i)   the Purchaser (or an Affiliate) shall enter into the
Assumption of Lease Agreements (in form and substance reasonably
satisfactory to the Seller) relating to the real properties described in
Schedule 7.2(i) hereto provided however that the Purchaser shall not be
liable for any costs or expenses specifically related to the transfer of
such lease; and

          (j)   the Purchaser shall have obtained the financing referred to
in Section 5.7 or other financing in an amount sufficient to permit it to
pay the Purchase Price on terms reasonably acceptable to it.

                               ARTICLE VIII

                          DOCUMENTS TO BE DELIVERED

          8.1    Documents to be Delivered by the Seller.  At the Closing, the
Seller shall deliver, or cause to be delivered, to the Purchaser the
following:

          (a)   stock certificates representing the Shares, duly endorsed in
blank or accompanied by stock transfer powers and with all requisite stock
transfer tax stamps attached;

          (b)   the certificates referred to in Section 7.1(d) and 7.1(e)
hereof;

          (c)   the opinion of McDonald Carano Wilson McCune Bergin
Frankovich & Hicks LLP, special counsel to the Seller, in a form to be
mutually agreed upon;

          (d)   copies of all consents and waivers referred to in Section
7.1(g) hereof;

          (e)   written evidence of the repayment to the Companies of all
Affiliate Loans;

          (f)   written resignations of each of the directors and officers of
the Companies;

          (g)   certificates of good standing with respect to the Companies
issued by the Secretary of State of the State of Nevada and for each state
in which the Companies are qualified to do business as a foreign
corporation; and

          (h)   such other documents as the Purchaser shall reasonably
request.

              (i)  Non-Compete Agreements with the Seller and certain senior
               executive officers of the Companies, other than Robert Torkar and
               George Congdon.

          8.2     Documents to be Delivered by the Purchaser.  At the Closing,
the Purchaser shall deliver to the Seller the following:

          (a)   evidence of payment of the Purchase Price referred to in
Section 2.2 hereof;

          (b)   the certificates referred to in Section 7.2(d) hereof;

          (c)   the opinion of Kummer Kaempfer Bonner & Renshaw, counsel to
the Purchaser, in a form to be mutually agreed upon;

          (d)   assumption of the Lease Agreements, substantially in the form
of Exhibit C hereto, duly executed by the Purchaser (or an Affiliate); and

          (e)   such other documents as the Sellers shall reasonably request.

                                        ARTICLE IX

                                      INDEMNIFICATION

          9.1     Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive the
Closing and shall continue in effect for a period of one (1) year after the
Closing Date (the "General Liability Period") for purposes of enforcement
and shall be binding on the parties hereto and their successors, heirs,
devisees, legal representatives and assigns.

          9.2     Purchaser's Indemnity.  The Purchaser shall indemnify and
hold Seller harmless from any claim, demand, loss, liability, damage, or
expense (including reasonable attorneys' fees) (collectively, "Seller's
Recoverable Losses") arising out of or in connection with (i) breach by
Purchaser of any representation or warranty of Purchaser or any covenant or
agreement to be performed after Closing, and (ii) claims of third parties
with respect to the ownership and/or operation of the Companies from and
after the Closing Date (collectively, the "Purchaser Purchase Agreement
Breach").

          9.3     Seller's Indemnity. Seller shall indemnify and hold Purchaser
harmless from any claim, demand, loss, liability, damage, or expense
(including reasonable attorneys' fees) (collectively, "Purchaser's
Recoverable Losses") arising out of or in connection with (i) any breach by
the Seller of any representation or warranty hereof, and (ii) claims of
third parties with respect to the ownership and/or operation of the
Companies before the Closing Date (collectively, the "Seller Purchase
Agreement Breach").

          9.4     Seller's Pre-Closing Remedies. If the Purchaser defaults
under any provision of this Agreement before the Closing Date, the Purchaser
and Seller agree that the damages that Seller will sustain as a result
thereof will be substantial, but will be difficult to ascertain.
Accordingly, the Purchaser and the Seller agree that, in the event of the
Purchaser's default before the Closing Date, the Seller shall terminate this
Agreement and retain the Initial Deposit.  The Purchaser and the Seller
agree that it is and will be extremely difficult and impractical to fix the
extent of such damages.  To avoid these problem, Purchaser and Seller agree
that as Seller' sole and exclusive remedy in the event of Purchaser's breach
hereof, at law or in equity, the Seller shall be entitled to retain as
liquidated damages the Initial Deposit.  The Purchaser and the Seller agree
that this is reasonable considering all of the circumstances existing on the
date of this Agreement, including the relationship of the sum to the range
of harm to the Seller that reasonably could be anticipated and the
anticipation that proof of actual damages would be costly or inconvenient.

          The Seller shall have all remedies available at law or equity for
post-closing breaches of this Agreement by the Purchaser.

          9.5     Purchaser's Pre-Closing Remedies.  If the Seller fails to
deliver title and possession of the Shares at Closing in accordance with
this Agreement even though all conditions to Seller's obligations have been
timely satisfied, then, Purchaser may either:

         (i)  obtain as its sole monetary remedy

         (1)  a refund of the Initial Deposit including all
         accrued interest thereon;

         (2) reimbursement of up to $300,000 for reasonable and
         documented attorneys' fees, expert fees, consultant fees and expenses
         incurred therewith and paid by Purchaser (with no reimbursement of any
         fees or expenses incurred by Purchaser by reason of any financing or
         equity investment sought by Purchaser in connection with this
         transaction); and

         (3)  Upon the making of such refund and reimbursement,
         this Agreement shall terminate and Seller and Purchaser shall each be
         released and discharged from any further obligation to the other
         hereunder at law or in equity; or

         (ii) bring an action for specific performance of this Agreement.

          9.6     Limitations on Indemnification for Breaches of
Representations and Warranties.  Seller shall not have any liability under
Section 9.3 hereof unless the aggregate amount of Purchaser's Recoverable
Losses exceeds $250,000 (the "Basket") and, in such event, the indemnifying
party shall be required to pay the entire amount of such Losses and Expenses
in excess of $250,000 up to a maximum of $5,000,000.

          9.7     Non-Tax Indemnification Procedures.

          (a)   In the event that any Legal Proceedings shall be instituted
or that any claim or demand ("Claim") shall be asserted by any Person in
respect of which payment may be sought under Section 9.2 or Section 9.3
hereof (regardless of the Basket), the indemnified party shall reasonably
and promptly cause written notice of the assertion of any Claim of which it
has knowledge which is covered by this indemnity to be forwarded to the
indemnifying party.  The indemnifying party shall have the right, at its
sole option and expense, to be represented by counsel of its choice, which
must be reasonably satisfactory to the indemnified party, and to defend
against, negotiate, settle or otherwise deal with any Claim which relates to
any Losses indemnified against hereunder.  If the indemnifying party elects
to defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Losses indemnified against hereunder, it shall within five
(5) days (or sooner, if the nature of the Claim so requires) notify the
indemnified party of its intent to do so.  If the indemnifying party elects
not to defend against, negotiate, settle or otherwise deal with any Claim
which relates to any Losses indemnified against hereunder, fails to notify
the indemnified party of its election as herein provided or contests its
obligation to indemnify the indemnified party for such Losses under this
Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Claim.  If the indemnified party defends any Claim,
then the indemnifying party shall reimburse the indemnified party for the
Expenses of defending such Claim upon submission of periodic bills.  If the
indemnifying party shall assume the defense of any Claim, the indemnified
party may participate, at his or its own expense, in the defense of such
Claim; provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if, so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party, a
conflict or potential conflict exists between the indemnified party and the
indemnifying party that would make such separate representation advisable;
and provided, further, that the indemnifying party shall not be required to
pay for more than one such counsel for all indemnified parties in connection
with any Claim.  The parties hereto agree to cooperate fully with each other
in connection with the defense, negotiation or settlement of any such Claim.

          (b)   After any final judgment or award shall have been rendered by
a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal therefrom, or
a settlement shall have been consummated, or the indemnified party and the
indemnifying party shall have arrived at a mutually binding agreement with
respect to a Claim hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the indemnifying
party pursuant to this Agreement with respect to such matter and the
indemnifying party shall be required to pay all of the sums so due and owing
to the indemnified party by wire transfer of immediately available funds
within 10 business days after the date of such notice.

          (c)   The failure of the indemnified party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent
that the indemnifying party can demonstrate actual loss and prejudice as a
result of such failure.

          9.8     Tax Matters.

          (a)   Tax Indemnification.

             (i)  The Seller agrees to be responsible for and to indemnify
             and hold the Purchaser Indemnified Parties harmless from and
             against any and all Taxes that may be imposed upon or assessed
             against the Companies or the assets thereof:

                (A)    with respect to all taxable periods ending on or
          prior to the Closing Date;

                (B)    with respect to any and all Taxes of the Companies
          for the period allocated to the Seller pursuant to Section
          9.8(b)(iv);

                (C)    arising by reason of any breach by the Seller of
          any of the representations contained in Section 4.11 hereof;

                (D)    by reason of being a successor-in-interest or
          transferee of another entity; and

                (E)    with respect to any and all Taxes of any member of
          a consolidated, combined or unitary group of which the
          Companies (or any predecessor) is or was a member on or prior
          to the Closing Date, by reason of the liability of Companies
          pursuant to Treasury Regulation Section 1.1502-6(a) or any
          analogous or similar state, local or foreign law or
          regulation.

                   (ii)    Purchaser agrees to indemnify and hold
          harmless the Seller from and against any and all Taxes (A) of the
          Companies with respect to any taxable period of the Companies
          beginning after the Closing Date and (B) attributable to the
          period allocated to Purchaser pursuant to Section 9.4(b)(iv).

            (b)  Preparation of Tax Returns; Payment of Taxes.

                   (i)     The Seller shall include the Companies, or
          cause the Companies to be included in, and shall file or cause to
          be filed, (A) the United States consolidated federal income Tax
          Returns of the Seller or its Affiliates for the taxable periods of
          the Companies ending on or prior to the Closing Date and (B) where
          applicable, all other consolidated, combined or unitary Tax
          Returns of the Seller or its Affiliates for the taxable periods of
          the Companies ending (or the portion of any taxable period ending)
          on or prior to the Closing Date, and shall pay any and all Taxes
          due with respect to the returns referred to in clause (A) or (B)
          of this Section 9.8(b)(i).  The Seller also shall file or shall
          cause the Companies to file all other Tax Returns of or which
          include the Companies required to be filed (taking into account
          any extensions) on or prior to the Closing Date and shall pay any
          and all Taxes due with respect to such Tax Returns.  All Tax
          Returns described in this Section 9.8(b)(i) shall be prepared in a
          manner consistent with prior practice unless a past practice has
          been finally determined to be incorrect by the applicable taxing
          authority or a contrary treatment is required by applicable tax
          laws (or the judicial or administrative interpretations thereof).

                   (ii)    Following the Closing, the Purchaser shall be
          responsible for preparing or causing to be prepared all federal,
          foreign, state and local Tax Returns required to be filed by the
          Companies after the Closing Date.  To the extent any Taxes shown
          due on any such Tax Return are indemnifiable by the Seller, (A)
          such Tax Return shall be prepared in a manner consistent with
          prior practice unless otherwise required by applicable tax laws;
          (B) the Purchaser shall provide the Seller with copies of such Tax
          Return at least 45 days prior to the due date for filing such
          return; and (C) the Seller shall have the right to review and
          approve (which approval shall not be unreasonably withheld) such
          Tax Returns for 30 days following receipt thereof.  The failure of
          the Seller to propose any changes to any such Tax Return within
          such 30 days shall be deemed to be an indication of its approval
          thereof.  The Seller and the Purchaser shall attempt in good faith
          mutually to resolve any disagreements regarding such Tax Returns
          prior to the due date for filing thereof.  Any disagreements
          regarding such Tax Returns which are not resolved prior to the
          filing thereof shall be promptly resolved pursuant to Section
          9.8(h) which shall be binding on the parties.  The Purchaser shall
          file or cause to be filed all such Tax Returns and shall, subject
          to receiving the payments from the Seller referred to in Section
          9.8(b)(iii), pay the Taxes shown due thereon; provided, however,
          that nothing contained in the foregoing shall in any manner
          terminate, limit or adversely affect any right of the Purchaser
          Indemnified Parties, the Seller or the Companies to receive
          indemnification pursuant to any provision in this Agreement.

                   (iii)   Not later than 5 days before the due date for
          payment of Taxes with respect to any Tax Returns which the
          Purchaser has the responsibility to file, the Seller shall pay to
          the Purchaser an amount equal to that portion of the Taxes shown
          on such return for which the Seller has an obligation to indemnify
          the Purchaser and its Affiliates pursuant to the provisions of
          Section 9.8(a).

                   (iv)    For federal income tax purposes, the taxable
          year of the Companies shall end as of the close of the Closing
          Date and, with respect to all other Taxes, the Seller and the
          Purchaser will, unless prohibited by applicable law, close the
          taxable period of the Companies as of the close of the Closing
          Date.  Neither the Seller nor the Purchaser shall take any
          position inconsistent with the preceding sentence on any Tax
          Return.  In any case where applicable law does not permit the
          Companies to close its taxable year on the Closing Date or in any
          case in which a Tax is assessed with respect to a taxable period
          which includes the Closing Date (but does not begin or end on that
          day), then Taxes, if any, attributable to the taxable period of
          the Companies beginning before and ending after the Closing Date
          shall be allocated (i) to the Seller for the period up to and
          including the Closing Date, and (ii) to the Purchaser for the
          period subsequent to the Closing Date.  Any allocation of income
          or deductions required to determine any Taxes attributable to any
          period beginning before and ending after the Closing Date shall be
          prepared by the Purchaser and shall be made by means of a closing
          of the books and records of the Companies as of the close of the
          Closing Date, provided that exemptions, allowances or deductions
          that are calculated on an annual basis (including, but not limited
          to, depreciation and amortization deductions) and Taxes that are
          not based on income or receipts shall be allocated between the
          period ending on the Closing Date and the period after the Closing
          Date in proportion to the number of days in each such period.  The
          Purchaser shall provide the Seller with a schedule showing the
          computation of the allocation at least 45 days prior to the due
          date for filing a Tax Return which includes the Closing Date.  The
          Seller shall have the right to review such schedule, and the
          Purchaser and the Seller shall attempt in good faith mutually to
          resolve any disagreements regarding the determination of such
          allocation.  Any disagreements regarding such determination shall
          be resolved pursuant to Section 9.8(h) which shall be binding on
          the parties.  Any amount owing from the Seller under this Section
          9.8(b)(iv) shall be paid no later than five (5) days prior to the
          filing of the underlying Tax Return.

          (c)    Cooperation with Respect to Tax Returns.  The Purchaser and
the Seller agree to furnish or cause to be furnished to each other, and each
at their own expense, as promptly as practicable, such information
(including access to books and records) and assistance, including making
employees available on a mutually convenient basis to provide additional
information and explanations of any material provided, relating to the
Companies as is reasonably necessary for the filing of any Tax Return, for
the preparation for any audit, and for the prosecution or defense of any
claim, suit or proceeding relating to any adjustment or proposed adjustment
with respect to Taxes.  The Purchaser or the Companies shall retain in its
possession, and shall provide the Seller reasonable access to (including the
right to make copies of), such supporting books and records and any other
materials that the Seller may specify with respect to Tax matters relating
to any taxable period ending on or prior to the Closing Date until the
relevant statute of limitations has expired.  After such time, the Purchaser
may dispose of such material, provided that prior to such disposition the
Purchaser shall give the Seller a reasonable opportunity to take possession
of such materials.

          (d)   Tax Audits.

                   (i)     The Purchaser shall have the sole right to
          represent the interests of the Companies in any Tax audit or
          administrative or court proceeding relating to taxable periods of
          the Companies beginning after the Closing Date and to employ
          counsel of its choice at its expense; provided that if the results
          of such Tax audit or proceeding could reasonably be expected to
          have a material adverse effect on the assets, business,
          operations, or financial condition of the Seller for taxable
          periods ending after the Closing Date, then there shall be no
          settlement or closing or other agreement with respect thereto
          without the written consent of the Seller (which consent shall not
          be unreasonably withheld).  The Seller agrees that it will
          cooperate fully with the Purchaser and its counsel in the defense
          against or compromise of any claim in any said proceeding.

                   (ii)    If any taxing authority asserts a claim, makes
          an assessment or otherwise disputes or affects any Tax for which
          the Seller is responsible hereunder the Tax reporting position of
          the Companies for taxable periods ending on or prior to the
          Closing Date, the Purchaser shall, promptly upon receipt by the
          Purchaser or the Companies of  notice thereof, inform the Seller
          thereof.

                   (iii)   The Seller shall represent the interests of
          the Companies in any Tax audit or administrative or court
          proceeding relating to any taxable period of the Companies which
          includes (but does not begin or end on) the Closing Date.  All
          costs, fees and expenses paid to third parties in the course of
          such proceeding shall be borne by the Seller and the Purchaser in
          the same ratio as the ratio in which, pursuant to the terms of
          this Agreement, the Seller and the Purchaser would share the
          responsibility for payment of the Taxes asserted by the taxing
          authority in such claim or assessment if such claim or assessment
          were sustained in its entirety.

          (e)    Refund Claims.  Except as otherwise provided in Section
9.8(f), to the extent any determination of Tax liability of the Companies,
whether as the result of an audit or examination, a claim for refund, the
filing of an amended return or otherwise, results in any refund of Taxes
paid attributable to (i) any period which ends on or before the Closing Date
or (ii) any period which includes the Closing Date but does not begin or end
on that day, any such refund shall belong to the Seller, provided that in
the case of any Tax refund described in clause (ii) of this Section 9.8(e),
the portion of such Tax refund which shall belong to the Seller shall be
that portion that is attributable to the portion of that period which ends
on the Closing Date (determined on the basis of an interim closing of the
books as of the Closing Date), and the Purchaser shall promptly pay any such
refund, and the interest actually received thereon, to the Seller upon
receipt thereof by the Purchaser.  Any and all other refunds shall belong to
the Purchaser.  Any payments made under this Section 9.8(e) shall be net of
any Taxes payable with respect to such refund, credit or interest thereon
(taking into account any actual reduction in Tax liability realized upon the
payment pursuant to this Section 9.8(e)).  Any such claim for a refund or
amended return shall be filed by the Purchaser at the written request of the
Seller and on the Seller's behalf.

          (f)   Transfer Taxes.  The Seller shall be liable for and shall pay
(and shall indemnify and hold harmless the Purchaser against) all sales,
use, stamp, documentary, filing, recording, transfer or similar fees or
taxes or governmental charges (including, without limitation, real property
transfer gains taxes, UCC-2 filing fees, FAA, ICC, DOT, real estate and
motor vehicle registration, title recording or filing fees and other amounts
payable in respect of transfer filings) as levied by any taxing authority or
governmental agency in connection with the transactions contemplated by this
Agreement (other than taxes measured by or with respect to income imposed on
the Seller or on the Purchaser or its Affiliates).  The Seller hereby agree
to file all necessary Documents (including, but not limited to, all Tax
Returns) with respect to all such amounts in a timely manner.

          (g)   Any dispute as to any matter covered hereby shall be resolved
by an independent accounting firm mutually acceptable to the Seller and the
Purchaser.  The fees and expenses of such accounting firm shall be borne
equally by the Seller and the Purchaser.

          (h)   The indemnification provided for in this Section 9.8 shall be
the sole remedy for any claim in respect of Taxes and the provisions of
Sections 9.1 through 9.3 hereof shall not apply to such claims.

          (i)   Any claim for indemnity under this Section 9.8 may be made at
any time prior to 60 days after the expiration of the applicable Tax statute
of limitations with respect to the relevant taxable period (including all
periods of extension, whether automatic of permissive).

          9.9     Employee Benefits and Labor Indemnity.  The Seller hereby
agrees to indemnify and hold the Purchaser Indemnified Parties harmless from
and against any and all losses, liabilities, obligations, damages, costs and
expenses (including reasonable attorneys' fees and the cost and expenses of
enforcing such right of indemnification) and penalties, if any, (i) arising
out of or based upon or with respect to any Employee Benefit Plan or Pension
Plan or any other "employee benefit plan" within the meaning of Section 3(3)
of ERISA maintained by, contributed to or to which there is or was an
obligation to contribute to by Seller, the Companies, or any ERISA Affiliate
and (ii) as a result of any claim made with respect to employment prior to
or on the Closing Date with Companies including, without limitation, any
claim with respect to, relating to arising out of or in connection with
discrimination by the Companies or wrongful discharge (including
constructive discharge).

          9.10    Tax Treatment of Indemnity Payments.  The Seller and the
Purchaser agree to treat any indemnity payment made pursuant to this Article
9 as an adjustment to the Purchase Price for federal, state, local and
foreign income tax purposes.

          9.11    Rite Aid Adjustment.  The Purchaser acknowledges that prior
to the Closing Date, the Companies may be obligated to make a prepaid rent
payment to Rite Aid Corporation in connection with the Rite Aid Agreements
in the amount of $2,880,000, which is the equivalent of one year's cash
rent.  On the Closing Date, the Purchaser will owe the Seller the
unamortized portion of the prepaid rent remaining.  Purchaser shall pay to
the Seller such unamortized amount remaining on the balance sheet divided by
the number of months remaining in equal monthly installments on the first
day of each month following the Closing Date.

                                  ARTICLE X

                                MISCELLANEOUS
          10.1   Certain Definitions.

               For purposes of this Agreement, the following terms shall have
the meanings specified in this Section 10.1:

               "Affiliate" shall have the meaning ascribed to such term in
Section 4.25.

               "Balance Sheet" shall have the meaning ascribed to such term in
Section 4.8 hereof.

               "Balance Sheet Date" shall have the meaning ascribed to such term
in Section 4.8 hereof.

               "Business Day"  means any day of the year on which national
banking institutions in New York are open to the public for conducting
business and are not required or authorized to close.

               "Closing Date"  shall have the meaning ascribed to such term in
Section 3.1 hereof.

               "Code" shall mean the Internal Revenue Code of 1986, as amended.
               "Company Property" shall have the meaning ascribed to such term
in Section 4.12(a) hereof.

               "Commission" shall mean the Nevada Gaming Commission.

               "Compliance Plan" shall mean the Seller's Nevada Gaming
Complianceand Reporting Plan, as approved by the Nevada Gaming Control Board.

               "Compliance Review" shall mean the review of any proposed buyer
and its principals as required by the Compliance Plan.

               "Contract"  means any Contract, agreement, indenture, note, bond,
loan, instrument, lease, commitment or other arrangement or agreement.

               "Effective Date"  shall have the meaning ascribed to such term in
Section 1.1 hereof.

               "Environmental Law"  means any foreign, federal, state or local
statute, regulation, ordinance, or rule of common law as now or hereafter in
effect in any way relating to the protection of human health and safety or
the environment including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.  9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. App.  1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C.  6901 et
seq.), the Clean Water Act (33 U.S.C. 1251 et seq.), the Clean Air Act
(42 U.S.C. 7401 et seq.) the Toxic Substances Control Act (15 U.S.C.
2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
651 et seq.), and the regulations promulgated pursuant thereto.

               "Financial Statements" shall have the meaning ascribed to such
term in Section 4.8.

               "GAAP"  means generally accepted United States accounting
principles as of the date hereof.

               "Gaming Approvals" means the licenses, consents, and approvals
required to be obtained by the Purchaser in connection with the acquisition
of the Shares and operation of the business of the Companies from the
Commission, the Clark County Liquor and Gaming Licensing Board, the City of
Las Vegas, and all other licensing authorities having jurisdiction over the
business of the Companies or any part of it.

               "Governmental Body"  means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority
thereof, or any court or arbitrator (public or private).

               "Hazardous Material"  means any substance, material or waste
which is regulated by the United States, or any state or local governmental
authority of the State of Nevada including, without limitation, petroleum
and its by-products, asbestos, and any material or substance which is
defined as a "hazardous waste," "hazardous substance," "hazardous material,"
"restricted hazardous waste," "industrial waste," "solid waste,"
"contaminant," "pollutant," "toxic waste" or "toxic substance" under any
provision of Environmental Law;

               "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.

               "Law" means any federal, state, local or foreign law (including
common law), statute, code, ordinance, rule, regulation or other
requirement.

               "Legal Proceeding"  means any judicial, administrative or
arbitral actions, suits, proceedings (public or private), claims or governmental
proceedings.

               "Lien"  means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.

               "Material Adverse Change"  means any material adverse change in
the business, properties, results of operations, prospects, condition
(financial or otherwise) of the Companies, taken as a whole.

               "Material Adverse Effect"  means any effect which has resulted
in, or is reasonably likely to result in, a Material Adverse Change.

               "Material Contracts" shall have the meaning ascribed to such
terms in Section 4.15.

               "Order"  means any order, injunction, judgment, decree, ruling,
writ, assessment or arbitration award.
               "Permits"  means any approvals, authorizations, consents,
licenses, permits or certificates.

               "Permitted Exceptions"  means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in
policies of title insurance which have been made available to Purchaser;
(ii) statutory liens for current taxes, assessments or other governmental
charges not yet delinquent or the amount or validity of which is being
contested in good faith by appropriate proceedings, provided an appropriate
reserve is established therefor; (iii) mechanics', carriers', workers',
repairers' and similar Liens arising or incurred in the ordinary course of
business that are not material to the business, operations and financial
condition of the property so encumbered or the Companies; (iv) zoning,
entitlement and other land use and environmental regulations by any
Governmental Body, provided that such regulations have not been violated;
and (v) such other imperfections in title, charges, easements, restrictions
and encumbrances which do not materially detract from the value of or
materially interfere with the present use of any Company Property subject
thereto or affected thereby.

               "Person"  means any individual, corporation, partnership, firm,
joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.

               "Personal Property Lease" shall have the meaning ascribed to such
term in Section 4.13.

               "Property Lease" shall have the meaning ascribed to such term in
Section 4.12.

               "Release"  means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or leaching into the
indoor or outdoor environment, or into or out of any property;

               "Remedial Action"  means all actions to (x) clean up, remove,
treat or in any other way address any Hazardous Material; (y) prevent the
Release of any Hazardous Material so it does not endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; or
(z) perform pre-remedial studies and investigations or post-remedial
monitoring and care.

               "Subsidiaries" means any Persons of which a majority of the
outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by any of the Companies.

               "Taxes" means (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, (ii) all
interest, penalties, fines, additions to tax or additional amounts imposed
by any taxing authority in connection with any item described in clause (i)
and (iii) any transferee liability in respect of any items described in
clauses (i) and/or (ii).

               "Tax Return"  means all returns, declarations, reports,
estimates, information returns and statements required to be filed in respect
of any Taxes.

          10.2    Payment of Sales, Use or Similar Taxes.  All sales, use,
transfer, intangible, recordation, documentary stamp or similar Taxes or
charges, of any nature whatsoever, applicable to, or resulting from, the
transactions contemplated by this Agreement shall be borne by the Seller.

          10.3    Expenses.  Except as otherwise provided in this Agreement,
the Seller and the Purchaser shall each bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each
other agreement, document and instrument contemplated by this Agreement and
the consummation of the transactions contemplated hereby and thereby, it
being understood that in no event shall the Companies bear any of such costs
and expenses.

          10.4    Specific Performance.  The Seller acknowledges and agrees
that the breach of this Agreement would cause irreparable damage to the
Purchaser and that the Purchaser will not have an adequate remedy at law.
Therefore, the obligations of the Seller under this Agreement, including,
without limitation, the Seller's obligation to sell the Shares to the
Purchaser, shall be enforceable by a decree of specific performance issued
by any court of competent jurisdiction, and appropriate injunctive relief
may be applied for and granted in connection therewith.  Such remedies
shall, however, be cumulative and not exclusive and shall be in addition to
any other remedies which any party may have under this Agreement or
otherwise.

          10.5    Further Assurances.  The Seller and the Purchaser each agrees
to execute and deliver such other documents or agreements and to take such
other action as may be reasonably necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.

          10.6    Submission to Jurisdiction; Consent to Service of Process.

          (a)   The parties hereto hereby irrevocably submit to the non-
exclusive jurisdiction of any federal or state court located within the
State of Nevada over any dispute arising out of or relating to this
Agreement or any of the transactions contemplated hereby and each party
hereby irrevocably agrees that all claims in respect of such dispute or any
suit, action proceeding related thereto may be heard and determined in such
courts.  The parties hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter
have to the laying of venue of any such dispute brought in such court or any
defense of inconvenient forum for the maintenance of such dispute.  Each of
the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.

          (b)   Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding by
the mailing of a copy thereof in accordance with the provisions of Section
10.11.

          10.7    Entire Agreement; Amendments and Waivers.  This Agreement
(including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of
any such amendment, supplement, modification or waiver is sought.  No action
taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein.  The
waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing waiver of such
breach or as a waiver of any other or subsequent breach.  No failure on the
part of any party to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of such right, power or remedy by such party preclude
any other or further exercise thereof or the exercise of any other right,
power or remedy.  All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.

          10.8    Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of  Nevada.

          10.9    Table of Contents and Headings.  The table of contents and
section headings of this Agreement are for reference purposes only and are
to be given no effect in the construction or interpretation of this
Agreement.

          10.10   Notices.  All notices and other communications under
this Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by certified mail, return receipt requested, to the
parties (and shall also be transmitted by facsimile to the Persons receiving
copies thereof) at the following addresses (or to such other address as a
party may have specified by notice given to the other party pursuant to this
provision):

     If to Seller, to:        Jackpot Enterprises, Inc.
                              1110 Palms Airport Drive
                              Las Vegas, Nevada 89119
                              Attention:  Allan R. Tessler

                              With a copy (which
                              shall not constitute
                              notice) to:

                              Camhy Karlinsky & Stein LLP
                              1740 Broadway, Sixteen Floor
                              New York, New York 10019-4315
                              Attention:  Alan I. Annex

                              With a copy (which
                              shall not constitute
                              notice) to:

                              Koffler & Company
                              11755 Wilshire Boulevard, Suite 2370
                              Los Angeles, California 90025
                              Attention: Stephen A. Koffler

                              With a copy (which
                              shall not constitute
                              notice) to:

                              McDonald Carano Wilson McCune Berin
                              Frankovich & Hicks LLP
                              241 Ridge Street, 4th Floor
                              Reno, Nevada 89505
                              Attention: A.J. Hicks

                              If to Purchaser, to:

                              E-T-T, Inc.
                              5195 Las Vegas Blvd, South
                              Las Vegas, Nevada 89119
                              Attention:  Edward Herbst
                                          Sean Higgins

                              With a copy (which
                              shall not constitute
                              notice) to:

                              Kummer Kaempfer Bonner & Renshaw
                              3800 Howard Hughes Parkway
                              Las Vegas, Nevada 89109
                              Attention: John N. Brewer

          10.11   Severability.  If any provision of this Agreement is
invalid or unenforceable, the balance of this Agreement shall remain in
effect.

          10.12   Binding Effect; Assignment.  This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.  Nothing in this Agreement shall create or
be deemed to create any third party beneficiary rights in any person or
entity not a party to this Agreement except as provided below.  No
assignment of this Agreement or of any rights or obligations hereunder may
be made by either the Seller or the Purchaser (by operation of law or
otherwise) without the prior written consent of the other parties hereto and
any attempted assignment without the required consents shall be void;
provided, however, that the Purchaser may assign this Agreement and any or
all rights or obligations hereunder (including, without limitation, the
Purchaser's rights to purchase the Shares and the Purchaser's rights to seek
indemnification hereunder) to any Affiliate of the Purchaser.  Upon any such
permitted assignment, the references in this Agreement to the Purchaser
shall also apply to any such assignee unless the context otherwise requires.

               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first written above.


                    E-T-T, INC.
                    By:
                    Edward Herbst
                    President
                    JACKPOT ENTERPRISES, INC.:
                    By:
                    Allan R. Tessler
                    Chairman
                                  EXHIBIT A

                                   Company
                                  Authorize
                                  d Capital
                                   Stock;
                                  par value
                                   Shares
                                 Issued and
                                 Outstanding
                                   % Owned
                                  Qualified
                                    to do
                                  Business


                                  Cardivan
                                   Company


                                    100%
                                   Nevada


                                 Corral Coin
                                    Inc.


                                    100%
                                   Nevada


                               Corral Country
                                 Coin, Inc.


                                    100%
                                   Nevada


TABLE OF CONTENTS
ARTICLE I SALE AND PURCHASE OF SHARES. . . . . . . . . . . . . . . . 1
  1.1  Sale and Purchase of Shares . . . . . . . . . . . . . . . . . 1
ARTICLE II  PURCHASE PRICE AND PAYMENT . . . . . . . . . . . . . . . 2
  2.1  Amount of Purchase Price. . . . . . . . . . . . . . . . . . . 2
  2.2  Payment of Purchase Price . . . . . . . . . . . . . . . . . . 2
ARTICLE III CLOSING AND TERMINATION. . . . . . . . . . . . . . . . . 2
  3.1  Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . 2
  3.2  Termination of Agreement. . . . . . . . . . . . . . . . . . . 3
  3.3  Procedure Upon Termination. . . . . . . . . . . . . . . . . . 4
  3.4  Effect of Termination . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF THE SELLER . . . . . . 5
  4.1  Organization and Good Standing. . . . . . . . . . . . . . . . 5
  4.2  Authorization of Agreement. . . . . . . . . . . . . . . . . . 5
  4.3  Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 5
  4.4   Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . 6
  4.5  Corporate Records.. . . . . . . . . . . . . . . . . . . . . . 6
  4.6  Conflicts; Consents of Third Parties. . . . . . . . . . . . . 7
  4.7  Ownership and Transfer of Shares. . . . . . . . . . . . . . . 7
  4.8  Financial Statements. . . . . . . . . . . . . . . . . . . . . 7
  4.9  No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . 8
  4.10 Absence of Certain Developments . . . . . . . . . . . . . . . 8
  4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
  4.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . .12
  4.13 Tangible Personal Property. . . . . . . . . . . . . . . . . .13
  4.14 Intangible Property.. . . . . . . . . . . . . . . . . . . . .14
  4.15 Material Contracts. . . . . . . . . . . . . . . . . . . . . .14
  4.16 Employee Benefits . . . . . . . . . . . . . . . . . . . . . .16
  4.17 Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
  4.18 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .20
  4.19 Compliance with Laws; Permits . . . . . . . . . . . . . . . .21
  4.20 Environmental Matters.. . . . . . . . . . . . . . . . . . . .21
  4.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .22
  4.22 Inventories; Receivables; Payables. . . . . . . . . . . . . .23
  4.23 Customers and Suppliers . . . . . . . . . . . . . . . . . . .23
  4.24 Financial Advisors. . . . . . . . . . . . . . . . . . . . . .23
  4.25 Transactions with Affiliates. . . . . . . . . . . . . . . . .24
  4.26 Bank Accounts.. . . . . . . . . . . . . . . . . . . . . . . .24
  4.27 Rite Aid Settlement.. . . . . . . . .
  4.28 Technology. . . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. . . . . .25
  5.1  Organization and Good Standing. . . . . . . . . . . . . . . .25
  5.2  Authorization of Agreement. . . . . . . . . . . . . . . . . .25
  5.3  Conflicts; Consents of Third Parties. . . . . . . . . . . . .25
  5.4  Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .26
  5.5  Investment Intention. . . . . . . . . . . . . . . . . . . . .26
  5.6  Financial Advisors. . . . . . . . . . . . . . . . . . . . . .26
  5.7  Financing . . . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .27
  6.1  Access to Information . . . . . . . . . . . . . . . . . . . .27
  6.2  Conduct of the Business Pending the Closing . . . . . . . . .27
  6.3  Consents. . . . . . . . . . . . . . . . . . . . . . . . . . .31
  6.4  Filings with Governmental Bodies. . . . . . . . . . . . . . .31
  6.5  Compliance Review.. . . . . . . . . . . . . . . . . . . . . .32
  6.6  Other Actions . . . . . . . . . . . . . . . . . . . . . . . .32
  6.7  No Solicitation . . . . . . . . . . . . . . . . . . . . . . .32
  6.8  Preservation of Records . . . . . . . . . . . . . . . . . . .33
  6.9  Publicity . . . . . . . . . . . . . . . . . . . . . . . . . .33
  6.10 Repayment of Loans. . . . . . . . . . . . . . . . . . . . . .33
  6.11 Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
  6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . .34
  6.13 Nonenticement . . . . . . . . . . . . . . . . . . . . . . . .34
  6.16 Financing . . . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE VII CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . .35
  7.1  Conditions Precedent to Obligations of the Purchaser. . . . .35
  7.2  Conditions Precedent to Obligations of the Seller . . . . . .36
ARTICLE VIII DOCUMENTS TO BE DELIVERED . . . . . . . . . . . . . . .37
  8.1  Documents to be Delivered by the Seller.. . . . . . . . . . .37
  8.2  Documents to be Delivered by the Purchaser. . . . . . . . . .38
ARTICLE IX INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . .38
  9.1  Survival of Representations and Warranties. . . . . . . . . .38
  9.2  Purchaser's Indemnity . . . . . . . . . . . . . . . . . . . .38
  9.3  Seller's Indemnity. . . . . . . . . . . . . . . . . . . . . .38
  9.4  Seller's Remedies . . . . . . . . . . . . . . . . . . . . . .39
  9.5  Purchaser's Remedies. . . . . . . . . . . . . . . . . . . . .39
  9.6  Limitations on Indemnification for Breaches of
       Representations and Warranties .. . . . . . . . . . . . . . .39
  9.7  Non-Tax Indemnification Procedures. . . . . . . . . . . . . .40
  9.8  Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . .41
  9.9  Employee Benefits and Labor Indemnity . . . . . . . . . . . .45
  9.10 Tax Treatment of Indemnity Payments . . . . . . . . . . . . .46
  9.11 Rite Aid Adjustment . . . . . . . . . . . . . . . . . . . . .46
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .46
  10.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . .46
  10.2 Payment of Sales, Use or Similar Taxes. . . . . . . . . . . .49
  10.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .50
  10.4 Specific Performance. . . . . . . . . . . . . . . . . . . . .50
  10.5 Further Assurances. . . . . . . . . . . . . . . . . . . . . .50
  10.6 Submission to Jurisdiction; Consent to Service of Process . .50
  10.7 Entire Agreement; Amendments and Waivers. . . . . . . . . . .51
  10.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . .51
  10.9 Table of Contents and Headings. . . . . . . . . . . . . . . .51
  10.10 Notices . . . . . . . . . . . . . . . . . .  . . . . . . . .51
  10.11 Severability. . . . . . . . . . . . . . . .  . . . . . . . .52
  10.12 Binding Effect; Assignment. . . . . . . . . . . . . . . . ..52

EX-10

                                                       EXHIBIT 10.21

                     J Net Ventures I LLC

                      OPERATING AGREEMENT



























                              TABLE OF CONTENTS

                                                                          Page

ARTICLE ONE Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE TWO Organization . . . . . . . . . . . . . . . . . . . . . . . . . . 6
        2.1  Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
        2.2  Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
        2.3  Purposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
        2.4  Restrictions on Investments . . . . . . . . . . . . . . . . . . 7
        2.5  Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
        2.6  Office and Agent. . . . . . . . . . . . . . . . . . . . . . . . 7
        2.7  Creation of Series of Fund Interests. . . . . . . . . . . . . . 7
        2.8  Investments by Series A Fund in Series B Portfolio Companies. . 8

ARTICLE THREE  Members . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
        3.1  Members; Percentage Interests . . . . . . . . . . . . . . . . . 9
        3.2  Admission of Additional Members . . . . . . . . . . . . . . . . 9
        3.3  Limited Liability . . . . . . . . . . . . . . . . . . . . . . . 9
        3.4  Membership Certificate. . . . . . . . . . . . . . . . . . . . . 9
        3.5  Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . 9
        3.6  Meeting of the Members. . . . . . . . . . . . . . . . . . . . . 9
        3.7  Members Are Not Agents. . . . . . . . . . . . . . . . . . . . .10
        3.8  Resignation and Withdrawal of Members . . . . . . . . . . . . .10
        3.9  Confidentiality . . . . . . . . . . . . . . . . . . . . . . . .10
        3.10 Competing Activities. . . . . . . . . . . . . . . . . . . . . .11

ARTICLE FOUR  Management and Control of the Fund . . . . . . . . . . . . . .12
        4.1  Management of the Fund by Manager . . . . . . . . . . . . . . .12
        4.2  Advisory Board. . . . . . . . . . . . . . . . . . . . . . . . .12
        4.3  Limited Liability . . . . . . . . . . . . . . . . . . . . . . .12
        4.4  Management Compensation . . . . . . . . . . . . . . . . . . . .13
        4.5  Assignment of Manager's Interest; Resignation of Manager;
             Removal of Manager. . . . . . . . . . . . . . . . . . . . . . .13
        4.6  Performance of Duties; Liability of Manager . . . . . . . . . .13
        4.7  Liability of Manager Limited to Manager's Assets. . . . . . . .13
        4.8  Expenses of the Fund. . . . . . . . . . . . . . . . . . . . . .13

ARTICLE FIVE Capital Contributions . . . . . . . . . . . . . . . . . . . . .16
        5.1  Capital Contributions . . . . . . . . . . . . . . . . . . . . .16
        5.2  Additional Capital Contributions. . . . . . . . . . . . . . . .16
        5.3  Withdrawal or Reduction of Capital Contributions. . . . . . . .16
        5.4  No Interest Payable on Capital Contributions. . . . . . . . . .17
        5.5  Capital Accounts. . . . . . . . . . . . . . . . . . . . . . . .17
        5.6  Minimum Capital Contribution of Manager . . . . . . . . . . . .18

ARTICLE SIX  Distributions . . . . . . . . . . . . . . . . . . . . . . . . .19
        6.1  Distributions . . . . . . . . . . . . . . . . . . . . . . . . .19
        6.2  Form of Distributions . . . . . . . . . . . . . . . . . . . . .21
        6.3  Restriction on Distributions. . . . . . . . . . . . . . . . . .21
        6.4  Return of Distributions . . . . . . . . . . . . . . . . . . . .21
        6.5  Withholding from Distributions. . . . . . . . . . . . . . . . .21

ARTICLE SEVEN  Allocations . . . . . . . . . . . . . . . . . . . . . . . . .22
        7.1  Allocations of Net Income and Net Losses. . . . . . . . . . . .22
        7.2  Regulatory Allocations. . . . . . . . . . . . . . . . . . . . .23
        7.3  Code Section 704(c) Allocations . . . . . . . . . . . . . . . .25
        7.4  Other Allocation Rules. . . . . . . . . . . . . . . . . . . . .25
        7.5  Allocation of Net Income and Losses and Distributions
             in Respect of a Transferred Interest. . . . . . . . . . . . . .25
        7.6  Obligations of Members to Report Allocations. . . . . . . . . .26

ARTICLE EIGHT  Transfer and Assignment of Interests. . . . . . . . . . . . .26
        8.1  Transfer and Assignment of Interests. . . . . . . . . . . . . .26
        8.2  Further Restrictions on Transfer of Interests . . . . . . . . .26
        8.3  Permitted Transfers . . . . . . . . . . . . . . . . . . . . . .27
        8.4  Substitution of Members . . . . . . . . . . . . . . . . . . . .27
        8.5  Effective Date of Permitted Transfers . . . . . . . . . . . . .27
        8.6  Rights of Legal Representatives . . . . . . . . . . . . . . . .27
        8.7  No Effect to Transfers in Violation of Agreement. . . . . . . .28
        8.8  Involuntary Transfers . . . . . . . . . . . . . . . . . . . . .28

ARTICLE NINE  Dissolution and Liquidation. . . . . . . . . . . . . . . . . .28
        9.1  Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . .28
        9.2  Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . .29
        9.3  Cancellation of Certificate of the Fund . . . . . . . . . . . .29

ARTICLE TEN  Records and Accounting; Fiscal Affairs. . . . . . . . . . . . .30
       10.1  Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . .30
       10.2  Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . .30
       10.3  Books and Records . . . . . . . . . . . . . . . . . . . . . . .30
       10.4  Tax Returns; Elections. . . . . . . . . . . . . . . . . . . . .30
       10.5  Tax Matters Member. . . . . . . . . . . . . . . . . . . . . . .31

ARTICLE ELEVEN  Indemnification and Insurance. . . . . . . . . . . . . . . .31
       11.1  Right to Indemnification. . . . . . . . . . . . . . . . . . . .31
       11.2  Limited Liability Members . . . . . . . . . . . . . . . . . . .32
       11.3  Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
       11.4  Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . .33

ARTICLE TWELVE  Investment Representations . . . . . . . . . . . . . . . . .33
       12.1  Pre-existing Relationship or Experience . . . . . . . . . . . .33
       12.2  No Advertising. . . . . . . . . . . . . . . . . . . . . . . . .33
       12.3  Investment Intent . . . . . . . . . . . . . . . . . . . . . . .33
       12.4  Accredited Investor . . . . . . . . . . . . . . . . . . . . . .33
       12.5  Treatment of Fund as Partnership. . . . . . . . . . . . . . . .33
       12.6  Economic Risk . . . . . . . . . . . . . . . . . . . . . . . . .34
       12.7  No Registration of Membership Interest. . . . . . . . . . . . .34
       12.8  Membership Interest in Restricted Security. . . . . . . . . . .34
       12.9  No Disposition in Violation of Law. . . . . . . . . . . . . . .34
       12.10 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
       12.11 Investment Risk . . . . . . . . . . . . . . . . . . . . . . . .35
       12.12 Investment Experience . . . . . . . . . . . . . . . . . . . . .35
       12.13 Absence of Market . . . . . . . . . . . . . . . . . . . . . . .35
       12.14 Information Reviewed. . . . . . . . . . . . . . . . . . . . . .36
       12.15 No Representations By Fund  . . . . . . . . . . . . . . . . . .36
       12.16 Consultation with an Attorney . . . . . . . . . . . . . . . . .36
       12.17 Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . .36
       12.18 No Assurance of Tax Benefits  . . . . . . . . . . . . . . . . .36

ARTICLE THIRTEENMiscellaneous. . . . . . . . . . . . . . . . . . . . . . . .37
       13.1  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
       13.2  Separability. . . . . . . . . . . . . . . . . . . . . . . . . .37
       13.3  Interpretation; Jurisdiction. . . . . . . . . . . . . . . . . .37
       13.4  Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . .37
       13.5  Counterparts; Effective Date. . . . . . . . . . . . . . . . . .38
       13.6  Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . .38
       13.7  Further Assurances. . . . . . . . . . . . . . . . . . . . . . .38
       13.8  Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
       13.9  Additional Remedies . . . . . . . . . . . . . . . . . . . . . .38
       13.10 No Reliance by Third Parties . . . . . . . . . . . . . . . . . 38

    Exhibits and Schedules

EXHIBIT A    -     Amended and Restated Certificate of Formation
SCHEDULE A   -     Members

                            J Net Ventures I LLC
                             OPERATING AGREEMENT


        This OPERATING AGREEMENT (the "Agreement"), dated as of _______,
2000 is by and among J Net Venture Partners, LLC, a limited liability company
organized under the laws of the State of Delaware, and each of the persons
listed on the signature pages hereof.

                             W I T N E S S E T H:

        WHEREAS, the Amended and Restated Certificate of Formation for J
Net Ventures I LLC (the "Fund"), a limited liability company organized under
the laws of the State of Delaware, was filed with the Secretary of State of
Delaware on June 21, 2000; and

        WHEREAS, the parties to this Agreement (individually referred to as
a "Member" and collectively as the "Members") desire to adopt and approve an
operating agreement for the Fund;

        NOW, THEREFORE, the Members hereby agree as follows:


                                  ARTICLE ONE
                                  Definitions

             1.1  The defined terms used in this Agreement shall, unless the
context otherwise requires, have the meanings specified in this Article One.

                  1.1.1     "Act" shall mean the Limited Liability Company Act,
Title 6 of the Delaware Code, Subchapter I, Section 18-101, et. seq., as it
may be amended from time to time, and any successor to said law.

                  1.1.2     "Advisory Board" shall have the meaning set forth in
Section 4.2.1.

                  1.1.3     "Affiliate" shall mean with respect to any Member or
Manager, (i) a Person that directly or indirectly, through one or more
intermediaries, has control of, is controlled by, or is under common control
with, such Member or Manager, or (ii) a Member's or Manager's spouse, child,
parent, grandparent, or grandchild or trust for the benefit of such person or
persons.  For these purposes, control means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
of any Person whether through the ownership of voting securities, by
contract, as an officer or director of such Person, or otherwise.

                  1.1.4     "Amended and Restated Certificate of Formation"
shall mean the Fund's Amended and Restated Certificate of Formation as filed
with the Secretary of State, as it may be amended, supplemented, or restated
from time to time.

                  1.1.5     "Capital Account" shall mean with respect to the
Manager and any Member, the Capital Account that the Fund establishes and
maintains for the Manager or any Member pursuant to Section 5.5.

                  1.1.6     "Capital Call" shall have the meaning set forth in
Section 5.1.

                  1.1.7     "Capital Call Date" shall have the meaning set forth
in Section 5.1.

                  1.1.8     "Capital Commitment" shall have the meaning set
forth in Section 5.1.

                  1.1.9     "Capital Contribution" shall mean with respect to
the Series A Fund, the amount of cash each Member contributed to the Series A
Fund, and with respect to the Series B Fund, the amount of cash each Member
contributed to the Series B Fund, as the case may be, and in the case of all
the all Series A Fund Members, the aggregate of all such Capital
Contributions made to the Series A Fund and in the case of all Series B Fund
Members, the aggregate of all such Capital Contributions made to the Series B
Fund.

                  1.1.10    "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time (or any corresponding provisions of any
succeeding law).

                  1.1.11    "Disposition" shall have the meaning set forth in
Section 6.1.1.

                  1.1.12    "Economic Assignee" shall have the meaning set forth
in Section 8.3.

                  1.1.13    "Economic Interest" shall mean a Member's Capital
Account and the right to receive distributions of the Fund's assets,
distribution of cash, and allocations of income, gain, loss, deduction,
credit and similar items from the Fund pursuant to this Agreement and the
Act, but shall not include any other rights of a Member, including, without
limitation, the right to vote or participate in the management of the Fund,
or any right to information concerning the business and affairs of the Fund
other than tax reporting information related to such Economic Interest.

                  1.1.14    "Fund" shall have the meaning set forth in the
preamble to this Agreement and shall consist of the Series A Fund and the
Series B Fund

                  1.1.15    "Fund Percentage Interest" shall mean, with respect
to a Member, a fraction (expressed as a percentage) (x) the numerator of
which shall equal the sum of all of such Member's Capital Contributions to
the Fund as of such date, and (y) the denominator of which shall equal the
sum of all Capital Contributions to the Fund made by all Members as of such
date, as same may be adjusted pursuant to this Agreement.

                  1.1.16    "Gilbert Investors" shall mean (i) Gilbert Global
Equity Partners L.P., (ii) Gilbert Global Equity Partners (Bermuda, L.P.),
and (iii) GGEP/GECC Equity Partners, L.P., each of which is a Member of the
Fund.

                  1.1.17    "Gross Asset Value" shall mean with respect to an
asset of the Series A Fund or the Series B Fund the adjusted basis for
federal income tax purposes of such asset, except that the Gross Asset Value
of each such asset shall be adjusted to equal its gross fair market value at
the time of any of the events described in Section 5.5.3.

                  1.1.18     "Indemnified Person" shall have the meaning set
forth in Section 11.1.

                  1.1.19    "Internal Rate of Return" shall have the meaning set
forth in Section 6.1.3.

                  1.1.20    "Manager" shall mean J Net Venture Partners, LLC, a
limited liability company.

                  1.1.21    "Marketable Securities" shall mean securities listed
on a national or regional stock exchange or quoted on the NASDAQ system,
including the over-the-counter bulletin board.

                  1.1.22    "Member" or "Members" shall mean the Manager and
those Members who have acquired Membership Interests, as listed on Schedule
A, which list may be amended from time to time.

                  1.1.23    "Membership Interest" shall mean all of a Member's
rights in the Fund at any particular time.

                  1.1.24    "Net Income" or "Net Loss" shall be computed
separately for Series A Fund Portfolio Companies and Series B Fund Portfolio
Companies and shall mean with respect to each fiscal year or other period, an
amount equal to the portion of the Fund's Taxable Income or Taxable Loss
allocable to Series A Fund Portfolio Companies or Series B Fund Portfolio
Companies, as the case may be, for such year or period, together with the
following adjustments:

                       any income of the Fund that is exempt from federal income
tax and not otherwise taken into account in computing Net Income or Net Loss
pursuant to this definition shall be added to such Taxable Income or Taxable
Loss;

                       any expenditures of the Fund described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures and not
otherwise taken into account in computing Net Income or Net Loss pursuant to
this definition shall be subtracted from such Taxable Income or Taxable Loss
in the year paid, and shall not be taken into account in any other year; and
                       in the event the Gross Asset Value of any Fund asset is
adjusted pursuant to Section 5.5.3, the amount of such adjustment shall be
taken into account as a gain or loss on disposition of such asset immediately
prior to the event causing the adjustment for purposes of computing Net
Income and Net Loss;

                       with respect to each Fund asset the Gross Asset Value of
which differs from its adjusted federal income tax basis, any gain or loss
resulting from any disposition of such asset shall be computed by reference
to its Gross Asset Value, rather than its adjusted federal income tax basis;

                       notwithstanding any other provision of this definition of
Net Income and Net Loss, any items comprising the Fund's Net Income or Net
Loss that are allocated pursuant to Section 7.2 shall not be taken into
account in computing Net Income or Net Loss.

                  1.1.25    "Percentage Interest" shall mean, with respect to a
Member, a fraction (expressed as a percentage and calculated separately for
each Sub-Fund) (x) the numerator of which shall equal the sum of all Capital
Contributions to a Sub-Fund made by such Member as of such date, and (y) the
denominator of which shall equal the sum of all Capital Contributions to such
Sub-Fund made by all Members as of such date, as same may be adjusted
pursuant to this Agreement.  A separate Percentage Interest shall be
calculated with respect to each Series B Fund Portfolio Company for each
Series B Fund Member equal to (i) the Capital Contribution of such Series B
Fund Member with respect to such Series B Fund Portfolio Company, divided by
(ii) the Capital Contributions of all Series B Fund Members with respect to
such Series B Fund Portfolio Company.

                  1.1.26    "Person" shall mean any individual, partnership,
corporation, limited liability company, unincorporated organization,
association, trust or other entity.

                  1.1.27    "Portfolio Company" shall mean a Person in which the
Series A Fund invests and/or the Series B Fund invests (i.e., a Series A Fund
Portfolio Company or a Series B Fund Portfolio Company).

                  1.1.28    "Regulations" shall, unless the context indicates
otherwise, mean the income tax regulations in force as final or temporary
promulgated under the Code, as such regulations may be amended from time to
time, including corresponding provisions of any succeeding regulations.

                  1.1.29    "Secretary of State" shall mean the Secretary of
State of Delaware.

                  1.1.30    "Series A Fund" shall have the meaning set forth in
Section 2.7.1.
                  1.1.31    "Series A Fund Member" shall mean a Member that has
a Membership Interest in the Series A Fund.

                  1.1.32    "Series A Fund Portfolio Company" shall mean a
Person in which the Series A Fund invests pursuant to this Agreement.

                  1.1.33    "Series B Fund" shall have the meaning set forth in
Section 2.7.1.

                  1.1.34    "Series B Fund Member" shall mean a Member that has
a Membership Interest in the Series B Fund.

                  1.1.35    "Series B Fund Portfolio Company" shall mean a
Person in which the Series B Fund invests pursuant to this Agreement.

                  1.1.36    "Sub-Fund" shall have the meaning set forth in
Section 2.7.1.

                  1.1.37    "Taxable Income" or "Taxable Loss" shall be computed
separately for the Series A Fund and for the Series B Fund and shall mean
with respect to each fiscal year or other period, an amount equal to the Sub-
Fund's taxable income or loss for such year or period determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be separately stated pursuant to Code
Section 703(a)(1) shall be included in such taxable income or loss).

                  1.1.38    "Tax Matters Partner" or "TMP" shall have the
meaning set forth in Section 10.6.

                  1.1.39    "Term" shall have the meaning set forth in Section
2.4.

                  1.1.40    "Transfer" and "Transferred" shall have the meaning
set forth in Section 8.1.



                                  ARTICLE TWO
                                 Organization

             2.1  Formation.  The Members have formed a limited liability
company pursuant to the provisions of the Act and this Agreement.  The Fund
commenced upon the filing of a Certificate of Formation on March 13, 2000
which was amended and restated by the Amended and Restated Certificate of
Formation (a copy of which is attached hereto as Exhibit A) which was filed
with the Secretary of State.

             2.2  Name.  The name of the Fund shall be "J Net Ventures I LLC".

             2.3  Purposes.
                  2.3.1     The purpose for which the Series A Fund was formed
is to purchase, sell and invest in securities of, and to otherwise finance,
early stage and later stage Internet-related, software-related and
technology-related companies.  Such companies may be private or public,
domestic or foreign.
                  2.3.2     The purpose for which Series B Fund was formed is to
purchase, sell and invest in securities of, and to otherwise finance, early
stage and later stage Persons involved in developing, providing and servicing
elements of the Internet infrastructure.  Since one of the Gilbert Investors
participating in the Series B Fund has partners that are tax-exempt and/or
are foreign investors, the Series B Fund necessarily will have, and intends
to have, investment objectives and business purpose, different than that of
the Series A Fund, in addition to the differences between the purposes
described provided in Sections 2.3.1 and the first sentence of this Section
2.3.2.  Notwithstanding the foregoing, the Series A Fund and the Series B
Fund may invest in the same Portfolio Companies.

                  2.3.3     Both the Series A Fund and the Series B Fund will
seek to be lead investor in investment situations, but may also co-invest
with other investment funds having objectives similar to that of the Series A
Fund or the Series B Fund, as the case may be.  The Series A Fund and/or the
Series B Fund may also invest in short-term highly liquid investments
providing for appropriate safety of principal (such as government
obligations, certificates of deposit, money market fund investments, short-
term debt obligations and interest-bearing accounts) pending investment of
funds.  The power to invest in securities shall include the power to invest
in one hundred percent (100%) or any fraction thereof of the debt or equity
securities of any one or more issuers and to cause the organization of any
one or more such issuers; and to invest in any other issuers which may engage
in the business of investing in securities of other issuers and/or making
loans to the other issuers.  In furtherance of all of the foregoing purposes,
the Fund shall have all powers necessary, suitable or convenient for the
accomplishment of such purposes, including without limitation the power to
engage in any lawful act or activity for which limited liability companies
may be organized under the laws of Delaware

             2.4  Restrictions on Investments.  The Series A Fund shall invest
no more than 15% of the Capital Contributions of Series A Fund Members in a
single Portfolio Company.

             2.5  Term.  Subject to earlier dissolution pursuant to the Act or
this Agreement, the Fund shall continue in existence from the date of the
filing of its initial Certificate of Formation until March 31, 2005;
provided, however, that the time in which the Fund continues in existence may
be extended for up to a period not to exceed two (2) years at the discretion
of the Manager.  Such period with any permitted extension is referred to
herein as the "Term".

             2.6  Office and Agent.  The Fund shall maintain a registered office
(which may but need not be a place of business in Delaware) and a registered
agent in the State of Delaware.  The principal office of the Fund shall be in
such location as determined from time to time by the Manager.  The registered
agent shall be as stated in the Certificate or as otherwise determined by the
Manager.

             2.7  Creation of Series of Fund Interests.

                  2.7.1     The Fund hereby designates and shall consist of two
sub-funds ("Series A Fund" and "Series B Fund" and each a "Sub-Fund")
consisting of separate limited liability company interests allocated to each
pursuant to this Agreement.   Each Sub-Fund shall have the separate rights,
powers and duties as is provided in the Agreement for the Fund, in general,
and when expressly provided in this Agreement, the Sub-Fund, subject however
to this Section.  All Capital Contributions of the Gilbert Investors as and
when made shall be allocated to the Series B Fund and the Capital
Contributions of all other Members shall be allocated to the Series A Fund.
The Gilbert Investors shall have the exclusive right, subject to the approval
of the Manager, to make capital contributions to the Series B Fund in
addition to their Capital Commitments.

                  2.7.2       The debts, liabilities and obligations incurred,
contracted for or otherwise existing with respect to a Sub-Fund shall be
enforceable only against the assets of such Sub-Fund and not against the
assets of the Fund generally of the other Sub-Fund and none of the debts,
liabilities and obligations incurred, contracted for or otherwise existing
with respect to the Fund generally or such other Sub-Fund shall be
enforceable against the assets of such Sub-Fund.

                  2.7.3     The Fund shall insure that (i) separate and distinct
records shall be maintained for each of Sub-Fund, (ii) the assets associated
each Sub-Fund shall be held and accounted for separately from the assets of
the other Sub-Fund and (iii) the Amended and Restated Certificate of
Formation shall at all times reflect the provisions of Section 2.7.2.

                  2.7.4     The Manager shall consult with each Gilbert Investor
with regard to all material matters regarding Series B Fund Portfolio
Companies. In all events, the Manager shall obtain the written consent of
each Gilbert Investor prior to making an investment for the Series B Fund and
prior to any Disposition of a Series B Fund Portfolio Company.  The Series B
Fund shall only make investments in Persons involved in developing, providing
and servicing Internet infrastructure unless each Gilbert Investor otherwise
consents in writing.  The Series B Fund shall have the right to participate
in all investment opportunities made available to the Series A Fund, in an
amount equal to the prospective investment by the Series A Fund and otherwise
on the same terms and conditions applicable to the investment by the Series A
Fund.  If the Membership Interests of a Gilbert Investor is assigned to its
constituent members or partners pursuant to Section 8.3, the constituent
members or partners shall select a single Person to represent their interests
with respect to this Section and notify the Manager in writing of the
identity of such Person, failing which the Manager may select a constituent
member or partner to act as the representative for the others.

                  2.7.5     The Series B Fund may only incur indebtedness or
become liable under guarantees if the Series B Fund Members have been advised
by counsel for the Fund (at the expense of the Series B Fund) that such
indebtedness or guarantees will not result in the realization of Unrelated
Business Taxable Income  ("UBTI") (as defined in Section 512 of the Code) by
a Series B Fund Member (or any person treated for federal income tax purposes
as a partner of a Series B Member that is itself treated as a partnership for
federal income tax purposes) that is exempt from federal income taxation
under Section 501(a) of the Code.  The Manager shall use its best efforts to
operate the Series B Fund in a manner that will not result in (i) realization
of UBTI by a Series B Fund Member (or any person treated for federal income
tax purposes as a partner of a Series B Fund Member that is itself treated as
a partnership for federal income tax purposes) that is exempt from income
taxation under Section 501(a) of the Code; or (ii) the Series B Fund being
engaged in the conduct of a "trade or business within the United States"
within the meaning of Section 864 of the Code.

             2.8  Investments by Series A Fund in Series B Portfolio Companies.
To the extent of available funds, the Series A Fund shall make available up
to fifteen million dollars ($15,000,000) for investments in Series B Fund
Portfolio Companies.  Such investments in Series B Fund Portfolio Companies
shall be in amounts equal to the amount invested by the Series B Fund and
shall be made as and when and on the same terms as the Series B Fund invests.
The Manager in its discretion, but subject to Section 2.3, may decide to have
the Series B Fund invest in a Series B Fund Portfolio Company in an amount
greater (but not lesser) than required by the foregoing sentence.

                                ARTICLE THREE
                                   Members

            3.1   Members; Percentage Interests.  The initial Members and their
respective Capital Contributions and Percentage Interests are listed on
Schedule A attached hereto.  The Percentage Interests shall be calculated
separately for the Series A Fund and the Series B Fund.  Upon the admission
of any new Member, Schedule A shall be amended accordingly.

            3.2   Admission of Additional Members.  Additional Members may only
be admitted to the Fund upon the prior written consent of the Manager (and
the prior written consent of each Gilbert Investor with respect to
participation in the Series B Fund), and as otherwise provided in this
Agreement.  Unless named in this Agreement, or unless admitted to the Fund as
a substituted Member as provided herein, no Person shall be considered a
Member, and the Fund need deal only with the Members so named and so
admitted.

            3.3   Limited Liability.  Except as expressly set forth in this
Agreement or required by law, no Member shall be personally liable for any
debt, obligation, or liability of the Fund, whether that liability or
obligation arises in contract, tort, or otherwise.

            3.4   Membership Certificate.  The Fund may issue, but shall not be
obligated to issue, to each Member, a certificate representing such Member's
Membership Interest in the Fund.

            3.5   Voting Rights.  Except as may be otherwise provided in the Act
or this Agreement, each of the Members hereby waives his or its right to vote
on any matters relating to the Fund.

            3.6   Meeting of the Members.  The Fund shall not be required to
hold annual or other meetings of the Members.  Subject to the foregoing, a
meeting of the Members may be called at any time by the Manager.  If called,
meetings of Members shall be held at the Fund's principal place of business,
unless otherwise agreed to by the Manager.

            3.7   Members Are Not Agents.  Pursuant to Section 4.1, the
management of the Series A Fund and the Series B Fund is vested in the
Manager.  The Members shall have no power to participate in the management of
the Fund other than the Gilbert Investors with respect to the Series B Fund
as provided in Section 2.7.4.  No Member, acting solely in the capacity of a
Member, is, or shall be, an agent of the Fund.

            3.8   Resignation and Withdrawal of Members.

                  3.8.1     Members may not resign or withdraw as a Member prior
to the dissolution and winding up of the Fund.

                  3.8.2     The Manager may terminate the Membership Interest of
any Member and/or (notwithstanding Section 3.8.1) cause such Member to resign
from the Fund at any time upon at least two days' prior written notice, if
such resignation is required, as determined in the sole and absolute
discretion of the Manager, to comply with laws or regulations applicable to a
Member or if the Manager determines that the continued participation of such
Member in the Fund might adversely affect the Fund, such as by involving the
Fund or any Member in any litigation arising out of, or relating to, the
participation of such Member in the Fund or causing the Fund to be required
to register as an investment company under the Investment Fund Act.  In the
event of termination by the Manager of the Member's Interest, such Member
shall immediately resign from the Fund and cease to be a Member but shall be
paid the fair market value of the Member's Membership Interest as determined
by the Manager, 90% of such amount payable within 90 days after such
termination or as soon thereafter as the Fund has available funds, with the
remainder to be paid upon completion of that year's audit.  Notwithstanding
the foregoing, if the terminated Member is a Series B Fund Member, Manager
shall cause a redemption of the Membership Interest of such terminated Member
by distributing to such Member interests in Series B Fund Portfolio Companies
held by the Series B Fund at the time equal to such Member's Percentage
Interests in such Series B Fund Portfolio Companies, unless the Series B Fund
is prohibited from making such distribution either by agreement with a
Portfolio Company or if the Manager, in good faith, determines that such
redemption and/or distribution of interests in Series B Fund Portfolio
Companies is not in the best interests of the Series B Fund and/or the other
Series B Fund Members.

            3.9   Confidentiality.  Members shall keep confidential and not
disclose to any other person any information received from the Fund relating
to business affairs of the Fund, including any information relating to any
Portfolio Company or prospective Portfolio Company except as may otherwise be
required by law

            3.10  Competing Activities.

                  3.10.1    The Manager shall devote to the Fund and to
Portfolio Companies in which the Fund invests such time as the Manager
believes shall be necessary to conduct the Fund business and affairs in an
appropriate manner.  The Members recognize, however, that Affiliates of the
Manager, and any member, officer or employee of the Manager or any such
Affiliate, shall be required to devote only such time to the affairs of the
Fund and to Portfolio Companies, as the Manager or such other Person
determines in its reasonable discretion may be necessary or appropriate to
manage and operate the Fund, and each such Person shall be free to serve and
may be compensated by any other Person or enterprise in any capacity
(including serving the Fund in any capacity other than as a representative or
agent of the Manager) that it may deem appropriate in its discretion.  The
Members hereby consent to the foregoing.  The Members further acknowledge
that although the Manager and the Advisory Board intend generally to identify
appropriate investment opportunities for the Fund, neither the Manager, the
Advisory Board nor any of their Affiliates shall have any obligation under
this Agreement, to offer to the Fund or any Member any particular investment
opportunity (except that the Manager shall offer to the Series B Fund each
investment opportunity presented to the Series A Fund as provided in Section
2.7). Any Member may engage in or possess any interest in other business
ventures of any kind, nature or description, independently or with others,
whether such ventures are competitive with the Fund or otherwise.  Neither
the Fund nor any Member shall have any rights or obligations by virtue of
this Agreement or the Fund relationship created hereby in or to such
independent ventures or the income or profits or losses derived therefrom.

                  3.10.2    Each Member acknowledges and agrees that (i) neither
the Manager nor any Affiliate of the Manager shall be prohibited from being a
sponsor or manager of or providing services to any other equity fund
including any equity fund having purposes substantially the same as those of
the Fund (a "Competitive Fund"); and (ii) neither the Manager nor any
Affiliate of the Manager shall have any obligation to offer to any Member the
opportunity to become Members of any Competitive Fund, or, if so offered,
such offer is not required to be made to the Members on a pro rata basis.

                  3.10.3    Notwithstanding that it may constitute a conflict of
interest, the Manager may engage in any transaction (including, without
limitation, the purchase, sale, lease, or exchange of any property or the
rendering of any service, or the establishment of any salary, other
compensation, or other terms of employment) with the Fund.

                  3.10.4    The Fund may invest in entities in which the
Manager, Affiliates of Manager or a member, officer or employee of Manager of
Affiliate may have an existing interest as manager, investor, consultant or
otherwise and the Members hereby consent to such investment.

                                ARTICLE FOUR
                     Management and Control of the Fund

            4.1   Management of the Fund by Manager.  The business, policies,
property, investment decisions and affairs of the Fund generally and of both
the Series A Fund and the Series B Fund in particular, shall be managed
exclusively by the Manager.  Except for situations in which the approval of
the Members is expressly required by the Act, the Manager shall have full,
complete and exclusive authority, power, and discretion to manage and control
the business, policies, property and affairs of the Fund, to make all
decisions regarding those matters and to perform any and all other acts or
activities customary or incident to the management of the Fund's business,
property and affairs.  With respect to the management of the Series B Fund,
the foregoing shall be subject to Sections 2.7 and 2.8.

             4.2  Advisory Board.

                  4.2.1     The Manager shall from time to time select a panel
of persons to be members of an Advisory Board (the "Advisory Board").
Members of the Fund and/or Members of, or Affiliates of, the Manager may be
selected to service on the Advisory Board.

                  4.2.2  The Manager shall determine the functions of the
Advisory Board but in general the Advisory Board shall assist the Manager
with identifying investments, conducting due diligence and managing
investments.  The recommendations of the Advisory Board shall be advisory
only and the Manager shall not be obligated to act in accordance with the
advice or recommendations of the Advisory Board, and shall suffer no
liability for failure to do so.

                  4.2.3     The members of the Advisory Board shall not be
compensated by the Fund for services rendered as a member of the Advisory
Board other than pursuant to this Section.  The Manager shall reimburse
Advisory Board members for reasonable out-of-pocket expenses.  The Manager
may also grant to all or some of the Advisory Board members a "profits
interest" in any Portfolio Company (i) first identified to the Manager by
such member or (ii) with respect to which such member significantly
participates in the due diligence.  If the Manager requests that an Advisory
Board member serve as a director of a Portfolio Company, such member may keep
any monetary or other compensation provided by such Portfolio Company.

          4.3     Limited Liability.  Except as expressly set forth in this
Agreement or required by law, the Manager shall not be personally liable for
any debt, obligation, or liability of the Fund, whether arising in contract,
tort or otherwise, solely by reason of being the Manager of the Fund.

          4.4     Management Compensation.  The Manager shall not be entitled to
any compensation for services rendered in connection with the management of
the Fund other than pursuant to Article Six.

          4.5     Assignment of Manager's Interest; Resignation of Manager;
Removal of Manager.

                  4.5.1     The Manager shall not assign, sell or otherwise
dispose of all or any portion of its interest as Manager; provided the
foregoing shall not restrict changes in the composition of the members of the
Manager nor a sale of Manager to one of its members.

                  4.5.2     The Manager shall not resign without the consent of
Members holding at least 75% of the Percentage Interests of the Series A Fund
and each of the Series B Fund Members.

                  4.5.3     Notwithstanding anything contained in the Act or
this Agreement to the contrary, the Manager may only be removed by unanimous
vote of all Members of the Fund and Members participating in a Sub-Fund shall
not be entitled to remove the Manager with respect to its role as Manager of
such Sub-Fund without the unanimous vote of all Members of the other Sub-
Fund.

                  4.5.4     If the Manager has resigned or is removed, then the
successor Manager shall be appointed by holders of at least a majority of the
Percentage Interests of each Sub-Fund.

          4.6     Performance of Duties; Liability of Manager.  The Manager
shall not be liable to the Fund or to any Member for any loss or damage
sustained by the Fund or any Member, unless the loss or damage shall have
been the result of fraud, deceit, gross negligence, reckless or intentional
misconduct, or a knowing violation of law by the Manager.

          4.7     Liability of Manager Limited to Manager's Assets.  Under no
circumstances will any director, officer, shareholder, member, manager,
partner, employee, agent or Affiliate of the Manager have any personal
responsibility for any liability or obligation of the Manager.

          4.8     Expenses of the Fund.

                  4.8.1     The Fund itself shall not have any direct salaried
personnel.  The following expenses ("Manager Expenses") shall be borne by the
Manager:
                            All general office overhead of the Fund, including
                  rent, utilities, telecommunications, office
                  furniture and equipment and computers ("Overhead") (and all
                  such furniture, equipment And computers shall be and remain
                  the property of the Manager), it being understood, however,
                  that general office overhead directly relating to the
                  operations of the Fund's Portfolio Companies (including, for
                  example, rent and other items of overhead attributable to
                  space and services used by employees of the Fund's Portfolio
                  Companies) will be borne directly by such Portfolio Companies
                  or, if paid by the Manager or a member of the Manager, the
                  Manager or such member will be reimbursed by such Portfolio
                  Companies;

                            All expenses of monitoring and managing investments
                  other than Transaction Expenses, as defined in Section
                  4.8.2(iv); and

                            All Organizational Expenses as defined in Section
                  4.8.2(i) in excess of $100,000.

               4.8.2        All expenses of the Fund that are not Manager
Expenses shall be "Fund Expenses", shall be borne by and allocated between
the Series A Fund and the Series B Fund pursuant to Section 4.8.4 and shall
include, without limitation:

                           All reasonable organization costs, fees and expenses
                  incurred by or on behalf of the Manager of its Affiliates in
                  connection with the formation and organization of the Fund
                  ("Organizational Expenses") up to an amount not to exceed
                  $100,000.  Such organization expenses shall include, without
                  limitation, legal and accounting fees and expenses, marketing,
                  printing and travel expenses;

                           To the extent not reimbursed by a prospective or
                  actual Portfolio Company and to the extent not considered
                  Overhead, all expenses of operating the Fund, including,
                  without limitation, any taxes imposed on the Fund, fees and
                  expenses for attorneys, accountants, investment bankers and
                  the members of the Advisory Board, insurance premiums, all
                  expenses relating to the disposition of Portfolio Companies,
                  all indemnification obligations of the Fund, the costs and
                  expenses of any litigation involving the Fund and the amount
                  of any judgments or settlements paid in connection therewith
                  (excluding, however, any costs and expenses which are finally
                  judicially determined to have resulted primarily from the
                  Manager's fraud, willful misconduct or gross negligence);

                            All expenses incurred by the Fund related to the
                  discovery, investigation, development, evaluation, structuring
                  or negotiation of investment opportunities for the Fund where
                  an investment does not in fact result, including, without
                  limitation, (i) commitment fees that become payable in
                  connection with a proposed investment that is not ultimately
                  made, (ii) legal, accounting, investment banking and other
                  professional fees and expenses and (iii) printing expenses;
                  and

                           All expenses described in "iii" above with regard to
                  investment opportunities for the Fund that actually result in
                  an investment (all such expenses referred to in subsection
                  "iii" above and this subsection "iv", "Transaction Expenses").

The Manager (or a member of Manager) shall pay, on behalf of the Fund, all
Fund Expenses and the Fund, on demand, shall promptly reimburse the Manager
(or a member of Manager if paid by such member) for the payment thereof.  The
Manager shall allocate such expenses among the Portfolio Companies and other
Fund income as the Manager may reasonably determine.  All breakup, topping or
similar fees shall be paid to and retained by Manager provided, however, the
Fund shall receive a credit against any reimbursement payments of Fund
Expenses due Manager in the amount of such fees as and when received by
Manager.

               4.8.3        The Manager shall not receive any salary, fees,
profits, distributions or compensation from the Fund, except as provided in
this Article Four and Article Six.

               4.8.4        Fund Expenses described in Section 4.8.2(i), (ii)
and (iii) shall be allocated to the Series A Fund provided, however, to the
extent that Series B Fund Members have committed to have a prospective
investment included in the Series B Fund, Fund Expenses described in Section
4.8.2(iii) with regard to such prospective but abandoned investment shall be
allocated to the Series A Fund and the Series B Fund in proportion to their
prospective investments.  Fund Expenses described in Sections 4.8.2(iv) shall
be allocated to the particular Portfolio Company to which they relate and as
between the Series A Fund and the Series B Fund, in proportion to their
prospective investments in such Portfolio Company.

                                ARTICLE FIVE
                            Capital Contributions

             5.1  Amount and Timing of Capital Contributions.

               5.1.1        Each Series A Fund Member shall contribute to the
Fund the amount set forth on Schedule A beside its name.  The Gilbert
Investors jointly and severally agree to contribute, in accordance with
Section 5.1.3, to the Fund, collectively, up to Fifteen Million Dollars
($15,000,000) during the Term, with the allocation of such contributions by
each Gilbert Investor to be decided among the Gilbert Investors.  The amounts
that the Series A Fund Members and the Gilbert Investors have agreed to
contribute to the Fund shall be referred to as their "Capital Commitments".

               5.1.2        The Series A Fund Members shall make their entire
respective Capital Commitments in conjunction with the execution of this
Agreement.

               5.1.3        The Gilbert Investors shall make payments from time
to time with respect their Capital Commitments only in conjunction with
investments approved by the Gilbert Investors pursuant to Section 2.7.4.
Once an investment is so approved, the Gilbert Investors shall make payments
with respect to their Capital Commitment in the aggregate amount equal to 50%
of the funds necessary to fund such approved investments as reasonably
determined by Manager with the balance to be funded by the Series A Fund
pursuant to Section 2.8.  The allocation of the amounts to be paid by the
individual Gilbert Investors shall be determined exclusively by the Gilbert
Investors, and may vary from investment to investment provided, however, the
Gilbert Investors shall be jointly and severally obligated to make the
contributions required for the approved investments.  All such payments to be
made by the Gilbert Investors to the Fund shall be made by the date specified
in a written notice ("Capital Call Date") given by the Manager ("Capital
Call"), which Capital Call Date shall not be less than fifteen (15) business
days after such Capital Call has been given.

             5.2  Additional Capital Contributions.  No Member shall be required
to make any Capital Contributions other than as set forth in Section 5.1.

             5.3  Withdrawal or Reduction of Capital Contributions.

                  5.3.1     Except as expressly provided in this Agreement, no
Member shall have the right to withdraw from the Fund all or any part of his
or its Capital Contribution prior to the dissolution and winding up of the
Fund.

                  5.3.2     Without limiting the generality of this Section, no
Member shall receive any part of his or its Capital Contribution with respect
to a Sub-Fund until:  (i) all liabilities of the Sub-Fund, except liabilities
to Members on account of their Capital Contributions, have been paid or there
remains property of the Sub-Fund sufficient to pay them; or (ii) the Amended
and Restated Certificate of Formation or this Agreement is canceled.

             5.4  No Interest Payable on Capital Contributions.  No interest
shall be payable on or with respect to the Capital Contributions or Capital
Accounts of Members.

             5.5  Capital Accounts.  An individual Capital Account (the "Capital
Account") shall be maintained separately for the Series A Fund and for the
Series B Fund for each Member separately for the Series A Fund and for the
Series B Fund in accordance with the following provisions.

                  5.5.1     The initial Capital Account of each Member shall be
the amount contributed by that Member to the Fund.  Following the date
hereof, each Member's Capital Account shall be credited with (1) the amount
of additional cash contributions made by such Member to the Fund; (2) the
amount of such Member's allocable share of Net Income and any items of Fund
income and gain that are specially allocated to such Member pursuant to
Article Seven hereof; and (3) the amount, if any, of any Fund liabilities
assumed by the Member or that are secured by any Fund property distributed to
such Member by the Fund.

                  5.5.2     Each Member's Capital Account shall be charged with
(1) the amount of cash distributed to such Member by the Fund (other than
cash distributed in repayment of any loan by such Member to the Fund or as
payment of interest thereon); (2) the amount of such Member's allocable share
of Net Loss and any items of Fund loss and deduction that are specially
allocated to such Member pursuant to Article Seven hereof; and (3) the fair
market value of any property distributed to such Member by the Fund (net of
liabilities secured by such distributed property that such Member is
considered to assume or take subject to under Section 752 of the Code).

                  5.5.3     In the event of (1) the acquisition of an additional
interest in the Fund by any new or existing Member in exchange for more than
a de minimis Capital Contribution, (2) the distribution by the Fund to a
Member of more than a de minimis amount of the assets of the Fund as
consideration for an interest in the Fund, (3) the liquidation of the Fund
for federal income tax purposes pursuant to Regulation Section 1.704-
1(b)(2)(ii)(g), or (4) an election under Code Sections 734(b) or 743(b), but
only as provided in Regulation Section 1.704-1(b)(2)(iv)(m), the Gross Asset
Value of the Fund's properties shall be adjusted (limited, in the case of the
events described in clauses (1) and (2), to adjustments which the Manager
determine are necessary or appropriate to reflect the relative economic
interest of the Members) to equal their then fair market values (as
determined by the Manager), and the Capital Accounts of each Member shall be
credited or charged with such Member's share of the Net Income or Net Loss
resulting from such adjustments.

                  5.5.4     In the event that any Membership Interest in the
Fund is transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred interest.

                  5.5.5     The foregoing provisions and the other provisions of
this Agreement relating to the maintenance of Capital Accounts are intended
to comply with Regulation Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulation.

                  5.5.6     Notwithstanding anything in this Section to the
contrary, a separate Capital Account shall be maintained for the Manager for
Series A Fund Portfolio Companies and for Series B Portfolio Companies.  All
references in Sections 7.1.1 and 7.1.2 shall be deemed references to the
Capital Account maintained for the Manager for Series A Fund Portfolio
Companies.

             5.6  Minimum Capital Contribution of Manager.  Notwithstanding any
other provision of this Agreement, the Manager shall make a capital
contribution of $100 to the Fund and shall be considered a Member.


                                 ARTICLE SIX
                                Distributions

             6.1  Distributions.

                  6.1.1     Subject to the reasonably anticipated business needs
and opportunities of the Fund, taking into account all debts, liabilities and
obligations of the Fund then due, working capital and other amounts which the
Manager deems necessary for the Fund's business or to place into reserves for
customary and usual claims with respect to such business, and subject also to
any restrictions under applicable law (including, without limitation, any
obligation to withhold and remit any amounts to any governmental authority),
the Manager may resolve to distribute the cash and all or a portion of
Marketable Securities held by the Fund to the Members, at such intervals as
the Manager shall determine in its sole discretion.  The Manager shall make
the foregoing determinations separately for each Sub-Fund considering the
business needs and opportunities, debt, liabilities, obligations, working
capital, reserves and assets of each Sub-Fund individually so that the assets
of one Sub-Fund shall only be available to satisfy the debts, liabilities,
and obligations with respect to such Sub-Fund, plus the actual or anticipated
Fund Expenses allocated or allocable to such Sub-Fund pursuant to Section
4.8.4 except that the Manager may consider the interests of both Sub-Funds
when determining whether to distribute Marketable Securities.  If the Manager
determines to distribute Marketable Securities such distribution shall be
made in accordance with Section 6.1.2A and B, and no Member shall receive a
preference as to the receipt of Marketable Securities in lieu of cash or cash
in lieu of Marketable Securities.  Notwithstanding the foregoing provisions
of this Section, if (i) at any time the Fund sells, exchanges or otherwise
disposes of all or any part of its interest in a Portfolio Company (a
"Disposition") and (ii) the Manager determines that the distribution of the
proceeds resulting from the sale together with any undistributed dividends
and interest, net of expenses and reserves set aside by the Manager pursuant
to this Section, will not violate Section 6.3.1, then the Manager shall
distribute such net proceeds (including dividends and interest) to the
Members as provided below:

               6.1.2.A       All amounts to be distributed hereunder shall be
distributed in the following order of priority with respect to each Series A
Fund Portfolio Company (to the extent of such investment by the Series A
Fund):

                            First, to each Series A Fund Member in proportion to
                  their respective Percentage Interests in the Series A Fund
                  until each Series A Fund Member has received pursuant to this
                  Section an amount equal to such Series A Fund Member's Capital
                  Contribution;

                            Second, to each Series A Fund Member in proportion
                  to their respective Percentage Interests until the Series A
                  Fund Members have received an Internal Rate of Return on their
                  Capital Contributions of 8%;

                            Third, to the Manager until the Manager has received
                            an amount equal to 20% of the cumulative
                            distributions made to Members pursuant to "ii"
                            above;

                            Lastly, the balance, 80% to the Series A Fund
                            Members in proportion to their respective Percentage
                            Interests and 20% to the Manager.

Distributions to the Manager pursuant to "iii" and "iv" above shall be called
"Carried Interest Distributions".  If upon a Disposition, the cumulative
amounts distributed to Series A Fund Members pursuant to Section 6.1.2A
(including distributions that would result from the Disposition in question),
result in a Internal Rate of Return in excess of 35%, then the distribution
percentages referred to in Section 6.1.2.A(iv) shall be 70% with respect to
Series A Fund Members and 30% with respect to the Manager.

The term "Internal Rate of Return" means the discount rate, compounded
annually, at which the net present value of all contributions made by, and
all distributions to, a Member is zero.

               6.1.2.B       With respect to each Series B Portfolio Company in
which the Series B Fund invests (to the extent of such investment by the
Series B Fund) amounts attributable to each Series B Fund Portfolio Company
shall be distributed to the Series B Fund Members in proportion to their
respective Percentage Interests in the Series B Fund, calculated separately
for each Series B Portfolio Company.

               6.1.3         Without limiting the generality of Section 6.1.1,
if and to the extent that the Fund is earning income which will result in the
Members being subject to income tax on their distributive share of the Fund's
income, minimum distributions shall be made to the Members in such amounts
and at such times (but in no event later than March 31 each year) as shall be
sufficient to enable the Members to meet any income tax liability arising or
incurred as a result of their participation in the Fund.  Any such
distribution shall be made on a nondiscriminatory basis to all Members pro
rata in accordance with their respective Fund Percentage Interests and shall
be credited against amounts distributible under Article Six.

                  6.1.4     It is specifically recognized that in making an
assumption as to tax liabilities of a Member, some Members may receive a
distribution which is in excess of their actual tax liabilities, and some
Members may receive a distribution which is less.

             6.2  Form of Distributions.

                  6.2.1     No Member, regardless of the nature of the Member's
Capital Contribution, has any right to demand and receive any distribution
from the Fund in any form other than money.

                  6.2.2     At the Manager's sole discretion, the Fund may
distribute specific property or assets of the Fund (including, without
limitation, Marketable Securities).

             6.3  Restriction on Distributions.

                  6.3.1     No distribution shall be made from a Sub-Fund if,
after giving effect to the distribution: (i) the Sub-Fund would not be able
to pay its debts as they become due in the usual course of business, (ii) the
Sub-Fund's total assets would be less than the sum of its total liabilities,
or (iii) the provisions of Section 18-215(h) of the Act are not satisfied.

                  6.3.2     The Manager may base a determination that a
distribution is not prohibited on any of the following:  (i) financial
statements prepared on the basis of accounting practices and principles that
are reasonable in the circumstances; (ii) a fair valuation; or (iii) any
other method that is reasonable in the circumstances.

The effect of a distribution is to be measured as of the date the
distribution is authorized if the payment is to occur within one hundred
twenty (120) days after the date of authorization, or the date payment is
made if it is to occur more than one hundred twenty (120) days after the date
of authorization.

             6.4  Return of Distributions.  Members and Economic Assignees who
receive distributions made in violation of the Act or this Agreement shall
return such distributions to the Fund.  Except for those distributions made
in violation of the Act or this Agreement, no Member or Economic Assignee
shall be obligated to return any distribution to the Fund or pay the amount
of any distribution for the account of the Fund or to any creditor of the
Fund.  The amount of any distribution returned to the Fund by a Member or
Economic Assignee or paid by a Member or Economic Assignee for the account of
the Fund or to a creditor of the Fund shall be added to the account or
accounts from which it was subtracted when it was distributed to the Member
or Economic Assignee.

             6.5  Withholding from Distributions.  To the extent that the Fund
is required by law to withhold or to make tax or other payments on behalf of
or with respect to any Member or Economic Assignee, the Fund may withhold
such amounts from any distribution and make such payments as so required.
For purposes of this Agreement, any such payments or withholdings shall be
treated as a distribution to the Member or Economic Assignee on behalf of
whom the withholding or payment was made.  Each Member shall indemnify and
hold the Fund harmless from and against all liabilities and taxes (including
interest and penalties) resulting from the Fund's failure to withhold or to
make tax or other payments attributable to such Member's allocable share of
the Fund's income or distributible cash.

                                ARTICLE SEVEN
                                 Allocations

             7.1  Allocations of Net Income and Net Losses.

                  7.1.1     Net Income attributable to Series A Fund Portfolio
Companies shall be allocated among the Series A Fund Members as follows:

                            First, to all Series A Fund Members in proportion
                  to the negative balances in their respective Capital
                  Accounts, if any, until all such negative balances have been
                  increased to zero.

                            Then, to the Series A Fund Members in an amount
                  equal to, or in proportion to, the positive differences
                  between (x) the amount distributible to each such Member
                  pursuant to Section 6.1.2.A(i), and (y) the positive balance
                  in its Capital Account.

                            Then, to the Series A Fund Members in an amount
                  equal to, or in proportion to, the positive differences
                  between (x) the amount distributible to each such Member
                  pursuant to Section 6.1.2.A(i) and (ii), and (y) the positive
                  balance in its Capital Account.

                           Then, to the Manager in an amount equal to the
                  positive difference between (x) the amount distributible
                  to the Manager pursuant to Section 6.1.2.A(iii) and (y) the
                  positive balance in its Capital Account.

                           Then, to the Series A Fund Members and the Manager
                  in an amount equal to, or in proportion to, the positive
                  differences between (x) the amount distributible to each such
                  Member pursuant to Sections 6.1.2.A(i), (ii), (iii) and (iv),
                  and (y) the positive balance in its Capital Account.

                           Then, to the Series A Fund Members and the Manager in
                  proportion to the allocations made to Series A Fund Members
                  pursuant to subsection (v) of this Section 7.1.1.

                  7.1.2     Net Losses shall be allocated as follows:

                            First, to the Series A Fund Members and the Manager
                  in an amount equal to, or in proportion to, the positive
                  differences between (x) the positive balance in its Capital
                  Account, and (y) the amount distributible to each such Series
                  A Fund Member pursuant to Sections 6.1.2.A(i), (ii) and (iii).

                            Then, to the Manager in an amount equal to the
                  positive difference between (x) the positive balance in the
                  Manager's Capital Account, and (y) the amount distributible
                  to the Manager pursuant to Section 6.1.2.A(i).

                            Then, to the Series A Fund Members in an amount
                  equal to, or in proportion to, the positive differences
                  between (x)the positive balance in its Capital Account, and
                  (y) the amount distributible to each such Series A Fund
                  Member pursuant to Section 6.1.2.A(i).

                            Then, to the Series A Fund Members and the Manager
                  in proportion to the positive balances in their respective
                  Capital Accounts until all such positive balance have been
                  reduced to zero.

                            Then, 80% to the Members in proportion to their
                  respective Percentage Interests and 20% to the Manager.

                  7.1.3     Net Income and Net Losses attributable to Series B
Portfolio Companies shall be allocated exclusively among Series B Fund
Members in proportion to their respective Percentage Interests in the Series
B Fund with respect to each such Series B Portfolio Company.

                  7.1.4     Notwithstanding anything in Section 7.1 to the
contrary, on liquidation of the Fund, Net Income and Net Loss (and items
thereof) shall be allocated among the Members (including the Manager) such
that, after taking into account such allocations, the positive balance in
each Member's Capital Account is equal to the amount distributible to that
Member pursuant to Section 9.2.4.

             7.2  Regulatory Allocations.

                  7.2.1     The Regulatory Allocations set forth in this Section
7.2 shall be calculated separately for the Capital Accounts maintained for
the Series A Fund and the Series B Fund.
                  7.2.2     Notwithstanding any other provision of this
Agreement, Net Loss (or items of deduction as computed for book purposes)
shall not be allocated to a Member to the extent that the Member has or would
have, as a result of such allocation, an Adjusted Capital Account Deficit.
As used herein, a Member's "Adjusted Capital Account Deficit" shall mean and
refer to such Member's Capital Account, increased by any amounts which such
Member is obligated to restore pursuant to the terms of this Agreement or is
deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations 1.704-2(g)(1) and 1.704-2(i)(5), and reduced by any
adjustments, allocations or distributions described in Regulation 1.704-
1(b)(2)(ii)(d)(4), (5) or (6).  Any Net Loss (or items of deduction as
computed for book purposes) which otherwise would be allocated to a Member,
but which cannot be allocated to such Member because of the application of
the first sentence of this Section 7.2.2, shall instead be allocated to the
other Members, in accordance with their respective Percentage Interests,
subject to the limitation imposed by the immediately preceding sentence.

                  7.2.3     In order to comply with the "qualified income
offset" requirement of the Regulations under Section 704(b) of the Code, and
notwithstanding any other provision of this Agreement to the contrary, except
Section 7.3, in the event a Member for any reason (whether or not expected)
has an Adjusted Capital Account Deficit, items of Net Income (consisting of a
pro rata portion of the items thereof) shall be allocated to such Member in
an amount and manner sufficient to eliminate as quickly as possible the
Adjusted Capital Account Deficit.

                  7.2.4     In order to comply with the "minimum gain
chargeback" requirements of Regulations 1.704-2(f)(1) and 1.704-2(i)(4),
and notwithstanding any other provision of this Agreement to the contrary, in
the event there is a net decrease in a Member's share of Fund minimum gain
(as defined in Regulation 1.704-2(d)(1)) and/or Member nonrecourse debt
minimum gain (as defined in Regulation 1.704-2(i)(2)) during a taxable year,
such Member shall be allocated items of income and gain for that year (and if
necessary, for other years) as required by and in accordance with Regulations
1.704-2(f)(1) and 1.704-2(i)(4) before any other allocation is made.

                  7.2.5     Notwithstanding any other provision of this
Agreement, all items of deduction and loss that, pursuant to Regulation
1.704-2(i), are attributable to a nonrecourse debt for which a Member (or a
Person related to such Member under Regulation 1.752-4(b)) bears the
economic risk of loss (within the meaning of Regulation 1.752-2), shall be
allocated to such Member as required by Regulation 1.704-2(c).

                  7.2.6     The allocations set forth in this Section 7.2 (the
"Regulatory Allocations") are intended to comply with certain requirements of
the Regulations.  It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Taxable
Income or Taxable Loss.  Therefore, notwithstanding any other provision of
this Article Seven (other than the Regulatory Allocations), offsetting
special allocations of Taxable Income or Taxable Loss, shall be made in
whatever manner is appropriate so that, after such offsetting allocations are
made, each Member's Capital Account balance is, to the extent possible, equal
to the Capital Account balance such Member would have had if the Regulatory
Allocations were not part of this Agreement.  In making such offsetting
allocations, there shall be taken into account future Regulatory Allocations
that, although not yet made, are likely to offset other Regulatory
Allocations previously made.

             7.3  Code Section 704(c) Allocations.  Notwithstanding any other
provision in this Article Seven, in accordance with Code Section 704(c) and
the Regulations promulgated thereunder, income, gain, loss, and deduction
with respect to any property the Gross Asset Value of which differs from its
adjusted basis shall, solely for tax purposes, be allocated among the Members
so as to take account of any variation between the adjusted basis of such
property to the Fund for federal income tax purposes and its Gross Asset
Value on the date of contribution.  Allocations pursuant to this Section 7.3
are solely for purposes of federal, state and local taxes.  As such, they
shall not affect or in any way be taken into account in computing a Member's
Capital Account or share of profits, losses, or other items of distributions
pursuant to any provision of this Agreement.

             7.4  Other Allocation Rules.  Each separate item of income,
deduction, gain and loss of the Fund shall be allocated among the Members in
the same proportion as the portion of the total Net Income or Net Loss for
the period which is credited or charged to the Capital Account of each Member
bears to the total Net Income or Net Loss for such period.

             7.5  Allocation of Net Income and Losses and Distributions in
Respect of a Transferred Interest.

                  7.5.1       If any Membership Interest is transferred, or if a
Member's Percentage Interest is increased or decreased by reason of the
admission of a new Member or otherwise, during any Fiscal Year of the Fund,
Net Income or Net Loss for such Fiscal Year shall be assigned pro-rata to
each day in the particular period of such Fiscal Year to which such item is
attributable (i.e., the day on or during which it is accrued or otherwise
incurred) and the amount of each such item so assigned to any such day shall
be allocated to the Member or Assignee based upon his or her respective
Economic Interest at the close of such day.

                  7.5.2     However, for the purpose of accounting convenience
and simplicity, the Fund shall treat such a transfer, increase or decrease
in, if a Member's Percentage Interest which occurs at any time during a semi-
monthly period (commencing with the semi-monthly period including the date
hereof) as having been consummated on the last day of such semi-monthly
period, regardless of when during such semi-monthly period such transfer,
increase, or decrease actually occurs (i.e., sales and dispositions made
during the first fifteen (15) days of any month will be deemed to have been
made on the 15th day of the month).

                  7.5.3     Notwithstanding any provision above to the contrary,
gain or loss of the Fund realized in connection with a sale or other
disposition of any of the assets of the Fund shall be allocated solely to the
parties owning Membership Interests as of the date such sale or other
disposition occurs.

             7.6  Obligations of Members to Report Allocations.  Each Member
hereby recognizes that the Fund will be treated as a partnership for federal
and state income tax purposes and will be subject to all provisions of
subchapter K of chapter 1 of subtitle A of the Code.  Each Member is aware of
the income tax consequences of the allocations made by this Article Seven and
hereby agrees to be bound by the provisions of this Article Seven in
reporting his or her share of Fund income and loss for income tax purposes.
Each Member agrees to report, on his own income tax returns for each year,
each item of income, gain, loss, deduction and credit as reported by the Fund
to such member on Schedule K-1 (or other similar tax report) issued by the
Fund to such Member for such year.  Except as otherwise required by law, no
Member shall take any reporting position that is inconsistent in any respect
with any tax reporting position taken by the Fund and, in the event of a
breach by such Member of the provisions of this Section such Member shall be
liable to the Fund and the Members for any costs, liabilities and damages
(including, without limitation, consequential damages) incurred by any of
them on account of such breach.


                                ARTICLE EIGHT
                    Transfer and Assignment of Interests

             8.1  Transfer and Assignment of Interests.  Subject to Section 8.4
hereof, no Member shall be entitled to transfer, assign, convey, sell,
encumber or in any way alienate all or any part of his or her Membership
Interest (collectively, "Transfer" or "Transferred") except with the prior
written consent of the Manager, which consent may be given or withheld,
conditioned or delayed (as allowed by this Agreement or the Act), in its sole
and absolute discretion.  Transfers in violation of this Article Eight shall
only be effective to the extent set forth in Section 8.7.  After the
consummation of any Transfer of any part of a Membership Interest, the
Membership Interest so Transferred shall continue to be subject to the terms
and provisions of this Agreement and any further Transfer shall be required
to comply with all the terms and provisions of this Agreement.

             8.2  Further Restrictions on Transfer of Interests.  In addition to
other restrictions found in this Agreement, no Member shall Transfer all or
any part of his or her Membership Interest without compliance with Section
12.9.

             8.3  Permitted Transfers.  The Membership Interest of any Member
may be Transferred to any other Member, subject to compliance with Section
12.9, and without the prior written consent of the Members or Manager.  The
Economic Interest of any Member may be Transferred subject to compliance with
Section 8.2, and without the prior written consent of the Manager, by the
Member (i) to any spouse, parent, sibling, in-law, child or grandchild of the
Member, or to a trust for the benefit of the Member or such spouse, parent,
sibling, in-law, child or grandchild of the Member by inter vivos gift or by
testamentary transfer, or (ii) to any Affiliate of the Member (such
transferee, an "Economic Assignee").  Following the full funding to the Fund
of the Capital Commitments of the Gilbert Investors, the Membership Interest
of any Gilbert Investor may be Transferred to any Affiliate of a Gilbert
Investor or a constituent member or partner of the entity constituting a
Gilbert Investor without the written consent of the Manager, subject to
compliance with Section 12.9.  Notwithstanding anything contained herein to
the contrary, no Transfer of a Membership Interest or Economic Interest
(whether or not the consent of the Manager is required) shall be effective
until written notice of such Transfer and the identity, address, and tax
reporting information of the transferee is delivered to the Manager.

             8.4  Substitution of Members.  An Economic Assignee of a Membership
Interest shall have the right to become a substitute Member only if (i) the
requirements of Sections 8.1 and 8.2 are met, (ii) the Economic Assignee
executes an instrument satisfactory to the Manager accepting and adopting the
terms and provisions of this Agreement, and (iii) the Economic Assignee pays
any reasonable expenses in connection with his or her admission as a new
Member.  The admission of an Economic Assignee as a substitute Member shall
not result in the release of the Member who assigned the Membership Interest
from any liability that such Member may have to the Fund.  Sections 8.1, 8.2,
8.3 and this Section 8.4 shall supply to any purported Transfer of an
Economic Interest by an Economic Assignee.

             8.5  Effective Date of Permitted Transfers.  Any permitted Transfer
of all or any portion of a Membership Interest shall be effective as of the
date provided in Section 7.5 following the date upon which the requirements
of Sections 8.1, 8.2, 8.3 and 8.4 have been met. Any transferee of a
Membership Interest shall take such Membership Interest subject to the
restrictions on Transfer imposed by this Agreement.

             8.6  Rights of Legal Representatives.  If a Member who is an
individual dies or is adjudged by a court of competent jurisdiction to be
incompetent to manage the Member's person or property, the Member's executor,
administrator, guardian, conservator, or other legal representative may
exercise all of the Member's rights for the purpose of settling the Member's
estate or administering the Member's property, including any power the Member
has under this Agreement to Transfer the Economic Interest.  If a Member is a
corporation, trust, or other entity and is dissolved or terminated, the
powers of that Member may be exercised by his or her legal representative or
successor.

             8.7  No Effect to Transfers in Violation of Agreement.  Any
Transfer of a Membership Interest in violation of this Article Eight shall be
void; provided, however, that the Manager may agree to allow a purported
transferee to whom a Membership Interest was Transferred in violation of this
Article Eight to become an Economic Assignee.

             8.8  Involuntary Transfers.

                  8.8.1     Upon and contemporaneously with any Transfer
(whether arising out of an attempted charge upon that Member's Economic
Interest by judicial process, a foreclosure by a creditor of the Member or
otherwise) of a Member's Economic Interest (other than in accordance with
Section 8.3) which does not at the same time transfer the balance of the
rights associated with the Membership Interest transferred by the Member
(including, without limitation, the rights of the Member to vote or
participate in the management of the business, property and affairs of the
Fund), the Fund shall purchase from the Member, and the Member shall sell to
Fund for a purchase price of $100, all remaining rights and interests
retained by the Member that immediately before the transfer were associated
with the transferred Economic Interest.  Such purchase and sale shall not,
however, result in the release of the Member from any liability to the Fund
as a Member.

                  8.8.2     Each Member acknowledges and agrees that the right
of the Fund to purchase such remaining rights and interests from a Member who
Transfers a Membership Interest in violation of this Article Eight is not
unreasonable under the circumstances existing as of the date hereof.


                                ARTICLE NINE
                         Dissolution and Liquidation

             9.1  Dissolution.

                  9.1.1     The Fund shall be dissolved and its affairs wound up
upon the first to occur of the following (a "Dissolution Event"):  (i) upon
the expiration of the Term or (ii) the determination of the Manager.  The
Manager may terminate and dissolve a Sub-Fund but such termination or
dissolution shall not cause (and any other dissolution of a Sub-Fund by
itself shall not cause) the dissolution of the other Sub-Fund (or the Fund)
nor affect the limitation on liabilities of such other Sub-Fund provided by
this Agreement, Section 18-215 of the Act or otherwise.

                  9.1.2     The death retirement, resignation, expulsion,
bankruptcy, or dissolution of any Member shall not result in the dissolution
of the Fund and each Member hereby consents to the continuation of the Fund
in the even of the death, retirement, resignation, expulsion, bankruptcy, or
dissolution of any Member.
                  9.1.3     Upon dissolution of the Fund, the Fund shall
immediately commence to wind up its affairs and the Manager shall proceed
with reasonable promptness to liquidate the business of the Fund.

                  9.1.4     During the period of the winding up of the affairs
of the Fund, the rights and obligations of the Members shall continue.

             9.2  Liquidation.  The Fund shall terminate after its affairs have
been wound up and its assets fully distributed in liquidation as follows
(determined separately for each Sub-Fund):

                  9.2.1     first, to the payment of the debts and liabilities
of each Sub-Fund (other than loans made by a Member or an Affiliate of a
Member to the Sub-Fund) and the expenses of liquidation;

                  9.2.2     next, to the setting up of any reserves which the
Manager may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Sub-Fund provided that any reserves not
necessary to satisfy such liabilities or obligations are distributed as soon
as practicable;

                  9.2.3     next, to the  Members or an Affiliate of a  Member,
to the extent such Persons have made loans to the Sub-Fund, an amount equal
to any unpaid accrued interest on, and then the principal balance of, such
loans; provided, however, that in the event the liquidation proceeds shall be
insufficient to pay all such interest and principal, payment first shall be
made of interest on such loans in the order in which such loans were made and
then repayment of the principal shall be made in the order in which such
loans were made; and

If only one of the Sub-Funds is terminated, then the foregoing shall apply
only to such Sub-Fund.

                  9.2.4     next, to the Members and the Manager in the order of
priority set forth in Article Six.

             9.3  Cancellation of Certificate of the Fund.  Upon the completion
of the liquidation of the Fund's property, the Manager shall cause the
cancellation of the Amended and Restated Certificate of Formation in Delaware
and all other qualifications of the Fund as a foreign limited liability
company in jurisdictions other than the State of Delaware.


                                 ARTICLE TEN
                   Records and Accounting; Fiscal Affairs

             10.1 Fiscal Year.  The fiscal year of the Fund shall be the
calendar year.

             10.2 Bank Accounts.  All funds of the Fund shall be deposited in
such bank or savings and loan account or accounts as shall be designated by
the Manager with separate accounts for each Sub-Fund.  Withdrawals from any
such bank account shall be made upon such signature or signatures as the
Manager may designate, and shall be made only for the purposes of the Fund.

             10.3 Books and Records.  The Manager shall maintain for each Sub-
Fund, full and accurate books of the Fund, in accordance with the Fund's
accounting policies consistently applied, at the principal place of business
of the Fund, showing all receipts and expenditures, assets, and liabilities,
Net Income or Net Loss, and all other records necessary for recording the
Fund's (and each Sub-Fund's) business and affairs, including those sufficient
to record the allocations and distributions provided for in this Agreement.
The books and records shall, upon reasonable prior notice to the Fund, be
open for inspection and copying by any Member or his duly authorized
representatives during regular business hours at such principal place of
business; provided, however, such right shall not extend to the inspection of
the books and records that relate exclusively to a Sub-Fund in which such
Member does not participate.  Any expense for any inspection or examination
shall be borne by the Member causing such inspection or review to be
conducted.  Any information obtained by a Member with respect to the affairs
of the Fund shall, except as may be required by law, be kept strictly
confidential.  The Manager shall deliver to the Members audited annual
financial reports of the Fund with 90 days following the end of the Fund's
fiscal year.

             10.4 Tax Returns; Elections.

                  10.4.1    The Manager shall use all reasonable efforts to
cause the Fund's accountants to prepare and make timely filings of all tax
returns and statements which the accountants determine must be filed on
behalf of the Fund with any taxing authority.  The Manager shall provide a
copy of such returns and statements to each Member.  Copies of such tax and
information returns shall be kept at the principal office of the Fund or at
such other place as the Manager shall determine and shall be available for
inspection by the Members or their representatives during normal business
hours.

                  10.4.2    The Manager may, in its discretion, make an election
for Federal income tax purposes to the extent permitted by applicable law and
regulations, as follows:

                            in case of a transfer of all or part of any Member's
                  Membership Interest, the Fund may elect in a timely manner
                  pursuant to Section 754 of the Code and pursuant to
                  corresponding provisions of applicable state and local tax
                  laws to adjust the bases of the assets of the Fund pursuant to
                  Sections 734 and 743 of the Code; and

                            all other elections required or permitted to be made
                  by the Fund shall be made in such a manner as the Manager, in
                  consultation with the Fund's attorneys or the Fund's
                  accountant, determine to be most favorable to the Members.

No Members shall take any action or refuse to take any action which would
cause the Fund to forfeit the benefits of any tax election previously made or
agreed to be made by the Fund.

             10.5 Tax Matters Member.  Pursuant to Section 6231(a)(7)(A) of the
Code, if applicable to the Fund, the Manager is hereby designated as the "Tax
Matters Partner" or "TMP" of the Fund for all purposes of the Code and for
the corresponding provision of any state or local statute.  Each of the
Members hereby consents to such designation and agrees to take any such
further action as may be required by regulations or otherwise to effectuate
such designation.  The TMP is authorized and required to represent the Fund
(at the Fund's expense) in connection with all examinations of the Fund's
affairs by any tax authorities, including resulting judicial and
administrative proceedings, and to expend Fund funds for the services and
costs associated therewith.  The decisions of the TMP shall be final and
binding as to all Members except to the extent that any Member files a
statement not to be bound by a settlement pursuant to Code Section
6224(c)(3).  The TMP shall furnish to the Members a copy of all notices or
other written communications received by the TMP from the Internal Revenue
Service or any state or local taxing authority (except such notices or
communications as are sent directly to the Members).


                               ARTICLE ELEVEN
                        Indemnification and Insurance

             11.1 Right to Indemnification.  Subject to the limitations and
conditions provided for in this Article and the Act and absent a final
judicial determination of fraud, willful misconduct or gross negligence, each
Person (an "Indemnified Person") who was or is made a party or is threatened
to be made a party to or is involved in any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (a "Proceeding"), or any appeal in such a
Proceeding, by reason of the fact that he or she was or is a Member, officer
of the Fund, Manager, officer or member of Manager, officer or member of the
Advisory Board or he or she was or is the legal representative of or a
manager, shareholder, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of a Member, Manager or
Advisory Board member, or was a signatory to the initial Certificate of
Formation or the Amended and Restated Certificate of Formation filed with the
Secretary of State, shall be held harmless, defended and indemnified by the
Fund against any and all judgments, penalties (including excise and similar
taxes and punitive damages), losses, damages, claims, fines, settlements,
costs, and expenses (including, without limitation, reasonable attorneys'
fees) as and when incurred, by such Indemnified Person in connection with
such Proceeding to the fullest extent permitted by law.  Any indemnity
provided in this Agreement shall be paid out of Fund assets or insurance
proceeds only and the foregoing shall not affect in any way the limitation on
liabilities of a Sub-Fund to the assets of such Sub-Fund and if a matter
giving rise to the indemnification obligations of this Section relates only
to a particular Sub-Fund then only the assets of that Sub-Fund shall be
available to satisfy such obligation.  No Member shall be required to make a
loan to satisfy the Fund's indemnity obligation.

             11.2 Limited Liability of Members.  In the absence of a final
judicial determination of fraud, willful misconduct or gross negligence,
neither the Manager, its members, the Advisory Board, its members, or any
other Indemnified Party shall be liable to any other Member or the Fund for
any loss or damage of any nature (i) for any mistake in judgment, (ii) for
any action taken or omitted to be taken, including any action taken or
omitted to be taken by or for the Indemnified Party's own account, or (iii)
for any loss due to the mistake, action, inaction, negligence, dishonesty,
fraud or bad faith of any broker or other agent, provided that such broker or
other agent shall have been selected, engaged or retained by the Manager or
other Indemnified Party with reasonable care.  The Manager may consult with
legal counsel and accountants in respect of Fund affairs and shall be fully
protected and justified in any action or inaction which is taken or omitted
in good faith, in reliance upon and in accordance with the opinion or advice
of such counsel or accountants, provided that they have been selected with
reasonable care.  In determining whether a Manager acted with the requisite
degree of care, the Manager shall be entitled to rely on reports and written
statements of the directors, officers and employees of a Portfolio Company.

             11.3 Survival.  Indemnification under this Article shall continue
as to a Person who has ceased to serve in the capacity that initially
entitled such Person to indemnity hereunder.  The rights granted pursuant to
this Article shall be deemed contract rights, and no amendment, modification
or repeal of this Article shall have the effect of limiting or denying any
such rights with respect to actions taken or Proceedings arising prior to any
such amendment, modification or repeal.

             11.4 Insurance.  The Fund shall have the power to purchase and
maintain insurance on behalf of any present or future Indemnified Party, or
member of the Advisory Board (each an "Insured Party") against any liability
asserted against such Insured Party by reason of actions or omissions or
alleged actions or omissions taken or omitted to be taken by the Insured
Party in connection with the Fund and its business and affairs (including
insurance against liability for any breach or alleged breach of its fiduciary
responsibilities), whether or not the Fund would have the power to indemnify
such Insured Party against such liability under this Article.

                               ARTICLE TWELVE
                         Investment Representations

        Each Member hereby represents and warrants to, and agrees with, the
Manager, the other Members, and the Fund as follows:
             12.1 Pre-existing Relationship or Experience.  (i) Such Member has
a preexisting personal or business relationship with the Fund or one or more
of its officers or control persons or (ii) by reason of his or its business
or financial experience, or by reason of the business or financial experience
of his or its financial advisor who is unaffiliated with and who is not
compensated, directly or indirectly, by the Fund or any affiliate or selling
agent of the Fund, such Member is capable of evaluating the risks and merits
of an investment in the Membership Interest and of protecting his or its own
interests in connection with this investment.

             12.2 No Advertising.  Such Member has not seen, received, been
presented with, or been solicited by any leaflet, public promotional meeting,
newspaper or magazine article or advertisement, radio or television
advertisement, or any other form of advertising or general solicitation with
respect to the sale of the Membership Interest.

             12.3 Investment Intent.  Such Member is acquiring the Membership
Interest for investment purposes for his or its own account only and not with
a view to or for sale in connection with any distribution of all or any part
of the Membership Interest.  No other person will have any direct or indirect
beneficial interest in or right to the Membership Interest.

             12.4 Accredited Investor.  Such Member is an "accredited investor"
as defined in Rule 501(c) promulgated by the Securities and Exchange
Commission (the "SEC").

             12.5 Treatment of Fund as Partnership.  Such Member has not, and
will not take any action, or fail to take any actions that would jeopardize
the Fund's treatment as a partnership for federal and state income tax
purposes.

             12.6 Economic Risk.  Such Member is financially able to bear the
economic risk of an investment in the Membership Interest, including the
total loss thereof.

             12.7 No Registration of Membership Interest.  Such Member
acknowledges that the Membership Interest has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or qualified under
any state securities laws, or any other applicable blue sky laws in reliance,
in part, on his or her representations, warranties, and agreements herein.

             12.8 Membership Interest in Restricted Security.  Such Member
understands that the Membership Interest is a "restricted security" under the
Securities Act in that the Membership Interest will be acquired from the Fund
in a transaction not involving a public offering, and that the Membership
Interest may be resold without registration under the Securities Act only in
certain limited circumstances and that otherwise the Membership Interest must
be held indefinitely.  In this connection, such Members understands the
resale limitations imposed by the Securities Act and is familiar with SEC
Rule 144, as presently in effect, and the conditions which must be met in
order for that Rule to be available for resale of "restricted securities,"
including the requirement that the securities must be held for at least one
(1) year after purchase thereof from the Fund prior to resale and the
condition that there be available to the public current information about the
Fund under certain circumstances.  He or she understands that the Fund has
not made such information available to the public and has no present plans to
do so.

             12.9 No Disposition in Violation of Law.

        Without limiting the representations set forth above, and without
limiting Article Seven of this Agreement, such Member will not make any
disposition of all or any part of the Membership Interest which will result
in the violation by such Members or by the Fund of the Securities Act, any
state securities laws, or any other applicable securities law.  Without
limiting
the foregoing, such Member agrees not to make any disposition of all or any
part of the Membership Interest unless and until:

                  12.9.1    There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement and any
applicable requirements of state securities laws; or

                  12.9.2    Such Member has notified the Fund of the proposed
disposition and has furnished the Fund with a detailed statement of the
circumstances surrounding the proposed disposition, and if reasonably
requested by the Manager, he has furnished the Fund with a written opinion of
counsel, reasonably satisfactory to the Manager, that such disposition will
not require registration of any securities under the Securities Act or the
consent of or a permit from appropriate authorities under any applicable
state securities laws.

             12.10     Legends.  Such Members understands that the certificates
(if any) evidencing the Membership Interest may bear one or all of the
following legends:

                  12.10.1   "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR REGISTERED NOR
QUALIFIED UNDER ANY STATE SECURITIES LAWS.  SUCH SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR
HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND
FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED.  ANY
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS FURTHER SUBJECT
TO OTHER RESTRICTIONS, TERMS, AND CONDITIONS WHICH ARE SET FORTH HEREIN IN
THE COMPANY'S OPERATING AGREEMENT, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY."
                  12.10.2   Any legend required by applicable state securities
laws.

             12.11     Investment Risk.  Such Member acknowledges that the
Membership Interest is a speculative investment which involves a substantial
degree of risk of loss by such Member of such Member's entire investment in
the Fund, that such Member understands and takes full cognizance of the risk
factors related to the purchase of the Membership Interest, and that the Fund
is newly organized and has no financial or operating history.

             12.12     Investment Experience.  Such Member is an experienced
investor in unregistered and restricted securities of speculative and high-
risk ventures.

             12.13     Absence of Market.  Such Member acknowledges that there
are substantial restrictions on the transferability of the Membership
Interest pursuant to this Agreement, that there is no public market for the
Membership Interest and none is expected to develop, and that, accordingly,
it may not be possible for him or her to liquidate such Member's investment
in the Fund.

             12.14     Information Reviewed.  Such Member has received and
reviewed such information such Member considers necessary or appropriate for
deciding whether to purchase the Membership Interest.  Such Member has had an
opportunity to ask questions and receive answers from the Fund and its
Manager regarding the terms and conditions of purchase of the Membership
Interest and regarding the business, financial affairs, and other aspects of
the Fund and has further had the opportunity to obtain all information (to
the extent the Fund possesses or can acquire such information without
unreasonable effort or expense) which he or she deems necessary to evaluate
the investment and to verify the accuracy of information otherwise provided
to such Member.

             12.15     No Representations By Fund.  Neither any Manager, any
agent or employee of the Fund or any Manager, or any other Person has at any
time expressly or implicitly represented, guaranteed, or warranted to such
Member that such Member may freely transfer the Membership Interest, that a
percentage of profit and/or amount or type of consideration will be realized
as a result of an investment in the Membership Interest, that past
performance or experience on the part of the Manager, the Advisory Board, or
their Affiliates or any other person in any way indicates the predictable
results of the ownership of the Membership Interest or of the overall Fund
business, that any cash distributions from Fund operations or otherwise will
be made to the Members by any specific date or will be made at all, or that
any specific tax benefits will accrue as a result of an investment in the
Fund.

             12.16     Consultation with an Attorney.  Such Member has been
advised to consult with his or her own attorney regarding all legal matters
concerning an investment in the Fund and the tax consequences of
participating in the Fund, and has done so, to the extent such Member
considers necessary.

             12.17     Tax Consequences.  Such Member acknowledges that the tax
consequences to such Member of investing in the Fund will depend on such
Member's particular circumstances, and neither the Fund, the Manager, the
Members, nor the partners, shareholders, members, managers, agents, officers,
directors, employees, Affiliates, or consultants of any of them will be
responsible or liable for the tax consequences to him or her of an investment
in the Fund.  Such Member will look solely to, and rely upon, such Member's
own advisers with respect to the tax consequences of this investment.

             12.18     No Assurance of Tax Benefits.  Such Member acknowledges
that there can be no assurance that the Code or the Regulations will not be
amended or interpreted in the future in such a manner so as to deprive the
Fund and the Members of some or all of the tax benefits they might now
receive, nor that some of the deductions claimed by the Fund or the
allocations of items of income, gain, loss, deduction, or credit among the
Members may not be challenged by the Internal Revenue Service.


                              ARTICLE THIRTEEN
                                Miscellaneous

        Each Member hereby represents and warrants to, and agrees with, the
Manager, the other Members, and the Fund as follows:

             13.1 Notices.  All notices, requests, demands and other
communications hereunder shall be made in writing and shall be deemed to have
been given if delivered by registered or certified mail, return receipt
requested, postage and registry fees prepaid to the Members at the addresses
set forth on the signature pages hereto.  Any address may be changed by
notice given to the Members, as aforesaid, by the party whose address for
notice is to be changed.

             13.2 Separability.  The invalidity or unenforceability of any
provision in this Agreement shall not affect the other provisions hereof and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.

             13.3 Interpretation; Jurisdiction.  This Agreement shall be
interpreted and construed in accordance with the laws of the State of
Delaware, without reference to the rules governing the conflicts of laws.
The parties hereto consent to personal jurisdiction and venue in the State of
Connecticut, County of Connecticut, with respect to any action or proceeding
brought in connection with this Agreement.  All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular
or plural as the identity of the Person or Persons referred to may require.
The captions of sections of this Agreement have been inserted as a matter of
convenience only and shall not control or affect the meaning or construction
of any of the terms or provisions hereof.

             13.4 Entire Agreement.  The parties hereto agree that all
understandings and agreements heretofore made among them are merged in this
Agreement, which alone fully and completely expresses their agreement with
respect to the subject matter hereof.  There are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, among the parties hereto, other than as set forth in this
Agreement and the Amended and Restated Certificate of Formation.  All prior
agreements among the parties are superseded by this Agreement, which
integrates all promises, agreements, conditions and understandings among the
parties with respect to the Fund and its properties.

             13.5 Counterparts; Effective Date.  This Agreement may be executed
in multiple counterparts, each of which shall be deemed an original and all
of which shall constitute one agreement.  The signatures of any party to a
counterpart shall be deemed to be a signature to, and may be appended to, any
other counterpart.

             13.6 Binding Effect.  This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, permitted assigns, heirs, executors, administrators and legal
representatives.

             13.7 Further Assurances.  Each of the parties hereto agrees to
execute, acknowledge, deliver, file, record and publish such further
certificates, instruments, agreements and other documents, and to take all
such further action as may be required by law or deemed by the Members to be
necessary or useful in furtherance of the Fund's purposes and the objectives
and intentions underlying this Agreement and not inconsistent with the terms
hereof.

             13.8 Waiver.  No consent or waiver, express or implied, by any
Member or Manager to or of any breach or default by any other Member or
Manager shall be deemed or construed to be a consent to or waiver of any
other breach or default by such other Member or Manager.  Failure on the part
of a Member or Manager to complain of any act or failure to act of any other
Member or Manager or to declare such other Member or Manager in default,
irrespective of how long such failure continues, shall not constitute a
waiver by such Member or Manager of his or her rights hereunder.

             13.9 Additional Remedies.  The rights and remedies of any Member or
Manager hereunder shall not be mutually exclusive.  The respective rights and
obligations hereunder shall be enforceable by specific performance,
injunction or other equitable remedy, but nothing herein contained is
intended to, nor shall it limit or affect, any other rights in equity or any
rights at law or by statute or otherwise of any party aggrieved as against
the other for breach or threatened breach of any provision hereof, it being
the intention of this paragraph to make clear the agreement of the parties
hereto that their respective rights and obligations hereunder shall be
enforceable in equity as well as at law.

             13.10     No Reliance by Third Parties.  The provisions of this
Agreement are not for the benefit of any creditor or other Person other than
a Member to whom any losses, debts, claims, expenses or encumbrances are owed
by, or who otherwise has any claim against, the Fund, any Member or any
Manager, and no creditor or other Person shall obtain any rights under this
Agreement, or shall be able to make any claim in respect of any debts,
liabilities or obligations against the Fund, any Member or any Manager.

            [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


        IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date first written above.




SERIES A FUND MEMBERS:
SERIES B FUND MEMBERS:



Jackpot Enterprises, Inc.


By:
        Name:
        Title:

Gilbert Global Equity
Partners, L.P.


By:
        Name:
        Title:






        Louis V. Gerstner, III

Gilbert Global Equity Partners
(Bermuda), L.P.


By:___________________________
_
        Name:
        Title:



GLOBAL PE HOLDINGS, LTD.


By:
        Name:
        Title:

GGEP/GECC Equity Partners,
L.P.


By:___________________________
_
        Name:
        Title:















MANAGER:

J Net Fund Venture Partners,
LLC


By:________________________

        Name:
        Title:





                                  EXHIBIT A
                AMENDED AND RESTATED CERTIFICATE OF FORMATION

EX-10

                                                      EXHIBIT 10.22

                                                              EXECUTION COPY


NAME OF SUBSCRIBER:

     To:  Jackpot Enterprises, Inc.
          1110 Palms Airport Drive
          Las Vegas, Nevada  89119


             SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION

                                   SECTION 1

          1.1  Subscription.

          The undersigned (the "Subscriber"), intending to be legally bound
hereby, irrevocably subscribes for and agrees to purchase the principal amount
of Convertible Subordinated Promissory Notes (the "Notes") of Jackpot
Enterprises, Inc., a Nevada corporation (the "Company"), indicated on page 17
hereof, on the terms and conditions described herein and set forth on the term
sheet attached hereto as Exhibit A, which terms and conditions are incorporated
herein by reference.  The issuance of the Notes was described in a Confidential
Memorandum dated February 21, 2000 (the "Confidential Memorandum").  The Notes
shall be issued substantially in the form attached hereto as Exhibit B. The
Notes are part of an offering being made by the Company only to accredited
investors (as such term is defined in the Regulation D under the Securities Act
of 1933, as amended) of a minimum $15,000,000 principal amount, and a maximum
$27,500,000 principal amount, of the Notes. The minimum subscription by any
person is $100,000 principal amount of Notes.

          As set forth in Section 2.1(d) the issuance of a portion of the Notes
is subject to early prepayment by the Company pursuant to the terms of this
Agreement.  Accordingly, each Subscriber whose subscription is accepted will be
issued two Notes, one in the amount of the Excess Amount (as discussed in
Section 2.1(d)) and a second for the balance of the amount subscribed for.  The
amount of each Subscriber Excess Amount will be set forth on page 17 hereof.

                    1.2  Purchase of Notes.

          The Subscriber understands and acknowledges that the purchase price
of the Notes is 100% of the principal amount subscribed for. Payment for the
Notes shall be made by check or wire transfer of immediately available funds in
accordance with the instructions of the Company, together with an executed copy
of this Subscription Agreement and any other required documents.

                                   SECTION 2

          2.1  Acceptance or Rejection; Early Partial Repayment.
          (a)  The Subscriber understands and agrees that the Company reserves
the right to reject this subscription for the Notes in whole or part, if, in its
reasonable judgment, it deems such action in the best interest of the Company
at any time prior to the Closing (as defined in Section 2.2 below) with respect
to such Notes, notwithstanding prior receipt by the Subscriber of notice of
acceptance of the Subscriber's subscription.

          (b)  The Subscriber understands and agrees that the subscription may
be revoked, provided that written notice of revocation is sent by certified or
registered mail, return receipt requested, and is received by the Company at
least two business days prior to the Closing with respect to the Notes
subscribed for by the Subscriber.

          (c)  In the event of rejection of this subscription, or in the event
the sale of the Notes subscribed for by the Subscriber is not consummated by the
Company for any reason (in which event this Subscription Agreement shall be
deemed to be rejected), this Subscription Agreement and any other agreement
entered into between the Subscriber and the Company relating to this
subscription shall thereafter have no force or effect, and the Company shall
promptly return or cause to be returned to the Subscriber the purchase price for
the Notes, without interest thereon or deduction therefrom.

          (d)  The Subscriber understands that the issuance of a portion of the
Notes is subject to early prepayment by the Company pursuant to the terms of
this Agreement. In the event the shareholders of the Company fail to approve the
issuance of an aggregate amount of Notes in excess of approximately $18,700,000
or the purchase of Notes in excess of approximately $940,000 by certain
affiliates of the Company, a portion of the Notes (the "Excess Amount") shall
be redeemed by the Company at a redemption price of 120% of the face amount of
the Note plus accrued interest through the date of redemption.

          2.2  Closing; Escrow Prior to Initial Closing: Closing Date.

          The closing (the "Closing") of the purchase and sale of Notes
subscribed to by Subscriber pursuant to this Subscription Agreement shall take
place following the acceptance by the Company of the subscription therefor, on
such date and at such time as are determined by the Company, provided that no
Closing shall occur unless and until subscriptions for not less than $15,000,000
principal amount of Notes shall have been received and accepted by the Company.
Until such time as subscriptions for $15,000,000 principal amount of Notes shall
have been received and accepted by the Company (the "Initial Closing"), amounts
paid in respect of subscriptions shall be held in a non-interest bearing escrow
account maintained by Camhy Karlinsky & Stein LLP, counsel to the Company.  The
Company's acceptance of the Subscriber's subscription shall be evidenced by the
Company's execution of this Subscription Agreement.  At the Closing of the
purchase and sale of the Notes subscribed to by the Subscriber, the Company
shall deliver to the Subscriber one or more original executed Notes in the form
attached hereto as Exhibit A.

                                   SECTION 3

          3.1  Investor Representations and Warranties.

          The Subscriber hereby acknowledges, represents and warrants to the
Company as follows:

          (a)  The Subscriber is acquiring the Notes for his own account as
principal, not as a nominee or agent, for investment purposes only, and not with
a view to, or for, resale, distribution or fractionalization thereof in whole
or in part, and no other person has a direct or indirect beneficial interest in
such Notes.  Further, the Subscriber does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Notes for which the Subscriber is subscribing.

          (b)  The Subscriber has full power and authority to enter into this
Subscription Agreement, the execution and delivery of this Subscription
Agreement have been duly authorized, if applicable, and this Subscription
Agreement constitutes a valid and legally binding obligation of the Subscriber.

          (c)  The Subscriber acknowledges that the offering and sale of the
Notes is intended to be exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), by virtue of Section 4(2) or 4(6) of
the Securities Act and the provisions of Regulation D promulgated thereunder
("Regulation D").  In furtherance thereof, the Subscriber represents and
warrants to and agrees with the Company as follows:

                      (i)  The Subscriber is an "accredited investor" within the
          meaning of Rule 501 (a) of Regulation D;

                     (ii)  The Subscriber has the financial ability to bear the
          economic risk of his investment, has adequate means for providing for
          his current needs and personal contingencies and has no need for
          liquidity with respect to his investment in the Company;

                     (iii)  No Person has acted as the Subscriber's Purchaser
          Representative for purposes of the private placement exemption under
          the Securities Act;  and

                     (iv)  The Subscriber has such knowledge and experience in
          financial and business matters as to be capable of evaluating the
          merits and risks of the prospective investment in the Notes.  If other
          than an individual, the Subscriber also represents it has not been
          organized for the purpose of acquiring the Notes.

          (d)  The information in the Investor Questionnaire completed and
executed by the Subscriber in the form of the Investor Questionnaire included
as Exhibit C hereto (the "Investor Questionnaire") is accurate and true in all
respects.

          (e)  The Subscriber:

                     (i)  Has been furnished with the Company's Confidential
          Memorandum, and the Subscriber has carefully read the Confidential
          Memorandum, and understands and has evaluated the risks and the
          considerations described in the Confidential Memorandum;

                    (ii)  Has been provided an opportunity for a reasonable
          period of time prior to the date hereof to obtain additional
          information concerning the offering of the Notes, the Company and
          all other information to the extent the Company possesses such
          information or can acquire it without unreasonable effort or expense;

                     (iii)  Has been given the opportunity for a reasonable
          period of time prior to the date hereof to ask questions of, and
          receive answers from, the Company or its representatives concerning
          the terms and conditions of the offering of the Notes and other
          matters pertaining to this investment, and has been given the
          opportunity for a reasonable period of time prior to the date hereof
          to obtain such additional information necessary in order for him to
          evaluate the merits and risks of purchase of the Notes to the extent
          the Company possesses such information or can acquire it without
          unreasonable effort or expense;

                      (iv)  Has not been furnished with any oral or written
          representation or oral or written information in connection with the
          offering of the Notes which is not contained in this Subscription
          Agreement; and

                      (v)  Has determined that the Notes are a suitable
          investment for the Subscriber and that at this time the Subscriber
          could bear a complete loss of such investment.

          (f)  The Subscriber is not relying on the Company or its affiliates
with respect to economic considerations involved in this investment.  The
Subscriber has relied on the advice of, or has consulted with only those
persons, if any, named as Subscriber Representative(s) herein and in the
Investor Questionnaire.  Each Subscriber Representative identified by the
Subscriber, if any, is capable of evaluating the merits and risks of an
investment in the Notes on the terms and conditions set forth herein and in the
Executive Summary and each Subscriber Representative has disclosed to the
Subscriber in writing (a copy of which is annexed to this Agreement) the
specific details of any and all past, present or future relationships, actual
or contemplated, between himself and the Company.

          (g)  The Subscriber represents, warrants and agrees that he will not
sell or otherwise transfer the Notes, or the Common stock issuable upon
conversion thereof, without registration under the Securities Act or an
exemption therefrom and fully understands and agrees that he must bear the
economic risk of his purchase because, among other reasons, the Notes have not
been registered under the Securities Act or under the securities laws of any
state and, therefore, cannot be resold, pledged, assigned or otherwise disposed
of unless they are subsequently registered under the Securities Act and under
the applicable securities laws of such states or an exemption from such
registration is available.  In particular, the Subscriber is aware that the
Notes are "restricted securities," as such term is defined in Rule 144
promulgated under the Securities Act ("Rule 144"), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met.  The
Subscriber also understands that the Company is under no obligation to register
the Notes, or the Common stock issuable upon conversion of the Notes, on
Subscriber's behalf or to assist him in complying with any exemption from
registration under the Securities Act or applicable state securities laws.  The
Subscriber further understands that sales or transfers of the Notes and the
Common stock issuable upon conversion thereof are further restricted by state
securities laws and the provisions of this Agreement.

          (h)  No representations or warranties have been made to the Subscriber
by the Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company contained herein, and in
subscribing for the Notes the Subscriber is not relying upon any representations
other than those contained herein.

          (i)  Any information which the Subscriber has heretofore furnished to
the Company with respect to his financial position and business experience is
correct and complete as of the date of this Subscription Agreement and if there
should be any material change in such information he will immediately furnish
such revised or corrected information to the Company.

          (j) The Subscriber understands and agrees that the certificates for
the Notes, and any Common stock issued upon conversion thereof, shall bear
substantially the following legend until (i) such securities shall have been
registered under the Securities Act and effectively been disposed of in
accordance with a registration statement that has been declared effective; or
(ii) in the opinion of counsel for the Company such securities be may sold
without registration under the Securities Act as well as any applicable "Blue
Sky" or state securities laws:

         "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
          OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED,
          SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i)
          PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH
          HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES,
          OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE
          SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE
          WRITTEN OPINION OF COUNSEL TO THE CORPORATION OR OTHER COUNSEL
          REASONABLY ACCEPTABLE TO THE CORPORATION THAT THE PROPOSED DISPOSITION
          IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS
          WELL AS ANY APPLICABLE BLUE SKY OR SIMILAR SECURITIES LAW."

          (k)  The Subscriber's overall commitment to investments which are not
readily marketable is not disproportionate to the Subscriber's net worth, and
an investment in the Notes will not cause such overall commitment to become
excessive.

          (l)  The Subscriber understands that an investment in the Notes is a
speculative investment, which involves a high degree of risk and the potential
loss of his entire investment.

          (m)  The foregoing representations, warranties, and agreements shall
survive the closing of the investment in the Notes.

          3.2  Indemnity

          (a)  The Subscriber agrees to indemnify and hold harmless the Company,
its officers and directors, employees and its affiliates and each other person,
if any, who controls any thereof, against any loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or breach or failure by the
Subscriber to comply with any covenant or agreement made by the Subscriber
herein or in any other document furnished by the Subscriber to the Company in
connection with this transaction.

          (b)       The Company agrees to indemnify and hold harmless the
Subscriber, its officers and directors, employees and its affiliates and each
other person, if any, who controls any thereof, against any loss, liability,
claim, damage and expense whatsoever (including, but not limited to, any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any litigation commenced or threatened or any claim whatsoever) arising
out of or based upon any false representation or warranty or breach or failure
by the Company to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the Subscriber in
connection with this transaction.

          3.3    Representations and Warranties of the Company and its
                 Subsidiaries

          The Company hereby represents and warrants to the Subscriber as
follows:

          (a)    The Company is a corporation duly organized and in good
standing under the laws of the State of Nevada and has all requisite corporate
authority to own its properties and to carry on its business as now being
conducted.  The Company does not have any and does not own more than fifty
percent (50%) of or control any other business entity, except as set forth
in the Company's reports, proxy statement or registration statements with the
Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or the Securities Act
(collectively, the "SEC Documents").  The Company is duly qualified and is in
good standing as a foreign corporation to do business in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to qualify
would not have any effect on the business, operations, properties, or financial
condition of the Company that is material and adverse to the Company and its
Subsidiaries (as defined below), taken as a whole, and/or any condition,
circumstance, or situation that would prohibit or otherwise interfere with the
ability of the Company to enter into and perform any of its obligations under
this Agreement in any material respect (collectively, a "Material
Adverse Effect").

          (b)    Each of the subsidiaries of the Company as reflected on Exhibit
21.1 to its Annual Report on Form 10-K for its fiscal year ended June 30, 1999
(the "Subsidiaries") is duly organized, validly existing and in good standing
under the laws of their state of formation and are qualified to do business as
a foreign corporation wherever necessary to so qualify. Each Subsidiary has
requisite power and authority to conduct its business and own its property as
now conducted and owned.

          (c)          The Company has the requisite corporate power and
corporate authority to enter into and perform its obligations under this
Agreement.  The execution, issuance and delivery of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and, except as set forth in
Section 2.1(d), no further consent or authorization of the Company or its
board of directors or stockholders is required.  This Agreement shall be as
of the Closing, duly executed and delivered by the Company, and as of the
Closing, shall constitute valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
or similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application.

          (d)    The authorized capital stock of the Company consists of
60,000,000 shares of Common Stock, $.01 par value per share and 1,000,000 shares
of Series A Junior Preferred Stock, $1.00 par value per share of which 8,954,041
shares of Common Stock and no shares of Series A Junior Preferred Stock are
outstanding as of the date hereof.

          (e)      The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) result in a violation of the
Company's Certificate of Incorporation or By-Laws or (ii) conflict with, or
constitute a material default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument, or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, (iii) subject to the receipt of
Stockholder approval as described in Section 2.1(d), result in a violation of
any federal, state or local law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the New York Stock Exchange (the "NYSE")) applicable to the
Company or by which any material property or asset of the Company is bound or
affected, nor is the Company otherwise in violation of, conflict with or default
under any of the foregoing (except in each case for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not have, individually or in the aggregate, a Material Adverse Effect) or (iv)
violate the Certificate of Incorporation, by-laws or other governing documents
of any of the Subsidiaries.  The business of the Company is not being conducted
in violation of any law, ordinance or regulation of any governmental entity,
except for possible violations that either singly or in the aggregate would not
have a Material Adverse Effect.

          (f)    Except as disclosed in the SEC Documents, there are no
lawsuits or proceedings pending or, to the knowledge of the Company,
threatened, against the Company or any Subsidiary, nor has the Company or any
Subsidiary received any written or oral notice of any such action, suit,
proceeding or investigation, which could reasonably be expected to have a
Material Adverse Effect on the consummation of the transactions contemplated
herein.  Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, to the knowledge of the
Company or any Subsidiary, requested of any court, arbitrator or governmental
agency which could result in a Material Adverse Effect.

          (g)    The Company maintains books and records and internal accounting
controls which provide reasonable assurance that: (i) all material transactions
to which the Company or any Subsidiary is a party or by which its properties are
bound are executed with management's authorization; (ii) the recorded accounting
of the Company's consolidated assets is compared with existing assets at regular
intervals; (iii) access to the Company's consolidated assets is permitted only
in accordance with management's authorization; and (iv) all transactions to
which the Company or any Subsidiary is a party or by which its properties are
bound are recorded as necessary to permit preparation of the financial
statements of the Company in accordance with United States generally accepted
accounting principles.

          (h)    Except as provided in Section 2.1(d), no consent, approval,
order or authorization of, or registration, declaration or filing with, any
governmental entity is required in connection with the execution, delivery and
performance of the transaction by the Company and the consummation of the
transactions by the Company hereunder.

          (i)    Each of the Company and its Subsidiaries has previously
delivered to the Subscriber copies of (i) the consolidated balance sheet
of the Company and its Subsidiaries for the past two fiscal years, and the
related consolidated statements of income, statements of stockholders' equity
and cash flows for such years, as reported in the Company's annual report on
Form 10-K, filed by the Company with the SEC, in each case accompanied by the
audit report of Deloitte & Touche LLP, independent public accountants with
respect to the Company, and (ii) the unaudited consolidated balance sheet of
the Company and its Subsidiaries, and the related unaudited consolidated
statement of operations, statement of stockholders' equity and cash flows as
reported in the Company's quarterly reports on Form 10-Q, filed with the SEC
under the Exchange Act since the last audited 10-K. All of such financial
statements fairly present the consolidated financial position of the Company
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth, in each case subject, as to interim statements, to
changes resulting from year-end adjustments (none of which will be material
in amount or effect). All of such financial statements have been prepared in
accordance with GAAP consistently applied during the periods involved, except
as otherwise set forth in the notes thereto, and the Company and its
Subsidiaries have no liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which are not fully reflected or reserved
against in the balance sheet included in such financial statements, except
for liabilities that may have arisen in the ordinary and usual course of
business and consistent with past practice and that, individually or in the
aggregate, would not have a Material Adverse Effect.

          (j)    The Company has timely filed all reports, registration
statements, proxy statements and other materials, together with any amendments
required to be made with respect thereto, that were required to be filed with
the SEC under the Securities Act or the Exchange Act or with the NYSE (all such
reports and statements are collectively referred to herein as the "Company
Reports"). As of the respective dates, the Company Reports, including the
financial statements contained therein, complied in all material respects with
all of the statutes and published rules and regulations enforced or promulgated
by the regulatory authority or exchange with which they were filed, did not
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and were complete and accurate in all material respects.

          (k)    This transaction will not result in the creation of any lien,
claim or encumbrance on any properties of the Company or any of its
Subsidiaries, nor will it contravene any license or permit under which the
Company or any of its Subsidiaries operate.

          (l)    Since the date of the last audited financial statement, there
has been no change in the assets, liabilities, business or financial condition,
operation or prospects of the Company and its Subsidiaries that would have a
Material Adverse Effect.

          (m)    Except as set forth in Schedule 3.3(m), since the date of the
last audited financial statement, except as contemplated by this Agreement or
as set forth in the interim financial statements, neither the Company nor any
of its Subsidiaries has (i) issued any stock, bond or other corporate security,
(ii) borrowed any amount or incurred or become subject to any liability
(absolute, accrued or contingent), except current liabilities incurred and
liabilities under contracts entered into in the ordinary course of business,
(iii) discharged or satisfied any lien or incurred or paid any obligation or
liability (absolute, accrued or contingent) other than current liabilities shown
on the interim financial statements and current liabilities incurred since the
date of the last applicable interim financial statement in the ordinary course
of business, (iv) declared or made any payment or distribution to stockholders
or purchased or redeemed any of its capital stock, (v) mortgaged, pledged or
subjected to any lien or encumbrance any of its assets, tangible or intangible,
other than liens of current real property taxes not yet due and payable, (vi)
sold, assigned or transferred any of its tangible assets except in the ordinary
course of business, or canceled any debt or claim owed to it except in the
ordinary course of business, (vii) sold, assigned, transferred or granted any
exclusive license with respect to any patent, trademark, trade name, service
mark, copyright, trade secret or other intangible asset, (viii) suffered any
substantial loss of property or waived any right of substantial value other than
in the ordinary course of business, (ix) made any change in officer compensation
except in the ordinary course of business and consistent with past practice, (x)
made any material change in the manner of its business or operations, (xi)
entered into any transaction except in the ordinary course of business or as
otherwise contemplated hereby or (xii) entered into any commitment, obligation,
understanding or other arrangement, contingent or otherwise, to effect, directly
or indirectly, any of the foregoing.

          (n)    Neither the Company nor any of its Subsidiaries nor any
officer, employee, agent or any other person acting on behalf of any of the
foregoing has, directly or indirectly, given or agreed to give any money, gift
or similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or other person who
was, is, or may be in a position to help or hinder the business of the Company
or any of its Subsidiaries (or assist in connection with any actual or proposed
transaction) which (i) might subject the Company or any of its Subsidiaries to
any material damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, could reasonably be
expected to have had a Material Adverse Effect or (iii) if not continued in the
future, might have a Material Adverse Effect.

          (o)    To the best knowledge of the Company:

                 (i)  neither the officers of the Company or any of its
Subsidiaries nor any officer of any of the foregoing has any interest (other
than as non-controlling holders of securities of a publicly-traded company),
either directly or indirectly, in any entity (whether as an employee, officer,
director, shareholder, agent, independent contractor, security holder, creditor,
consultant or otherwise) that presently (i) provides any services or designs,
produces or sells any products or product lines, or engages in any activity
which is the same, similar to or competitive with any activity or business in
which the Company or any of its respective Subsidiaries is now engaged, (ii) is
a supplier of, customer of, creditor of, or has an existing contractual
relationship with, the Company or any of its Subsidiaries, or (iii) has any
direct or indirect interest in any asset or property used by the Company or any
of its Subsidiaries or any property, real or personal, tangible or intangible,
that is necessary or desirable for the conduct of the business of the Company
or any of its Subsidiaries; and

                 (ii)  except as set forth in Schedule 3.3(o), no current
stockholder, director or officer of the Company or any of its Subsidiaries or
any affiliate of any such person, is at present (nor has any former stockholder,
director or officer of any such person who has acted as such within the 12
months preceding the date hereof been) directly or indirectly through his
affiliation with any other person, a party to any transaction with the Company
or any of its Subsidiaries providing for the furnishing of services by, or
rental of real or personal property from, or otherwise requiring cash payments
to any such person in excess of $1,000.

          (p)    The Company and each of its Subsidiaries own or possess, and
will own or possess after giving effect to this transaction, the valid right to
use all the patents, patent applications, patent and know-how licenses,
inventions, technology, permits, trademark registration and applications,
trademarks, service marks, trade names, copyrights, product designs,
applications, formulae, processes, circulation, and other subscriber lists,
industrial property rights and licenses and rights in respect of the foregoing
used or necessary for the conduct of its business (collectively, "Intellectual
Property"), except to the extent the failure to own or possess any such
Intellectual Property would not have a Material Adverse Effect.  The Company is
not aware of any existing or threatened infringement or misappropriation (a) by
the Company or any of its Subsidiaries of any Intellectual Property owned or
possessed by any other person or (b) by any other person of any Intellectual
Property of the Company or any of its Subsidiaries, which in either case would
have a Material Adverse Effect.

          (q)    Neither the Company nor any of its Subsidiaries, is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

          (r)    Neither the Company nor any of its Subsidiaries have dealt
with, nor is the Company or any of its Subsidiaries obligated to pay any fee or
commission in connection with, any broker, finder or other similar person in
connection with the offer or sale of the Notes or any of the transactions
contemplated by this Agreement, and the Company hereby indemnifies each of the
Subscribers against, and agrees that it will hold each of the Subscribers
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.

          (s)    The Company has not, either directly or through any agent,
offered any Notes or any other securities to, or solicited any offers to acquire
any Notes or any other securities from, or otherwise approached, negotiated or
communicated in respect of any Notes or any other securities with, any person
in such a manner as to require that the offer or sale of the Notes or any such
other securities be registered pursuant to the Securities Act or any Blue Sky
Laws.
          (t)    Neither this Agreement, the Notes nor any of the exhibits,
schedules, attachments, written or oral statements, documents, certificates or
other items prepared or supplied to the Subscriber by or on behalf of the
Company or any of its Subsidiaries with respect to the transactions contemplated
hereby or thereby contain any untrue statement of a material fact or omit a
material fact necessary to make each statement contained herein or therein not
misleading; provided, however, that with respect to any financial projections
furnished to each of the Subscribers by or on behalf of the Company or any of
its Subsidiaries, the Company represents and warrants only that such projections
were based upon assumptions reasonably believed by the Company to be reasonable
and fair as of the date the projections were prepared in the context of the
Company's history and then current and reasonably foreseeable business
conditions.

          (u)    The Company and each of its Subsidiaries own good and
marketable title to all of their respective properties and assets, real and
personal, tangible and intangible, of any nature whatsoever (including
Intellectual Property); free and clear of all liens (including infringement
claims with respect to Intellectual Property) except where the failure to do
so would not have a Material Adverse Effect on the Company.

          (v)    During the twelve-consecutive-month period prior to the date of
the execution and delivery of this Agreement, no steps have been taken to
terminate any pension plan, and no contribution failure has occurred with
respect to any pension plan sufficient to give rise to a lien under section
302(f) of ERISA.  No condition exists or event or transaction has occurred with
respect to any pension plan which might result in the incurrence by the Company
or any member of its Controlled Groups of any material liability, fine or
penalty.  Except as disclosed in Schedule 3.3(v), neither the Company nor any
member of its Controlled Groups has any contingent liability with respect to any
post-retirement benefit under a welfare plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.

          (w)    The Company and each of its Subsidiaries has accurately
completed and filed or will file within the time prescribed by law
(including extensions of time granted by the appropriate taxing authority) all
material tax returns and reports required to be filed with the Internal Revenue
Service and any states or governmental subdivisions and all foreign countries,
and has paid all taxes, interest, penalties, assessments or deficiencies shown
to be due and payable by the Company or any of its Subsidiaries on or in respect
of such tax returns and reports.  Except as set forth on Schedule 3.3(w),
neither the Company nor any of its Subsidiaries knows of (i) any other material
federal, state, county, municipal or foreign taxes (or other liabilities in
respect thereof) which are due and payable by the Company or any of its
Subsidiaries which have not been so paid, (ii) any other federal, state,
county, municipal or foreign tax returns or reports which are required to be
filed by the Company or any of its Subsidiaries which have not been so filed,
(iii) any other material unpaid assessment for, or any fact which would
constitute grounds for the assessment of, additional taxes or penalties due or
payable by the Company or any of its Subsidiaries for any fiscal period or any
basis thereof or (iv) any material tax lien, whether imposed by any federal,
state, county, municipal or foreign taxing authority, outstanding against the
assets or business of the Company or any of Subsidiaries.  Except as set forth
on Schedule 3.3(w), none of the federal or state income tax returns of the
Company or any of its Subsidiaries has been audited.  Proper and accurate
amounts have been withheld by the Company and its Subsidiaries from their
respective employees for all periods in compliance with the tax, social
security and any employment withholding provisions of applicable federal
and state law, and proper and accurate federa and state returns have been
filed by the Company and its Subsidiaries for all periods for which returns
were due with respect to employee income tax withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and payable have
been paid in full or provision therefor included on the books of the Company
and each of its Subsidiaries in accordance with and to the extent required by
GAAP.  The Company has not made any election under Section 341(f) of the Code.

          3.4    Covenants of the Company

                 For so long as the Note shall be outstanding:

          (a)    The Company will, and will cause each of its Subsidiaries to,
at all times preserve and keep in full force and effect its corporate or
partnership existence and all rights and franchises material to its business.

          (b)    The Company will, and will cause each of its Subsidiaries to,
comply in all material respects with all applicable laws, rules, regulations and
orders (including Environmental Laws), such compliance to include:

                  (i)  the maintenance and preservation of its corporate or
partnership existence and qualification as a foreign entity; and

                  (ii) the payment, before the same become delinquent, of all
Taxes, assessments and governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if the same
is being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
          (c)     The Company will, and will cause each of its Subsidiaries to,
maintain, preserve, protect and keep its properties (including all its
Intellectual Property and Licenses) in good repair, working order and condition,
and make necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times unless the Company determines in good faith that the continued maintenance
of any of its properties is no longer economically desirable.

          (d)     The Company will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained with responsible insurance companies
insurance with respect to its properties and business against such casualties
and contingencies and of such types and in such amounts as is customary in the
case of similar businesses and will, upon the reasonable request of the
Subscriber, furnish to such Subscriber at reasonable intervals a certificate of
the chief financial officer of the Company setting forth the nature and extent
of all insurance maintained by the Company and its Subsidiaries in accordance
with this Section.

          (e)     The Company shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock, for the purpose of
effecting the conversion of the Notes to Common Stock and otherwise complying
with the terms of this Agreement, such number of its duly authorized shares of
Common Stock as shall be sufficient to effect such conversions or otherwise to
comply with the terms of this Agreement.  If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the Notes into Common Stock, or otherwise to comply
with the terms of this Agreement, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.  In addition to the foregoing, all Common Stock issued in connection
with any such conversion shall be reasonably satisfactory in form and substance
to a majority in interest of the holders participating in such conversion,
including as to rights, preferences, privileges, etc.  The Company will obtain
any authorization, consent, approval from, or other action by, or make any
filing with any person or persons (including any applicable court or
administrative body) that may be required to effect the foregoing, including
under applicable state securities laws.

          (f)    At any time and from time to time upon the reasonable request
of the Subscriber, the Company will, and will cause each of its Subsidiaries to,
at its own expense, promptly execute, acknowledge and deliver such further
documents and do such other acts and things as the Subscriber may reasonably
request in order to effect fully the purposes of this Agreement, the Notes and
the other Transaction Documents and to provide for payment of the Obligations
in accordance with the terms hereof and thereof.

          (g)    The Company will not, and will not permit any of its
Subsidiaries to, enter into, or cause, suffer or permit to exist any
arrangement or contract with any officer or director of the Company or
any of the Subsidiaries unless such arrangement or contract is fair and
equitable to the Company or such Subsidiary and is an arrangement or contract
of the kind which would be entered into by a prudent person in the position of
the Company or such Subsidiary with a person which is not one of its officers
or directors.  Any such arrangement or contract shall be approved by a majority
of the disinterested members of the Board of Directors of the Company.

          (h)    The Company will timely file all reports, registration
statements, proxy statements and other materials, together with any amendments
required to be made with respect thereto, that are required to be filed with the
SEC under the Securities Act or the Exchange Act or with the NYSE (all such
reports and statements are collectively referred to herein as the "Company
Reports"). As of their respective dates, the Company Reports, including the
financial statements contained therein, will comply in all material respects
with all of the statutes and published rules and regulations enforced or
promulgated by the regulatory authority or exchange with which they are filed,
will not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading and are complete and accurate in all material respects.

          (i)    As promptly as practicable, the Company will apply to the NYSE
to list the shares of Common Stock into which the Notes may by converted, and
the Company will use its reasonable efforts to cause such shares to be listed
on the NYSE as promptly thereafter as practicable.

          (j)    The Company shall use its best efforts to take all action
required by the NYSE's rules and regulations to obtain the approval of the
Company's stockholders of the issuance and sale of the Notes to the Subscriber
hereunder.  Subject to its fiduciary duties under applicable law, the Company's
Board of Directors shall recommend that the Company's stockholders approve the
issuance and sale of the Notes hereunder.

          (k)     Promptly following the date hereof, the Company will prepare
and file with the SEC a proxy statement to be distributed to the Company's
stockholders in connection with the issuance and sale of the Notes hereunder,
including any amendments and supplements thereto (the "Proxy Statement"). The
Company will use all reasonable efforts to have or cause the Proxy Statement to
be declared effective as promptly as practicable. The Company agrees to provide
the Subscriber and their respective counsel with any written comments the
Company or its counsel receive from the SEC with respect to the Proxy Statement
promptly after the receipt of such comments. The form and substance of the Proxy
Statement shall be determined by the Company, in its reasonable discretion. The
Company will use all reasonable efforts to cause the Proxy Statement (i) not to
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (ii) to
comply as to form in all material respects with the applicable provision of the
Exchange Act and the rules and regulations thereunder.

                                   SECTION 4


          4.1  Modification.  Neither this Subscription Agreement nor any
provisions hereof shall be modified, discharged or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.

          4.2  Notices.  Any notice, demand or other communication which any
party hereto may be required, or may elect, to give to anyone interested
hereunder shall be sufficiently given if (a) deposited, postage prepaid, in a
United States mail letter box, registered or certified mail, return receipt
requested, addressed to such address as may be given herein, or (b) delivered
personally at such address.

          4.3  Counterparts.  This Subscription Agreement may be executed
through the use of separate signature pages or in any number of counterparts
(and by facsimile signature), and each of such counterparts shall, for all
purposes, constitute one agreement binding on all parties, notwithstanding that
all parties are not signatories to the same counterpart.

          4.4  Binding Effect.  Except as otherwise provided herein, this
Subscription Agreement shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors, legal
representatives and assigns.  If the Subscriber is more than one person, the
obligation of the Subscriber shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be deemed
to be made by and be binding upon each such person and his heirs, executors,
administrators and successors.

          4.5  Entire Agreement.  This Subscription Agreement and the
documents referenced herein contain the entire agreement of the parties hereto
and there are no representations, covenants or other agreements except as
stated or referred to herein and therein.

          4.6  Assignability.  This Subscription Agreement is not
transferable or assignable by the Subscriber; provided, however, that
Subscriber may assign its rights and obligations hereunder to its affiliates
and limited partners.

          4.7  Applicable Law.  This Subscription Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
giving effect to rules governing the conflicts of law.

          4.8  Pronouns.  The use herein of the masculine pronouns "he", "him"
or "his" or similar terms shall be deemed to include the feminine and neuter
genders as well and the use herein of the singular pronoun shall be deemed to
include the plural as well.

                     ALL SUBSCRIBERS MUST COMPLETE THIS PAGE









Principal Amount of
Notes
Subscribed For

___________________
Excess Amount



Manner in which Title is to be held (Please Check One):



1
 .

                                      G

                                 Individual

                                      7
                                      .

                                      G

                            Trust/Estate/Pension
                              or Profit Sharing
                                    Plan
Date Opened:



                                      2
                                      .

                                      G

                             Joint Tenants with
                                  Right of
                                Survivorship

                                      8
                                      .

                                      G

                             As a Custodian for
                            ____________________
                                    ____
                              Under the Uniform
                             Gift to Minors Act
                               of the State of




                                      3
                                      .

                                      G

                             Community Property

                                      9
                                      .

                                      G

                                Married with
                              Separate Property



                                     4.

                                      G

                              Tenants in Common

                                     10
                                      .

                                      G

                                    Keogh



                                      5
                                      .

                                      G

                            Corporation/Partners
                                    hip/
                              Limited Liability
                                   Company

                                      1
                                     1.

                                      G

                               Tenants by the
                                  Entirety



                                     6.

                                      G

                                     IRA









           IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
                INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 9.
            SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 10.



     IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement
on the ____ day of June, 2000.

                  EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY

      (Corporation, Partnership, Limited Liability Company, Trust, Etc.)


Name of Entity (Please Print):

State of Incorporation or Organization:

State of Principal Offices:

Federal Taxpayer Identification Number:



______________________________________
BY:
Name:
Title:

[seal]

Attest:
        (If Entity is a Corporation)

Address:
COMPANY ACCEPTANCE


     ACCEPTED this ______ day of June, 2000 on behalf of the Company.

                             JACKPOT ENTERPRISES, INC.

BY:
Name:  Allan R. Tessler
Title: Chairman

    IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement
    on the ____day of June, 2000.


                         EXECUTION BY NATURAL PERSONS

Exact Name in Which Title is to be Held:



Name:


(Please Print)

Name of Additional Purchaser:


(Please Print)




Residence:


Number and Street


Address of Additional Purchaser:


Number and Street





City, State and Zip Code



City, State and Zip Code





Social Security Number



Social Security Number





(Signature)



(Signature)


                            COMPANY ACCEPTANCE

     ACCEPTED this ______ day of June, 2000 on behalf of the Company.

                            JACKPOT ENTERPRISES, INC.


BY:
Name:     Allan R. Tessler
Title:    Chairman

                                  SCHEDULES
                               Schedule 3.3(m)


    1. An aggregate of 178,571 shares of common stock was issued to the
       following individuals for an aggregate consideration of $2,000,000
       in connection with the investment by Jackpot Enterprises, Inc. in
       TechTrader, Inc.

                          Jacob Pechenik      151,881
                          Greg Campbell        16,393
                          Martin Somarriba      4,518
                          David Zipkin          3,320
                          Neelan Choski         2,459

    2. Mark W. Hobbs was hired as President and Chief Operating Officer and
       Steven L. Korby has been hired as Executive Vice President and Chief
       Financial Officer.

                               Schedule 3.3(w)


    The Federal Income Tax Returns for Jackpot Enterprises, Inc. for the fiscal
year ended June 30, 1989 was audited by the Internal Revenue Service.

EX-10

                                                          EXHIBIT 10.23

FORM OF NOTE

THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") SHALL HAVE BECOME EFFECTIVE WITH
RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL OR
OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
REGISTRATION UNDER THE SECURITIES ACT IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER AND THAT SUCH TRANSFER IS NOT IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES LAWS.  THIS LEGEND SHALL BE ENDORSED UPON ANY
NOTE ISSUED IN EXCHANGE FOR THIS NOTE AND ANY SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF THIS NOTE.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE HEREUNDER
ARE SUBJECT TO THE SUBORDINATION PROVISIONS SET FORTH IN SECTION 3 HEREOF.
IN THE EVENT OF A CONFLICT BETWEEN ANY TERMS OF THIS NOTE AND THE TERMS OF
SUCH SECTION 3, THE TERMS OF SECTION 3 SHALL GOVERN.
________________________________________________________________

JACKPOT ENTERPRISES, INC.

No. _________ 	$_________


Convertible Subordinated Note


	Jackpot Enterprises, Inc., a Nevada corporation (the "Company"), for
value received, hereby promises to pay to the order of _____________ (the
"Payee") on March 31, 2007 (the "Maturity Date") at the offices of the
Company, the principal sum of _________________ Dollars ($_________) or such
lesser principal amount as shall at such time be outstanding hereunder (the
"Principal Amount").  Each payment by the Company pursuant to this Note shall
be made in lawful currency of the United States of America and in immediately
available funds.  Interest on this Note shall accrue on the Principal Amount
outstanding from time to time at a rate per annum computed in accordance with
Section 4 hereof.

	Accrued and unpaid interest on the Principal Amount of this Note
outstanding shall commence on the date hereof and be payable (i) on the last
day of each March, June, September, and December commencing June 30, 2000 (ii)
upon maturity (whether at the Maturity Date, by acceleration or otherwise) and
(ii) after maturity until paid in full (after as well as before judgment), on
demand.  Each of the dates referred to in clauses (i) and (ii) is sometimes
hereinafter referred to as an "Interest Payment Date."  All computations of
interest hereunder shall be made based on the actual number of days elapsed in
a year of 365 days (including the first day but excluding the last day during
which any such Principal Amount is outstanding).  The Principal Amount of this
Note together with interest accrued and unpaid thereon shall be payable on the
Maturity Date unless this Note is converted or prepaid in accordance with
Section 5 hereof.

	The amount of all repayments of principal, interest rates applicable
thereto and interest accrued thereon shall be recorded on the records of the
Company and, prior to any transfer of, or any action to collect on this Note,
shall be endorsed on this Note.  Any such recordation or endorsement shall
constitute prima facie evidence of the accuracy of the information so recorded
or endorsed, but the failure to record any such amount or rate shall not limit
or otherwise affect the obligations of the Company hereunder to make payments
of principal or interest when due.  All payments by the Company hereunder
shall be applied first to pay any interest which is due, but unpaid, then to
reduce the Principal Amount.

	The Company (i) waives presentment, demand, protest or notice of any
kind in connection with this Note and (ii) in the event of a default by the
Company after notice, agrees to pay to the holder hereof, all reasonable costs
and expenses (including reasonable legal fees and expenses) incurred in
connection with the enforcement and collection or this Note.

	This Note is issued pursuant to a Subscription Agreement dated the
date of this Note, between the Company and the Payee (the "Subscription
Agreement"), a copy of which agreement is available for inspection at the
Company's principal office. This Note is one of several Notes issued in
connection with the sale of an aggregate of $20 million of such Notes.
Notwithstanding any provision to the contrary contained herein, this Note is
subject and entitled to those terms, conditions, covenants and agreements
contained in the Subscription Agreement which are expressly applicable to the
Notes.  Any transferee of this Note, by its acceptance hereof, assumes the
obligations of the Payee in the Subscription Agreement with respect to the
conditions and procedures for transfer of this Note.

	1.	Definitions.  For purposes of this Note, the following terms
shall have the meanings described below:

A.	"Indebtedness for Borrowed Money" means (i) all payment
obligations of the Company to a bank, financial institution, insurance
company, finance company or other institutional lender or other entity
regularly engaged in the business of extending credit in the form of
borrowed money (each of the foregoing, an "Institutional Lender") in respect
of extensions of credit to the Company (or to a subsidiary of the Company to
the extent such obligations are guaranteed by the Company) and (ii) all
obligations, contingent or otherwise, relative to the face amount of all
letters of credit, whether or not drawn, and banker's acceptances, in each
case issued for the account of the Company.

B.	"Market Price" as of any date, (i) means the last
reported sale price for the shares of Common Stock on the New York Stock
Exchange (the "NYSE") or the Nasdaq National Market ("Nasdaq") as
reported by Bloomberg Financial Markets or an equivalent reliable reporting
service mutually acceptable to and hereafter designated by the holder of
this Note and the Company ("Bloomberg"), or (ii) if the NYSE or Nasdaq is
not the principal trading market for the shares of Common Stock, the last
reported sale price on the principal trading market for the Common Stock as
reported by Bloomberg, or (iii) if market value cannot be calculated as of
such date on any of the foregoing bases, the Market Price shall be the fair
market value as reasonably determined in good faith by (a) the Board of
Directors of the Company or, at the option of a majority-in-interest of the
holders of the outstanding Notes, by (b) an independent investment bank of
nationally recognized standing in the valuation of businesses similar to the
business of the Company.  The manner of determining the Market Price of the
Common Stock set forth in the foregoing definition shall apply with respect
to any other security in respect of which a determination as to market value
must be made hereunder.

C.	"Senior Debt" means, collectively, (i) all Indebtedness for
Borrowed Money (and all renewals, extensions, refundings, amendments and
modifications of any such Indebtedness for Borrowed Money); (ii) all other
indebtedness incurred prior to or after the issuance of the Notes which by
its terms is superior in right of payment to the Notes; and (iii) all
payment obligations of the Company pursuant to any capitalized lease with an
entity that is not an affiliate of the Company, unless by the terms of the
instrument creating or evidencing any such indebtedness it is expressly
provided that such indebtedness is not superior in right of payment to the
Notes.

2.	Prepayment.  The Principal Amount of this Note may not be prepaid
in whole or in part, except as provided in Section 5A hereof.

3.	Subordination.  The Company, for itself, its successors and
assigns, covenants and agrees, and the Payee and each successive holder of
this Note, by its acceptance of this Note, likewise covenants and agrees
(expressly for the benefit of the present and future holders of the Senior
Debt, that the payment of principal of, and interest on, this Note is hereby
expressly subordinated in right of payment to the prior payment in full of
the principal of, premium (if any) and interest on, all Senior Debt of the
Company (other than the Notes), whether outstanding on the date hereof or
hereafter incurred or created.

		The provisions of this Section 2 are not for the benefit of the
Company, but are solely for the purpose of defining the relative rights of the
holders of the Senior Debt, on the one hand, and the holders of the Notes, on
the other hand.  Nothing contained herein (i) shall impair, as between the
Company and the holder of this Note, the obligations of the Company, which are
absolute and unconditional, to pay to the holder hereof all amounts payable in
respect of this Note as and when the same shall become due and payable in
accordance with the terms hereof or  (ii) shall prevent the holder of this
Note from exercising all rights, powers and remedies otherwise permitted by
applicable law or upon a default under this Note as set forth in these
subordination provisions.

4.	Computation of Interest.

A.	Base Interest Rate.  Subject to subsections 4B below, the
outstanding Principal Amount shall bear interest at the rate of eight (8%)
percent per annum.

B.	Maximum Rate.  In the event that it is determined that, under
applicable law, the interest charges and fees payable by the Company in
connection herewith or in connection with any other document or instrument
executed and delivered in connection herewith cause the effective interest
rate applicable to the indebtedness evidenced by this Note to exceed the
maximum rate allowed by law (the "Maximum Rate"), then such interest shall be
recalculated for the period in question and any excess over the Maximum Rate
paid with respect to such period shall be credited, without further agreement
or notice, to the Principal Amount outstanding hereunder to reduce said
balance by such amount with the same force and effect as though the Company
had specifically designated such extra sums to be so applied to principal and
the Payee had agreed to accept such extra payment(s) as a premium-free
prepayment.  All such deemed prepayments shall be applied to the principal
balance payable at Maturity.

5.	Conversion of Note.  Subject to the terms stated below, the Payee
shall have conversion rights  ("Conversion Rights") as follows:

A.	Mandatory Conversion.  This Note shall be convertible
automatically without further action of the Company, the Payee or any other
party if at any time after April 1, 2004, the common stock of the Company
(the "Common Stock") shall have a Market Price of over 250% of the then
current Conversion Price for a period of ten trading days within any twenty
consecutive trading day period, into such number of fully paid and non-
assessable shares of Common Stock as are determined pursuant to Sections 5C
and 5E(i).
B.	Optional Conversion.  At the option of the Payee, all of the
outstanding Principal Amount of this Note with all accrued and unpaid
interest shall be convertible anytime after June 1, 2001 and from time to
time up to and including the Maturity Date, into such number of fully paid
and non-assessable shares of Common Stock as shall be determined below.

C.	Conversion Price .  The number of shares of Common Stock to
be received by the Payee upon conversion (the "Conversion Shares") is to be
determined by dividing the Principal Amount of this Note by the conversion
price in effect at the time of conversion (the "Conversion Price").  The
Conversion Price at which the Conversion Shares shall be deliverable upon
conversion of this Note without the payment of additional consideration by
the Payee shall initially be $10.75  Such initial Conversion Price, and the
rate at which this Note may be converted into Conversion Shares, shall be
subject to adjustment as provided in Section 5F below.

D.	Fractional Shares.  No fractional shares of Common Stock
shall be issued upon conversion of this Note.  The determination of
fractional shares shall be made on the basis of the Principal Amount of this
Note plus accrued and unpaid interest at the time of conversion divided by
the Conversion Price.  In lieu of any fractional shares to which the Payee
would otherwise be entitled, the Company shall pay cash equal to such
fraction multiplied by the Conversion Price immediately in effect prior to
the event which would result in the issuance of a fractional share of Common
Stock.

E.	Mechanics of Conversion.

(i)		Mandatory Conversion.   In the event the Notes
automatically convert pursuant to the provisions of Sections 5A hereof, the
Company shall deliver to the Payee at its address appearing on the records
of the Company a written notice of the conversion of this Note (the
"Conversion Notice") including a brief description of the event which
resulted in the conversion and the effective date of such conversion (the
"Conversion Date"), requesting surrender of this Note for cancellation and
written instructions regarding the registration and delivery of certificates
for the Conversion Shares.  In the event the Payee receives a Conversion
Notice, the Payee shall be required to surrender this Note for cancellation,
or, if the Note is lost or otherwise unavailable for delivery, an affidavit
of lost Note in form reasonably acceptable to the Company, but the failure
of the Payee to so surrender this Note shall not affect the conversion of
the outstanding Principal Amount into Conversion Shares.  Promptly after the
Company receives this Note for cancellation, or, if this Note is lost or
otherwise unavailable for delivery, an affidavit of lost Note in form
reasonably acceptable to the Company, the Company will issue to the Payee or
its designee such number of fully paid and non-assessable Conversion Shares
as are determined pursuant to Section 5C.  No holder of this Note shall be
entitled upon conversion of this Note to have the Conversion Shares
registered in the name of another person or entity without first complying
with all applicable restrictions on the transfer of this Note.  In the event
the Payee does not provide the Company with written instructions regarding
the registration and delivery of certificates for the Conversion Shares, the
Company shall issue such shares in the name of the Payee and shall forward
such certificates to the Payee at its address appearing on the records of
the Company.   The person entitled to receive the Conversion Shares shall be
deemed to have become the holder of record of such shares at the close of
business on the Conversion Date and the person entitled to receive share
certificates for the Conversion Shares shall be regarded for all corporate
purposes after the Conversion Date as the record holder of the number of
Conversion Shares to which it is entitled upon the conversion.  The Company
may rely on record ownership of this Note for all corporate purposes,
notwithstanding any contrary notice.  After the Conversion Date, this Note
shall, until surrendered to the Company, represent the right to receive the
Conversion Shares plus cash in lieu of fractional shares, if any.

(ii)		Optional Conversion.  Upon election of the Payee to
convert this Note into Conversion Shares pursuant to Section 5B, the Payee
shall surrender the certificate or certificates therefor, duly endorsed, at
the office of the Company, and shall give written notice to the Company at
its principal corporate office, of the election to convert the same and
shall state therein the name or names in which the certificate or
certificates for the Conversion Shares are to be issued. Promptly after the
Company receives this Note for cancellation, or, if this Note is lost or
otherwise unavailable for delivery, an affidavit of lost Note in form
reasonably acceptable to the Company, the Company will issue to the Payee or
its designee such number of fully paid and non-assessable Conversion Shares
as are determined pursuant to Section 5C.  Such conversion shall be deemed
to have been made immediately prior to the close of business on the date of
such surrender of the Note to be converted, and the person or persons
entitled to receive the Conversion Shares issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock as of such date.

(iii)	Noteholder Rights.  All Notes subject to conversion
as herein provided shall no longer be deemed to be outstanding and all
rights with respect thereto, including the rights, if any, to receive
notice, is and shall immediately cease and terminate on the Conversion Date,
except for Conversion Rights.
F.	Adjustment of Conversion Price and Number of Conversion
Shares.  The Conversion Price in effect at any time and the number and kind
of securities issuable upon conversion of the Notes shall be subject to
adjustment from time to time upon the happening of certain events as
follows:

(i)		Adjustment upon Declaration of Dividends or
Reclassification.  In case the Company shall (a) declare a dividend or make
a distribution on its outstanding shares of Common Stock in shares of Common
Stock, (b) subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (c) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
applicable Conversion Price in effect at the time of the record date for
such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted by multiplying the
Conversion Price prior to such action by a fraction, the denominator of
which shall be the number of shares of Common Stock outstanding after giving
effect to such action, and the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such action.  Such
adjustment shall be made successively whenever any event listed above shall
occur.

(ii)		Adjustment upon Issuance of Common Stock. (a) If,
at any time after the date hereof the ("Closing Date"), the Company shall
issue, sell or otherwise distribute (or, in accordance with Sub-section
(ii)(b) hereof, shall be deemed to have issued, sold or otherwise
distributed) any shares of Common Stock without consideration or for a
consideration per share less than the Market Price (determined on a per
share basis) as of the date of such issuance or sale, then, effective
immediately upon such issuance or sale, the Conversion Price shall be
reduced (without regard to any other provisions hereof) to an amount equal
to the product obtained by multiplying (A) the Conversion Price in effect
immediately prior to such issuance or sale, by (B) a fraction, the numerator
of which shall be the sum of (x) the product obtained by multiplying (1) the
number of shares of Common Stock outstanding (on a Fully-Diluted Basis)
immediately prior to such issuance or sale by (2) the Market Price prior to
the date of such issuance or sale, and (y) the consideration, if any,
received by the Company upon such issuance or sale, and the denominator of
which shall be the product obtained by multiplying (C) the number of shares
of Common Stock outstanding (on a Fully-Diluted Basis) immediately after
such issuance or sale, by (D) the Market Price as of the date of issuance or
sale.  Upon each such adjustment of the Conversion Price hereunder, the
number of Conversion Shares which may be obtained upon conversion of a Note
shall be increased to the number of shares determined by multiplying (A) the
number of Conversion Shares which could be obtained upon conversion of such
Note immediately prior to such adjustment by (B) a fraction, the numerator
of which shall be the Conversion Price in effect immediately prior to such
adjustment and the denominator of which shall be the Conversion Price in
effect immediately after such adjustment.

(b) For the purpose of determining the adjusted Conversion Price under
Subsection (ii)(a) hereof, the following shall be applicable:

(I) Issuance of Rights or Options.  If the Company in any manner
issues, grants or otherwise distributes any rights or options to subscribe
for or to purchase (A) Common Stock or (B) any stock or other securities
convertible into or exchangeable for Common Stock (such rights or options
being herein called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), and the price per
share for which Common Stock is issuable upon the exercise of such Options
or upon conversion or exchange of such Convertible Securities is less than
the Market Price (determined on a per share basis) as of the date of
issuance or grant of such Options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such Options (or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options) shall be deemed to be
outstanding and to have been issued and sold by the Company for such price
per share.  For purposes of this paragraph, the price per share for which
Common Stock is issuable upon exercise of Options or upon conversion or
exchange of Convertible Securities issuable upon exercise of Options shall
be determined by dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the issuing or granting of
such Options, plus the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, plus in the
case of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon exercise of such Options or upon the conversion or exchange of
all such Convertible Securities issuable upon the exercise of such Options.
No further adjustment of the Conversion Price shall be made upon the actual
issuance of such Common Stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities.  The provisions
of this Section F(ii)(a)(I) shall not apply to any Options issued pursuant
to any stock option plan of the Company approved by the stockholders of the
Company.

  	(II) Issuance of Convertible Securities.  If the Company in any manner
issues, sells or otherwise distributes any Convertible Securities having an
exercise or conversion or exchange price per share of Common Stock which is
less than the Market Price (determined on a per share basis) as of the date
of such issuance or sale, then the maximum number of shares of Common Stock
issuable upon the conversion or exchange of such Convertible Securities
shall be deemed to be outstanding and to have been issued and sold by the
Company for such lower price per share.  For purposes of this paragraph, the
price per share for which Common Stock is issuable upon conversion or
exchange of Convertible Securities is determined by dividing (A) the total
amount received or receivable by the Company as consideration for the
issuance or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such
Convertible Securities.  No further adjustment of the Conversion Price shall
be made upon the actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities, and if any such issuance or sale of
such Convertible Securities is made upon exercise of any Options for which
adjustments of the Conversion Price had been or are required to be made
pursuant to other provisions of this Sub-section F(ii)(b), no further
adjustment of the Conversion Price shall be made by reason of such issuance
or sale.

 	(III) Change in Option Price or Conversion Price.  If, at any time,
there is any change in (x) the purchase price provided for in any Options,
(y) the additional consideration, if any, payable upon the issuance,
conversion or exchange of any Convertible Securities, or (z) the rate at
which any Convertible Securities are convertible into or exchangeable for
Common Stock, then the Conversion Price in effect at the time of such change
shall be readjusted to the Conversion Price which would have been in effect
at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time initially granted,
issued or sold and the number of Conversion Shares shall be correspondingly
readjusted.

 	(IV) Calculation of Consideration Received.  If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, then the consideration received therefor shall be
deemed to be the net amount received by the Company therefor.  If any Common
Stock, Options or Convertible Securities are issued or sold for
consideration other than cash, then the amount of the consideration other
than cash received by the Company shall be the fair value of such
consideration determined, in good faith, by the Board of Directors of the
Company.

(V)  Treasury Shares.  The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the
account of the Company or any Subsidiary of the Company, and the disposition
of any shares so owned or held shall be considered an issue or sale of
Common Stock.

 	(VI) Record Date.  If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date
of the issuance, sale or distribution of the shares of Common Stock deemed
to have been issued, sold or distributed upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.

(iii)  Consolidations and Mergers.  If, at any time after the
Closing Date, the Company shall consolidate with, merge with or into, or
sell all or substantially all of its assets or property to, another
corporation, then the Company shall cause effective provision to be made so
that each Note shall, effective as of the effective date of such event
retroactive to the record date, if any, of such event, be exercisable or
exchangeable for the kind and number of shares of stock, other securities,
cash or other property to which a holder of the number of shares of Common
Stock deliverable upon conversion or exchange of such Note would have been
entitled upon such event.

(iv)  Notice; Calculations; Etc.  Whenever the Conversion
Price and the number of Conversion Shares shall be adjusted as provided in
this Sub-section F, the Company shall provide to each holder a statement,
signed by the President or Chief Financial Officer of the Company,
describing in detail the facts requiring such adjustment and setting forth a
calculation of the Conversion Price and the number of Conversion Shares
applicable to each Note after giving effect to such adjustment.  All
calculations under this Sub-section F shall be made to the nearest one
hundredth of a cent ($.0001) or to the nearest one-tenth of a share, as the
case may be. Adjustments pursuant to Sub-section F shall apply to successive
events or transactions of the type covered thereby.

(v)  Certain Adjustments; Cash Dividends or Distributions.
In the event that the Company in any manner issues or grants Options or
Convertible Securities, or any other transaction, circumstances or events
occur which give rise to anti-dilution adjustments under Other Anti-Dilution
Instruments, then the Company will promptly make proportional, equitable and
corresponding adjustments in the number of shares of Common Stock issuable
upon conversion of the Notes to protect the holders against dilution as a
result of such events.  In the event the Company in any manner makes any
dividends or distributions in cash, cash equivalent or marketable
securities, other than Tax Distributions, the Conversion Price shall be
adjusted by multiplying the Conversion Price (determined on a per share
basis) by a fraction (x) the numerator of which is the Market Price
immediately prior to the time of such dividend or distribution (determined
on a per share basis) less the per share amount of such dividend or
distribution and (y) the denominator of which is such Market Price.

G.	Validity of Stock.  All shares of Common Stock which may be
issued upon conversion of this Note will, upon issuance by the Company in
accordance with the terms of this Note, be validly issued, fully paid and
non-assessable.

H.	Reservation of Shares.  The Company covenants and agrees that
it will at all times have authorized and reserved, solely for the purpose of
such possible conversion, out of its authorized but unissued shares, a
sufficient number of shares of its Common Stock to provide for the exercise
in full of the conversion rights contained in this Note.

I.	Retirement of Stock. For so long as the Note shall be
outstanding, the Company covenants and agrees that it will not retire any
capital stock of the Company, or any warrants, other than in connection with
the redemption or cashless exercise of any stock options.

6.	Amendments and Waivers.

A.	The provisions of this Note may not be amended, modified,
waived, changed or terminated other than by an agreement in writing signed
by the Company and the holders of one hundred percent (100%) of the
outstanding principal amount of the Notes.

B.	No failure or delay on the part of the Payee in exercising any
power or right under this Note shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power or right preclude any other
or further exercise thereof or the exercise of any other power or right.  No
notice to or demand on the Company in any case shall entitle it to any notice
or demand in similar or other circumstances.  No waiver or approval by the
Payee shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions.  No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.

7.1	Nature of Events.  An "Event of Default" shall exist if any of
the following occurs and is continuing:

A.	Failure to pay Interest on this Note on or before the date
such payment is due;

B.	Failure to pay principal on this Note on or before the date
such payment is due;

C.	Any material representation or warranty made by the Company
in this Note or the Subscription Agreement and Investment Representation of
even date herewith between the Company and the Holder (the "Subscription
Agreement") being untrue when made;

D.	Failure to perform or observe any covenant or agreement of
the Company contained in this Note, or in the Subscription Agreement which
remains uncured for a period of 30 days after receipt of notice from any
holder of Notes as to such failure or after the Company had or should have
had knowledge of such failure;

E.	Failure by the Company to pay principal at maturity of, or
interest on, or the occurrence and continuation of an event of default
under, any loan agreement, mortgage, indenture or other instruments under
which there is issued or by which there is secured or evidenced any
indebtedness (other than the Notes) of the Company, whether such
indebtedness exists on the date of the issuance of this Note or is created
thereafter and the principal amount of such indebtedness which, together
with any such other indebtedness under which the occurrence of such event of
default constitutes an event of default or, if not paid at maturity,
aggregates an amount equal to or greater than $100,000, or the rendering of
one or more final judgments, orders or decrees against the Company and/or
any subsidiary in an aggregate amount in excess of $300,000 which are not
vacated, satisfied, discharged or the execution thereof stayed within a
period of 30 days from entry thereof;

F.	A custodian, receiver, liquidator or trustee of the Company,
or of any of its  material property, is appointed or takes possession and
such appointment or possession remains in effect for more than 30 days; or
the Company is adjudicated bankrupt or insolvent; or an order for relief is
entered under the Federal Bankruptcy Code or any other applicable Federal or
state bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar law affecting the enforcement of creditors
rights generally against the Company; or any of the material property of the
Company is sequestered by court order and the order remains in effect for
more than 30 days; or a petition is filed against the Company under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
indebtedness, dissolution or liquidation law of any jurisdiction, whether
now or hereafter in effect, and is not dismissed within 30 days after
filing;

G.	The Company files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of indebtedness, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, or
consents to the filing of any petition against it under any such law; or

H.	The Company makes an assignment for the benefit of its
creditors, or generally fails to pay its obligations as they become due
(without a waiver thereof), or consents to the appointment of or taking
possession by a custodian, receiver, liquidator or trustee of the Company or
all or any material part of its material property.

7.2	Default Remedies.

	In case an Event of Default has occurred and is continuing, the holder
of this Note, by written notice to the Company, may declare the principal of
this Note, plus accrued Interest, to be immediately due and payable, and
upon any such declaration such principal, plus accrued Interest shall become
due and payable immediately.  In case an Event of Default described in
Sections 7.1(F), (G), or (H) above occurs, such amounts will become due and
payable without any declaration or any act on the part of the holder of this
Note.  Such declaration of acceleration may be rescinded and past defaults
may be waived by the holder of this Note.

8.	Miscellaneous.

A.	Registered Holder.  The Company may consider and treat the
person in whose name this Note shall be registered as the absolute owner
thereof for all purposes whatsoever (whether or not this Note shall be
overdue) and the Company shall not be affected by any notice to the
contrary.   In case of transfer of this Note by operation of law, the
transferee agrees to notify the Company of such transfer and of its address,
and to submit appropriate evidence regarding such transfer so that this Note
may be registered in the name of the transferee.  This Note is transferable
only on the books of the Company by the holder hereof, in person or by
attorney, on the surrender hereof, duly endorsed.  Communications sent to
any registered owner shall be effective as against all holders or
transferees of the Note not registered at the time of sending the
communication.

B.	Governing Law.  This Note shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to
conflict of laws principles applied in the State of New York.

C.	Notices.  Unless otherwise provided, all notices required or
permitted under this Note shall be in writing and shall be deemed
effectively given (i) upon personal delivery to the party to be notified,
(ii) upon confirmed delivery by Federal Express or other nationally
recognized courier service providing next-business-day delivery, or (iii)
upon confirmed receipt if deposited with the United States Postal Service,
by registered or certified mail, postage prepaid and addressed to the party
to be notified, in each case at the address set forth below, or at such
other address as such party may designate by written notice to the other
party (provided that notice of change of address shall be effective upon
receipt by the party to whom such notice is addressed).

	If sent to Payee, notices shall be sent to the following address:

				[_____________
				______________]

	If sent to the Company, notices shall be sent to the following address:

				Jackpot Enterprises, Inc.
				1110 Palms Airport Drive
				Las Vegas, Nevada  89119-3730
				Attention:  Mr. Bob Torkar

	With a copy (which shall not constitute notice) to:

				Camhy Karlinsky & Stein LLP
				1740 Broadway
				New York, New York 10019
				Attention: Alan I. Annex, Esq.

D.	Waiver of Jury Trial.  THE PAYEE AND THE COMPANY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS NOTE OR ANY OTHER DOCUMENT OR INSTRUMENT
EXECUTED AND DELIVERED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE
PAYEE OR THE COMPANY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PAYEE'S PURCHASING THIS NOTE.

9.	No Rights or Liabilities as a Shareholder.  This Note shall not
entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company.  No provision of this Note, in the absence of
affirmative action by the holder hereof to purchase Conversion Shares, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors
of the Company.



	IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
name by its duly authorized officer.

					JACKPOT ENTERPRISES, INC.


					By:
			Name: 	Allan R. Tessler
			Title:  Chairman

EX-10

                                                           EXHIBIT 10.24

                                                        EXECUTION COPY

                        REGISTRATION RIGHTS AGREEMENT


        REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June
__, 2000 is made and entered into by and among Jackpot Enterprises, Inc., a
Nevada corporation (the "Company") and each of the purchasers set forth on the
signature pages attached hereto (collectively, the "Holders").

        1. Background.  Pursuant to that certain Subscription
Agreement and Investment Representation, dated on even date herewith (the
"Subscription Agreement"), by and among the Company and the Holders, the
Company has agreed to sell and the Holders have agreed to purchase Convertible
Subordinated Debentures of the Company of a principal amount of ________ (the
"Debentures"), which are convertible into shares of Common Stock of the
Company, par value $.01 per share (the "Common Stock") under the terms and
conditions specified in the Subscription Agreement and the Debenture.

        2. Definitions.  As used in this Agreement, the following
capitalized terms shall have the following respective meanings:

        "Exchange Act" - The Securities Exchange Act of 1934, as amended.

        "Holders" - The Holders, together with their respective successors
and assigns.

        "Person" - Any individual, partnership, company, joint venture,
corporation, trust, limited liability company, unincorporated organization or
government or any department or agency thereof.

        "Registrable Securities" - Any shares of Common Stock issued or
issuable upon the conversion of the Debentures held by the Holders and any
shares of Common Stock which may be issued or distributed in respect of such
Common Stock by way of stock dividend or stock split or other distribution,
recapitalization or reclassification.  As to any particular Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
Registrable Securities shall have become effective under the Securities Act and
such Registrable Securities shall have been disposed of in accordance with such
registration statement, (ii) they shall have been distributed to the public
pursuant to Rule 144 or 144A (or any successor provisions) under the Securities
Act, (iii) they shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any state
securities or blue sky law then in force, or (iv) they shall have ceased to be
outstanding.

        "Registration Expenses" - Any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation, (i) all SEC and stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses of complying with securities or blue sky laws (including fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities), (iii) all printing, messenger
and delivery expenses, (iv) all fees and expenses incurred in connection with
the listing of the Registrable Securities on any securities exchange pursuant
to clause (viii) of Section 5, (v) the fees and disbursements of counsel for
the Company and of its independent public accountants, including the expenses
of any special audits and/or "cold comfort" letters required by or incident to
such performance and compliance, and (vi) the reasonable fees and expenses of
any special experts retained in connection with the requested registration, but
excluding underwriting or broker discounts and selling commissions and transfer
taxes, if any.

        "Securities Act" - The Securities Act of 1933, as amended.

        "SEC" - The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.

        3. Piggyback Registrations.

           (i) Right to include Registrable Securities.  If the
Company at any time after the date hereof and prior to the maturity date of the
Debentures proposes to register its Common Stock under the Securities Act
(other than a registration on Form S-4 or S-8 or any successor or other forms
promulgated for similar purposes), whether or not for sale for its own account,
pursuant to a registration statement on which it is permissible to register
Registrable Securities for sale to the public under the Securities Act, it will
each such time give written notice at least thirty (30) days prior to filing
any registration statement under the Securities Act to Holders of its intention
to do so and of such Holders' rights under this Section 3. Upon the written
request to register any Registrable Securities of Holders made within twenty
(20) days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by Holders), the Company will
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
Holders; provided, that (i) if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to proceed with the proposed registration
of the securities to be sold by it, the Company may, at its election, give
written notice of such determination to Holders and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration and (ii) if such registration involves an underwritten
offering, Holders must sell its Registrable Securities to the underwriters
selected by the Company on the same terms and conditions as apply to the
Company, with such differences, including any with respect to indemnification
and liability insurance, as may be customary or appropriate in combined primary
and secondary offerings. If a registration requested pursuant to this Section
3(a) involves an underwritten public offering, Holders may elect, in writing
prior to the effective date of the registration statement filed in connection
with such registration, not to register such securities in connection with such
registration.

           (ii) Priority in Incidental Registrations.  If a
registration pursuant to this Section 3 involves an underwritten offering and
the managing underwriter advises the Company in writing that, in its good faith
opinion, the amount of securities requested to be included in such registration
exceeds the amount which can be sold in such offering, so as to be likely to
have a material adverse effect on such offering as contemplated by the Company
(including the price at which the Company proposes to sell such securities),
then the Company will include in such registration first, all securities
proposed by the Company to be sold for the Company's own account, second any
amount of other securities including the Registrable Securities requested to
be included in such registration by Holders ("Other Securities") of the Company
held by all other security holders which the Company has agreed to register
which, in the good faith opinion of such managing underwriter, can be sold
without causing a material adverse effect on the offering, with such amount of
Other Securities to be allocated pro rata among the Holders and such other
holders on the basis of the relative number of shares of Other Securities owned
by the Holders and such other holders.

           (iii) Expenses.  The Company will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Section.

        4. Demand Registrations.

        (a)  Long Form.

           (i)   Upon the written request of the Holders, the
Company will use its best efforts to cause such of the Registrable Securities
as may be requested by the Holders thereof to be registered under the
Securities Act as expeditiously as possible.  If the Company determines to
include shares to be sold by it in any Registration Statement requested
pursuant to this Section 4(a), such Registration Statement shall be deemed to
have been a registration under Section 3 of this Agreement, and not a
registration under this Section 4(a), unless Holders are able to include in
such Registration Statement all of the Registrable Securities initially
requested for inclusion in such Registration Statement.  The Company may
postpone for up to 180 days a demand registration under this Section 4(a) if
the Board of Directors of the Company reasonably and in good faith determines
that such filing would be materially detrimental to the Company or require a
disclosure of a material fact that might reasonably be expected to have a
material adverse effect on the Company or any plan or proposal by the Company
or any of its subsidiaries to engage in any transaction of assets or any
merger, consolidation, tender offer, or other significant transaction;
provided, however, that the Company may take such action pursuant to this final
sentence of this Section 4(a)(i) only one time in any eighteen (18) month
period.

           (ii)  If a requested registration involves an
underwritten public offering and the managing underwriter of such offering
determines in good faith that the number of securities sought to be offered
should be limited due to market conditions, then the number of securities to
be included in such underwritten public offering shall be reduced to a number
deemed satisfactory by such managing underwriter, provided that the securities
included shall be determined in the following order of priority:  first, the
Registrable Securities of the Holders, and second, any other securities of the
Company which the managing underwriter agrees to include.

           (iii) The obligations of the Company under this
Section 4(a) shall terminate after the Company has effected one (1)
registration under this Section 4.

           (b)   Short Form.

           (i)   In addition to the rights provided to the Holders
in Sections 3 and 4(a)  above, at such time as the registration of Registrable
Securities under the Securities Act can be effected on Form S-3 (or any similar
form promulgated by the SEC which permits short form registration using
extensive incorporation by reference), the Company will so notify Holders.
Thereafter, upon the request of Holders, the Company will effect qualification
and registration under the Securities Act on said Form S-3 or other short form
registration of all or such portion of the Registrable Securities as the Holder
shall specify.

           (ii)  Notwithstanding Section 4(b)(i) above, the
Company shall not be obligated to effect any registration unless the aggregate
offering price of the Registrable Securities to be sold in any such
Registration Statement shall be estimated to be at least $500,000 or if the
Company, within 10 days of receipt of such request, delivers notice of its
intent to file a registration statement within 90 days.  The Company shall not
be required to effect more than two (2) registrations pursuant to this Section
4(b) upon demand of the Holders.

           (c) Right to Rescind.  A requested registration under this
Section 4 may be rescinded by written notice to the Company prior to such
registration being declared effective by the SEC; provided, however, that such
rescinded registration shall not count as a registration for purposes of
Section 4(a)(iii) or Section 4(b)(ii) if the Company shall have been reimbursed
(pro rata by those requesting registration or in such other proportion as they
may agree) for all out-of-pocket expenses incurred by the Company in connection
with such rescinded registration.

           (d) Expenses.  The Company will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Section 4.

        5. Shelf Registration.

           (i)   The Company shall file with the SEC, as soon as
reasonably practicable following the issuance of the first Debenture, but in
no event later than nine (9) months following the issuance of the first
Debenture, a registration statement in connection with the resale, pursuant to
open market or privately negotiated transactions, of the Registrable Securities
on a continuous basis pursuant to Rule 415 of the Securities Act (the "Shelf
Registration Statement"), which Shelf Registration Statement shall be in a form
that can be declared effective as soon as reasonably practicable after the
filing thereof.  The Company shall use its reasonable best efforts to have the
staff of the SEC declare the Shelf Registration Statement effective as soon as
reasonably practicable following the filing thereof.

           (ii)  The Company shall use its best efforts to file such
Shelf Registration Statement and to keep such Shelf Registration Statement
continuously effective under the Securities Act until the date which is
eighteen (18) months from its effective date, or such shorter period ending
when all the Registrable Securities covered by such Shelf Registration
Statement have been sold in the manner set forth and as contemplated in the
Shelf Registration Statement.

           (iii) The Company shall promptly supplement and amend
the Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used for such registration
statement, if required by the Securities Act, or if reasonably requested by the
Holders or by any underwriter of the Registrable Securities registered
thereunder.

        6. Registration Procedures.  If and whenever the Company is
required to use its best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Agreement,
the Company will, as expeditiously as possible:

            (i)  prepare and, in any event within 120 days after the
end of the period within which a request for registration may be given to the
Company, file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective as promptly as possible; provided, however, that
the Company may discontinue any registration of its securities which is being
effected pursuant to Section 3 or delay any registration of its securities
which is being effected pursuant to Section 4 at anytime prior to the effective
date of the registration statement relating thereto;

            (ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for a period not in excess of 180 days and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement; provided, however, that
before filing a registration statement or prospectus, or any amendments or
supplements thereto, the Company will if requested by the Holders furnish to
counsel of the Holders copies of all documents proposed to be filed, which
documents will be subject to the review of such counsel;

           (iii) furnish to Holders such number of copies of such
registration statement and of each amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus included
in such registration statement (including each preliminary prospectus and
summary prospectus), in conformity with the requirements of the Securities Act,
and such other documents as Holders may reasonably request in order to
facilitate the disposition of the Registrable Securities by Holders;

           (iv)  use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as Holders shall reasonably
request, and do any and all other acts and things which may be reasonably
necessary or advisable to enable Holders to consummate the disposition in such
jurisdictions of the Registrable Securities owned by Holders, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for the
requirements of this clause (iv), it would not be obligated to be so qualified,
to subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;

           (v)   use its best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the Holders to consummate the disposition of such Registrable
Securities;

            (vi)      notify Holders, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) of this Section 6, of the Company's
becoming aware that the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such seller, prepare and furnish to such
seller a reasonable number of copies of an amended or supplemental prospectus
as may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;

                  (vii)   otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder;

                  (viii)         use its best efforts to list such Registrable
Securities on any securities exchange on which the Common Stock is then listed,
if such Registrable Securities are not already so listed and if such listing
is then permitted under the rules of such exchange, and to provide a transfer
agent and registrar for such Registrable Securities covered by such
registration statement not later than the effective date of such registration
statement;

                  (ix)      enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions as
Holders or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities;

                  (x)       make available for inspection by Holders, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by Holders or any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably requested by Holders, underwriter, attorney, accountant or agent in
connection with such registration statement;

                  (xi)      notify the Holders and the Holders' counsel promptly
in writing (A) of any comments by the SEC with respect to any registration
statement or prospectus, or any request by the SEC for the amending or
supplementing thereof or for additional information with respect thereto, (B)
of the issuance by the SEC of any stop order suspending the effectiveness of
any registration statement or prospectus or any amendment or supplement thereto
or the initiation of any proceedings for the purpose and (C) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of such Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purposes;

                  (xii)          use its best efforts to obtain from its
independent certified public accountants a "cold comfort" letter in customary
form and covering such matters of the type customarily covered by cold comfort
letters;

                  (xiii)     use its best efforts to obtain, from its counsel,
an opinion or opinions in customary form (which shall also be addressed to the
Holders selling Registrable Securities in such registration);

                  (xiv)      provide a transfer agent and registrar (which may
be the same entity and which may be the Company) for such Registrable
Securities; and

                  (xv)  use its best efforts to take all other steps necessary
to effect the registration of such Registrable Securities contemplated hereby.

        The Company may require each Holder to furnish the Company with such
information regarding Holder and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.

        Holders agree that, upon receipt of any notice from the Company of
the happening of any event of the kind described in clause (vi) of this Section
6, Holders will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until Holders' receipt of the copies of the supplemented or amended prospectus
contemplated by clause (vi) of this Section 6, and, if so directed by the
Company, Holders will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in Holders' possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the period
mentioned in clause (ii) of this Section 6 shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to clause (vi) of this Section 6 and including the date when Holders
shall have received the copies of the supplemented or amended prospectus
contemplated by clause (vi) of this Section 6.

        6.             Indemnification.

                  (a)       Indemnification by the Company.  In the event of any
registration of any securities of the Company under the Securities Act pursuant
to Sections 3, 4 and 5 hereof, the Company will, and it hereby does, indemnify
and hold harmless Holders, each affiliate of Holders and their directors and
officers (and the partners, members, directors, officers, affiliates and
controlling Persons of each of the foregoing), each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls Holders or any such underwriter within
the meaning of the Securities Act (collectively, the "Indemnified Parties"),
against any and all losses, claims, damages or liabilities, joint or several,
and expenses to which any such Indemnified Party may become subject under the
Securities Act, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof, whether
or not such Indemnified Party is a party thereto) arise out of or are based
upon (a) any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (b)
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing, and the Company will
reimburse, as incurred,  such Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided,
however, that the Company shall not be liable to any Indemnified Party in any
such case to the extent that any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement of material fact or omission or
alleged omission of material fact made in such registration statement or
amendment or supplement thereto or in any such preliminary, final or summary
prospectus in reliance upon and in conformity with written information with
respect to Holders furnished to the Company by Holders specifically stating
that it is for use in the preparation thereof, nor shall the Company be liable
for any amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of Holders or any other Indemnified Party and shall survive the transfer of
such securities by Holders.

                  (b)       Indemnification by Holders.  In the event of any
registration of any securities of the Company under the Securities Act in
accordance with Section 6 herein, Holders shall indemnify and hold harmless (in
the same manner and to the same extent as set forth in subdivision (a) of this
Section 7) the Company, each of its directors, each of its officers who signed
the registration statement pursuant to which any shares of Holders are sold,
each person, if any, who controls the Company within the meaning of the
Securities Act, and all other prospective sellers or any underwriter, as the
case may be, with respect to any statement or alleged statement of material
fact in or omission or alleged omission of material fact from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement, if such statement or alleged statement or omission
or alleged omission was made in reliance upon and in conformity with written
information with respect to Holders or underwriter furnished to the Company by
Holders specifically stating that it is for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment
or supplement, or a document incorporated by reference into any of the
foregoing; provided, however, that the liability of such indemnifying party
under this Section 7(b) shall be limited to the amount of net proceeds received
by such indemnifying party from the offering giving rise to such liability.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any of the prospective
sellers, or any of their respective affiliates, directors, officers or
controlling Persons and shall survive the transfer of such securities by
Holders.

                  (c)    Notices of Claims, Etc.  Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 7, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 7, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice.  In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party for any legal or other expenses subsequently incurred
by the latter in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof, the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.

                  (d)   Contribution.  If the indemnification provided for in
this Section 7 shall for any reason be held by a court to be unavailable to an
indemnified party under paragraphs (a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under paragraph (a) or (b) hereof, the indemnified
party and the indemnifying party under paragraph (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating
the same), (i) in such proportion as is appropriate to reflect the relative
fault of the Company and the Holders that resulted in such loss, claim, damage
or liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage, liability, or action in
respect thereof, as well as any other relevant equitable consideration or (ii)
if the allocation provided by such clause (i) above is not permitted by
applicable law, in such proportion as shall be appropriate to reflect the
relative benefits received by the Company and Holders from the offering of such
securities covered by such registration statement. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation; provided, however, that the
contribution of Holders under this Section 7(d) shall be limited to the amount
of net proceeds received by Holders from the offering giving rise to such
contribution.  In addition, no Person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such Person's consent, which consent shall not be unreasonably
withheld.

                  (e)       Indemnification Payments.  The indemnification
required by this Section 6 shall be effected by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills
are received or expense, loss, damage or liability is incurred.

        7.             Rule 144: The Company covenants that it will make all
required filings with the SEC on a timely basis and will take all action as
Holders may reasonably request, all to the extent required from time to time
to enable Holders to sell shares of Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
(i) Rule 144 under the Securities Act, as such Rule may be amended from time
to time, or (ii) any similar rule or regulation hereafter adopted by the SEC.
Upon the request of Holders, the Company will deliver to Holders a written
statement as to whether it has complied with such requirements at any time
after 90 days after the effective date of the first Registration Statement
filed by the company for an offering of its securities to the general public.

        8.             Miscellaneous.

                  (i)       Amendments and Waivers.  This Agreement may only
amended by written instrument executed by all parties. A waiver by any party
of a breach of any term of this Agreement shall only be effective if such
waiver is in writing and signed by the party waiving the breach.

                  (ii)      Assignment.  Notwithstanding anything herein to the
contrary, the registration rights of Holders under Sections 3 and 4 hereof may
be assigned only to a party who acquires at least 10% of the Debentures
outstanding as of the date of this Agreement or an equivalent number (on an as-
converted basis) of Registrable Securities issued upon conversion thereof,
unless the transfer is to a person that directly, or indirectly through
intermediaries, controls, or is controlled by, or is under common control with,
the Holders, which shall be a permitted transfer regardless of the number of
shares being transferred; provided, however, that no party may be assigned any
of the foregoing rights unless the Company is given written notice by the
assigning party at the time of such assignment stating the name and address of
the assignee and identifying the securities of the Company as to which the
rights in question are being assigned; and provided, further, that any such
assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement.

                  (iii)          Successors, Assigns and Transferees.  This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.

                  (iv)      Notices.  All notices and other communications
provided for hereunder shall be in writing and shall be sent by first class
mail, telex, nationally recognized overnight courier, telecopier or hand
delivery:


If to the Company:
Jackpot Enterprises, Inc.
1110 Palms Airport Drive
Las Vegas, Nevada 89119
Fax No.:
Attention:



     With a copy (which
     shall not
     constitute notice)
     to:
Camhy Karlinsky & Stein LLP
1740 Broadway
New York, NY 10019
Fax No.:  (212) 977-8389
Attention:  Alan I. Annex, Esq.



If to the Holders:
To the address set forth under
the signature block of such
Purchaser set forth on the
signature pages attached hereto



        All such notices and communications shall be deemed to have been
given or made (1) when delivered, if delivered by hand, (2) five business days
after being deposited in the mail, postage prepaid, (3) when telecopied,
receipt acknowledged, or (5) one business day after being deposited with a
national overnight courier.

                  (v)   Descriptive Headings.  The headings in this Agreement
are for the convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein.

                  (vi)      Severability.  In the event that any one or more of
the provisions, paragraphs, words, clauses, phrases or sentences contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision, paragraph, word clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, causes, phrases or sentences thereof shall not be in any way impaired,
it being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.

                  (vii)     Counterparts.  This Agreement may be executed in
counterparts, by facsimile, and by different parties on separate counterparts,
each of which shall be deemed an original, but all such counterparts shall
together constitute one and the same instrument, and it shall not be necessary
in making proof of the Agreement to produce or account for more than one such
counterpart.

                  (viii)   Governing Law.  This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of New
York applicable to contracts made and to be performed therein.  The parties to
this Agreement hereby agree to submit to the jurisdiction of the courts of the
State of New York in any action or proceeding arising out of or relating to
this Agreement.

                  (ix)  Specific Performance.  The parties hereto acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  Accordingly, it is agreed that they
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United States
or any state thereof, in addition to any other remedy to which they may be
entitled at law or equity.

                  (x)       No Conflict of Rights.  The Company represents and
warrants to the Holders that the registration rights granted to the Holders
hereby do not conflict with any other registration rights granted by the
Company.  The Company shall not, after the date hereof, grant any registration
rights which conflict with or impair, or have any priority over, the
registration rights granted hereby.  In any underwritten public offering
initiated pursuant to Section 4, the managing underwriter shall be a nationally
recognized investment banking firm selected by the Company and reasonably
acceptable to the Holders.

                  (xi)   Entire Agreement.  This Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior arrangements or understandings with respect hereto.

                  [The remainder of this page is intentionally left blank.]

        IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be executed on its behalf as of the date first written above.

                            JACKPOT ENTERPRISES, INC.


                            By:
                                 Name:
                                 Title:


                         GILBERT GLOBAL EQUITY PARTNERS, L.P.


                            By:
                                  Name:    Richard W. Gaenzle, Jr.
                                  Title:   Authorized Signatory
                                 Address for Notice:
                                 c/o GGEP Investments, L.L.C.
                                 785 Smith Ridge Road
                                 New Canaan, CT 06840
                                 Fax No.: (203) 972-0250
                                 Attention: Steven J. Gilbert

                            With a copy to:
                                 Gilbert Global Equity Capital, L.L.C.
                                 590 Madison Avenue, 40th Floor
                                 New York, N.Y. 10022
                                 Fax No.: (212) 702-7990
                                 Attention:

                            With a copy to:
                                 Mayer Brown & Platt
                                 1675 Broadway
                                 New York, N.Y. 10019-5820
                                 Fax No.: (212) 262-1910
                                 Attention: Thomas M. Vitale


           [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]


                            GILBERT GLOBAL EQUITY PARTNERS
                            (BERMUDA), L.P.


                            By:
                                  Name:    Richard W. Gaenzle, Jr.
                                  Title:   Authorized Signatory
                                 Address for Notice:
                                 Clarendon House
                                 2 Church Street
                                 P.O. Box 666
                                 Hamilton, HM EX
                                 Bermuda
                                 Fax No.: (441) 292-4720
                                 Attention: Wayne Morgan

                            With a copy to:
                                 Gilbert Global Equity Capital, L.L.C.
                                 590 Madison Avenue, 40th Floor
                                 New York, N.Y. 10022
                                 Fax No.: (212) 702-7990
                                 Attention:

                            With a copy to:
                                 Mayer Brown & Platt
                                 1675 Broadway
                                 New York, N.Y. 10019-5820
                                 Fax No.: (212) 262-1910
                                 Attention: Thomas M. Vitale


                            ______________________________________
                                 STEVE KOTLER
                                      Address for Notice:
                                      c/o Gilbert Global Equity Capital, L.L.C.
                                      590 Madison Avenue, 40th Floor
                                      New York, N.Y. 10022
                                      Fax No.: (212) 702-7990



            [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

                     ZBBF-J-NET ENTERPRISES (a California
                               partnership)


                            By:
                                  Name:    Harry M. Brittenham
                                  Title:   Managing Partner
                                 Address for Notice:
                                 1801 Century Park West
                                 Los Angeles, California 90067


                            THE DAVID MARKIN TRUST
                                 Address for Notice:
                                 1801 Century Park West, Los Angeles
                                 California, 90067



                            By:
                                  Name:    David Markin
                                  Title:   Trustee
                                 Address for Notice:
                                 70 Blossom Way
                                 Palm Beach, Florida 33480



                            _____________________________________
                                 DAVID MARKIN
                                 Address for Notice:
                                 70 Blossom Way
                                 Palm Beach, Florida 33480



                            _____________________________________
                                 MARC & ANNE HIRSCHFIELD
                                 Address for Notice:
                                 3490 Clubhouse Drive, I-2
                                 Wilson, Wyoming 83014


            [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

                    THE ALAN J. HIRSCHFIELD LIVING TRUST


                            By:___________________________________
                                 Name:
                                 Title:
                                      Address for Notice:
                                      3490 Clubhouse Drive, I-2
                                      Wilson, Wyoming 83014



                            ______________________________________
                                 SCOTT E. HIRSCHFIELD
                                      Address for Notice:
                                      3490 Clubhouse Drive, I-2
                                      Wilson, Wyoming 83014



                            ______________________________________
                                 LAURA Y. HIRSCHFIELD
                                      Address for Notice:
                                      1500 Grand Avenue
                                      Seattle, Washington 98122



                            THE ALAN J. HIRSCHFIELD GST EXEMPT TRUST


                            By:___________________________________
                                 Name:
                                 Title:
                                      Address for Notice:
                                      3490 Clubhouse Drive, I-2
                                      Wilson, Wyoming 83014




           [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]


                            THE JAMES & TONY KAPLAN TRUST


                            By:___________________________________
                                 Name:
                                 Title:
                                      Address for Notice:
                                      16705 Huerta Road
                                      Encino, California 91436



                            _____________________________________
                                 JOSE F. FANJUL
                                      Address for Notice:
                                      340 Royal Ponciana Way
                                      Suite 316
                                      Palm Beach, Florida 33480


                            _____________________________________
                                 ALFONSO  FANJUL
                                      Address for Notice:
                                      340 Royal Ponciana Way
                                      Suite 316
                                      Palm Beach, Florida 33480


                            M LIMITED LIABILITY COMPANY



                            By:___________________________________
                                 Name:
                                 Title:
                                      Address for Notice:
                                      2016 N. Pitcher Street
                                      Kalamazoo, Michigan 49007

           [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]



                            ______________________________________
                                 DAVID ROBERTS
                                      Address for Notice:
                                      89 Blackberry Drive
                                      Stamford, Connecticut 06903



                            ______________________________________
                                 LOUIS V. GERSTNER, III
                                      Address for Notice:
                                      124 East 79th Street
                                      New York, New York 10021


                            TESSLER-3, LLC


                            By:___________________________________
                                 Name:     Andrea L. Tessler
                                 Title:    Member
                                      Address for Notice:
                                      4020 Lake Creek Drive
                                      Suite 100
                                      Wilson, Wyoming 83014


                            ALEXANDER ENTERPRISE HOLDINGS CORP.



                            By:__________________________________
                                 Name:
                                 Title:
                                      Address for Notice:
                                      Falcon Cliff, Palace Road
                                      Douglas,
                                      Isle of Man


            [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

                            ______________________________________
                                 ALLAN R. TESSLER
                                      Address for Notice:
                                      3790 Clubhouse Drive, P.O. Box 7443
                                      Wilson, Wyoming 83001


                            MEISTER BROTHERS HOLDINGS, LLC


                            By:___________________________________
                                 Todd Meister
                                 Managing Member
                                      Address for Notice:
                                      c/o Data Broadcasting Corporation
                                      498 7th Avenue
                                      New York, New York 10018





                            ______________________________________
                                 MARK W. HOBBS
                                      Address for Notice:
                                      5124 N. Meadow Ridge Circle
                                      McKinney, Texas 75070





                            ______________________________________
                                 STEVEN L. KORBY
                                      Address for Notice:
                                      8838 Farquhar Circle
                                      Dallas, Texas 75209





           [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

EX-21

                                                                  EXHIBIT 21.1
                   SUBSIDIARIES OF JACKPOT ENTERPRISES, INC.




                                                    STATE OF
         COMPANY                     % OWNED      INCORPORATION


1. J Net Ventures I, LLC               100%          Delaware

EX-23

                                                      EXHIBIT 10.23

                                                              EXECUTION COPY


NAME OF SUBSCRIBER:

     To:  Jackpot Enterprises, Inc.
          1110 Palms Airport Drive
          Las Vegas, Nevada  89119


             SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION

                                   SECTION 1

          1.1  Subscription.

          The undersigned (the "Subscriber"), intending to be legally bound
hereby, irrevocably subscribes for and agrees to purchase the principal amount
of Convertible Subordinated Promissory Notes (the "Notes") of Jackpot
Enterprises, Inc., a Nevada corporation (the "Company"), indicated on page 17
hereof, on the terms and conditions described herein and set forth on the term
sheet attached hereto as Exhibit A, which terms and conditions are incorporated
herein by reference.  The issuance of the Notes was described in a Confidential
Memorandum dated February 21, 2000 (the "Confidential Memorandum").  The Notes
shall be issued substantially in the form attached hereto as Exhibit B. The
Notes are part of an offering being made by the Company only to accredited
investors (as such term is defined in the Regulation D under the Securities Act
of 1933, as amended) of a minimum $15,000,000 principal amount, and a maximum
$27,500,000 principal amount, of the Notes. The minimum subscription by any
person is $100,000 principal amount of Notes.

          As set forth in Section 2.1(d) the issuance of a portion of the Notes
is subject to early prepayment by the Company pursuant to the terms of this
Agreement.  Accordingly, each Subscriber whose subscription is accepted will be
issued two Notes, one in the amount of the Excess Amount (as discussed in
Section 2.1(d)) and a second for the balance of the amount subscribed for.  The
amount of each Subscriber Excess Amount will be set forth on page 17 hereof.

                    1.2  Purchase of Notes.

          The Subscriber understands and acknowledges that the purchase price
of the Notes is 100% of the principal amount subscribed for. Payment for the
Notes shall be made by check or wire transfer of immediately available funds in
accordance with the instructions of the Company, together with an executed copy
of this Subscription Agreement and any other required documents.

                                   SECTION 2

          2.1  Acceptance or Rejection; Early Partial Repayment.
          (a)  The Subscriber understands and agrees that the Company reserves
the right to reject this subscription for the Notes in whole or part, if, in its
reasonable judgment, it deems such action in the best interest of the Company
at any time prior to the Closing (as defined in Section 2.2 below) with respect
to such Notes, notwithstanding prior receipt by the Subscriber of notice of
acceptance of the Subscriber's subscription.

          (b)  The Subscriber understands and agrees that the subscription may
be revoked, provided that written notice of revocation is sent by certified or
registered mail, return receipt requested, and is received by the Company at
least two business days prior to the Closing with respect to the Notes
subscribed for by the Subscriber.

          (c)  In the event of rejection of this subscription, or in the event
the sale of the Notes subscribed for by the Subscriber is not consummated by the
Company for any reason (in which event this Subscription Agreement shall be
deemed to be rejected), this Subscription Agreement and any other agreement
entered into between the Subscriber and the Company relating to this
subscription shall thereafter have no force or effect, and the Company shall
promptly return or cause to be returned to the Subscriber the purchase price for
the Notes, without interest thereon or deduction therefrom.

          (d)  The Subscriber understands that the issuance of a portion of the
Notes is subject to early prepayment by the Company pursuant to the terms of
this Agreement. In the event the shareholders of the Company fail to approve the
issuance of an aggregate amount of Notes in excess of approximately $18,700,000
or the purchase of Notes in excess of approximately $940,000 by certain
affiliates of the Company, a portion of the Notes (the "Excess Amount") shall
be redeemed by the Company at a redemption price of 120% of the face amount of
the Note plus accrued interest through the date of redemption.

          2.2  Closing; Escrow Prior to Initial Closing: Closing Date.

          The closing (the "Closing") of the purchase and sale of Notes
subscribed to by Subscriber pursuant to this Subscription Agreement shall take
place following the acceptance by the Company of the subscription therefor, on
such date and at such time as are determined by the Company, provided that no
Closing shall occur unless and until subscriptions for not less than $15,000,000
principal amount of Notes shall have been received and accepted by the Company.
Until such time as subscriptions for $15,000,000 principal amount of Notes shall
have been received and accepted by the Company (the "Initial Closing"), amounts
paid in respect of subscriptions shall be held in a non-interest bearing escrow
account maintained by Camhy Karlinsky & Stein LLP, counsel to the Company.  The
Company's acceptance of the Subscriber's subscription shall be evidenced by the
Company's execution of this Subscription Agreement.  At the Closing of the
purchase and sale of the Notes subscribed to by the Subscriber, the Company
shall deliver to the Subscriber one or more original executed Notes in the form
attached hereto as Exhibit A.

                                   SECTION 3

          3.1  Investor Representations and Warranties.

          The Subscriber hereby acknowledges, represents and warrants to the
Company as follows:

          (a)  The Subscriber is acquiring the Notes for his own account as
principal, not as a nominee or agent, for investment purposes only, and not with
a view to, or for, resale, distribution or fractionalization thereof in whole
or in part, and no other person has a direct or indirect beneficial interest in
such Notes.  Further, the Subscriber does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Notes for which the Subscriber is subscribing.

          (b)  The Subscriber has full power and authority to enter into this
Subscription Agreement, the execution and delivery of this Subscription
Agreement have been duly authorized, if applicable, and this Subscription
Agreement constitutes a valid and legally binding obligation of the Subscriber.

          (c)  The Subscriber acknowledges that the offering and sale of the
Notes is intended to be exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), by virtue of Section 4(2) or 4(6) of
the Securities Act and the provisions of Regulation D promulgated thereunder
("Regulation D").  In furtherance thereof, the Subscriber represents and
warrants to and agrees with the Company as follows:

                      (i)  The Subscriber is an "accredited investor" within the
          meaning of Rule 501 (a) of Regulation D;

                     (ii)  The Subscriber has the financial ability to bear the
          economic risk of his investment, has adequate means for providing for
          his current needs and personal contingencies and has no need for
          liquidity with respect to his investment in the Company;

                     (iii)  No Person has acted as the Subscriber's Purchaser
          Representative for purposes of the private placement exemption under
          the Securities Act;  and

                     (iv)  The Subscriber has such knowledge and experience in
          financial and business matters as to be capable of evaluating the
          merits and risks of the prospective investment in the Notes.  If other
          than an individual, the Subscriber also represents it has not been
          organized for the purpose of acquiring the Notes.

          (d)  The information in the Investor Questionnaire completed and
executed by the Subscriber in the form of the Investor Questionnaire included
as Exhibit C hereto (the "Investor Questionnaire") is accurate and true in all
respects.

          (e)  The Subscriber:

                     (i)  Has been furnished with the Company's Confidential
          Memorandum, and the Subscriber has carefully read the Confidential
          Memorandum, and understands and has evaluated the risks and the
          considerations described in the Confidential Memorandum;

                    (ii)  Has been provided an opportunity for a reasonable
          period of time prior to the date hereof to obtain additional
          information concerning the offering of the Notes, the Company and
          all other information to the extent the Company possesses such
          information or can acquire it without unreasonable effort or expense;

                     (iii)  Has been given the opportunity for a reasonable
          period of time prior to the date hereof to ask questions of, and
          receive answers from, the Company or its representatives concerning
          the terms and conditions of the offering of the Notes and other
          matters pertaining to this investment, and has been given the
          opportunity for a reasonable period of time prior to the date hereof
          to obtain such additional information necessary in order for him to
          evaluate the merits and risks of purchase of the Notes to the extent
          the Company possesses such information or can acquire it without
          unreasonable effort or expense;

                      (iv)  Has not been furnished with any oral or written
          representation or oral or written information in connection with the
          offering of the Notes which is not contained in this Subscription
          Agreement; and

                      (v)  Has determined that the Notes are a suitable
          investment for the Subscriber and that at this time the Subscriber
          could bear a complete loss of such investment.

          (f)  The Subscriber is not relying on the Company or its affiliates
with respect to economic considerations involved in this investment.  The
Subscriber has relied on the advice of, or has consulted with only those
persons, if any, named as Subscriber Representative(s) herein and in the
Investor Questionnaire.  Each Subscriber Representative identified by the
Subscriber, if any, is capable of evaluating the merits and risks of an
investment in the Notes on the terms and conditions set forth herein and in the
Executive Summary and each Subscriber Representative has disclosed to the
Subscriber in writing (a copy of which is annexed to this Agreement) the
specific details of any and all past, present or future relationships, actual
or contemplated, between himself and the Company.

          (g)  The Subscriber represents, warrants and agrees that he will not
sell or otherwise transfer the Notes, or the Common stock issuable upon
conversion thereof, without registration under the Securities Act or an
exemption therefrom and fully understands and agrees that he must bear the
economic risk of his purchase because, among other reasons, the Notes have not
been registered under the Securities Act or under the securities laws of any
state and, therefore, cannot be resold, pledged, assigned or otherwise disposed
of unless they are subsequently registered under the Securities Act and under
the applicable securities laws of such states or an exemption from such
registration is available.  In particular, the Subscriber is aware that the
Notes are "restricted securities," as such term is defined in Rule 144
promulgated under the Securities Act ("Rule 144"), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met.  The
Subscriber also understands that the Company is under no obligation to register
the Notes, or the Common stock issuable upon conversion of the Notes, on
Subscriber's behalf or to assist him in complying with any exemption from
registration under the Securities Act or applicable state securities laws.  The
Subscriber further understands that sales or transfers of the Notes and the
Common stock issuable upon conversion thereof are further restricted by state
securities laws and the provisions of this Agreement.

          (h)  No representations or warranties have been made to the Subscriber
by the Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company contained herein, and in
subscribing for the Notes the Subscriber is not relying upon any representations
other than those contained herein.

          (i)  Any information which the Subscriber has heretofore furnished to
the Company with respect to his financial position and business experience is
correct and complete as of the date of this Subscription Agreement and if there
should be any material change in such information he will immediately furnish
such revised or corrected information to the Company.

          (j) The Subscriber understands and agrees that the certificates for
the Notes, and any Common stock issued upon conversion thereof, shall bear
substantially the following legend until (i) such securities shall have been
registered under the Securities Act and effectively been disposed of in
accordance with a registration statement that has been declared effective; or
(ii) in the opinion of counsel for the Company such securities be may sold
without registration under the Securities Act as well as any applicable "Blue
Sky" or state securities laws:

         "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
          OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED,
          SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i)
          PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH
          HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES,
          OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE
          SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE
          WRITTEN OPINION OF COUNSEL TO THE CORPORATION OR OTHER COUNSEL
          REASONABLY ACCEPTABLE TO THE CORPORATION THAT THE PROPOSED DISPOSITION
          IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS
          WELL AS ANY APPLICABLE BLUE SKY OR SIMILAR SECURITIES LAW."

          (k)  The Subscriber's overall commitment to investments which are not
readily marketable is not disproportionate to the Subscriber's net worth, and
an investment in the Notes will not cause such overall commitment to become
excessive.

          (l)  The Subscriber understands that an investment in the Notes is a
speculative investment, which involves a high degree of risk and the potential
loss of his entire investment.

          (m)  The foregoing representations, warranties, and agreements shall
survive the closing of the investment in the Notes.

          3.2  Indemnity

          (a)  The Subscriber agrees to indemnify and hold harmless the Company,
its officers and directors, employees and its affiliates and each other person,
if any, who controls any thereof, against any loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or breach or failure by the
Subscriber to comply with any covenant or agreement made by the Subscriber
herein or in any other document furnished by the Subscriber to the Company in
connection with this transaction.

          (b)       The Company agrees to indemnify and hold harmless the
Subscriber, its officers and directors, employees and its affiliates and each
other person, if any, who controls any thereof, against any loss, liability,
claim, damage and expense whatsoever (including, but not limited to, any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any litigation commenced or threatened or any claim whatsoever) arising
out of or based upon any false representation or warranty or breach or failure
by the Company to comply with any covenant or agreement made by the Company
herein or in any other document furnished by the Company to the Subscriber in
connection with this transaction.

          3.3    Representations and Warranties of the Company and its
                 Subsidiaries

          The Company hereby represents and warrants to the Subscriber as
follows:

          (a)    The Company is a corporation duly organized and in good
standing under the laws of the State of Nevada and has all requisite corporate
authority to own its properties and to carry on its business as now being
conducted.  The Company does not have any and does not own more than fifty
percent (50%) of or control any other business entity, except as set forth
in the Company's reports, proxy statement or registration statements with the
Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or the Securities Act
(collectively, the "SEC Documents").  The Company is duly qualified and is in
good standing as a foreign corporation to do business in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to qualify
would not have any effect on the business, operations, properties, or financial
condition of the Company that is material and adverse to the Company and its
Subsidiaries (as defined below), taken as a whole, and/or any condition,
circumstance, or situation that would prohibit or otherwise interfere with the
ability of the Company to enter into and perform any of its obligations under
this Agreement in any material respect (collectively, a "Material
Adverse Effect").

          (b)    Each of the subsidiaries of the Company as reflected on Exhibit
21.1 to its Annual Report on Form 10-K for its fiscal year ended June 30, 1999
(the "Subsidiaries") is duly organized, validly existing and in good standing
under the laws of their state of formation and are qualified to do business as
a foreign corporation wherever necessary to so qualify. Each Subsidiary has
requisite power and authority to conduct its business and own its property as
now conducted and owned.

          (c)          The Company has the requisite corporate power and
corporate authority to enter into and perform its obligations under this
Agreement.  The execution, issuance and delivery of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and, except as set forth in
Section 2.1(d), no further consent or authorization of the Company or its
board of directors or stockholders is required.  This Agreement shall be as
of the Closing, duly executed and delivered by the Company, and as of the
Closing, shall constitute valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
or similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application.

          (d)    The authorized capital stock of the Company consists of
60,000,000 shares of Common Stock, $.01 par value per share and 1,000,000 shares
of Series A Junior Preferred Stock, $1.00 par value per share of which 8,954,041
shares of Common Stock and no shares of Series A Junior Preferred Stock are
outstanding as of the date hereof.

          (e)   The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby do not and will not (i) result in a violation of the Company's
Certificate of Incorporation or By-Laws or (ii) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or
instrument, or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, (iii) subject to the receipt of
Stockholder approval as described in Section 2.1(d), result in a violation of
any federal, state or local law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the New York Stock Exchange (the "NYSE")) applicable to the
Company or by which any material property or asset of the Company is bound or
affected, nor is the Company otherwise in violation of, conflict with or default
under any of the foregoing (except in each case for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not have, individually or in the aggregate, a Material Adverse Effect) or (iv)
violate the Certificate of Incorporation, by-laws or other governing documents
of any of the Subsidiaries.  The business of the Company is not being conducted
in violation of any law, ordinance or regulation of any governmental entity,
except for possible violations that either singly or in the aggregate would not
have a Material Adverse Effect.

          (f)    Except as disclosed in the SEC Documents, there are no
lawsuits or proceedings pending or, to the knowledge of the Company,
threatened, against the Company or any Subsidiary, nor has the Company or any
Subsidiary received any written or oral notice of any such action, suit,
proceeding or investigation, which could reasonably be expected to have a
Material Adverse Effect on the consummation of the transactions contemplated
herein.  Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, to the knowledge of the
Company or any Subsidiary, requested of any court, arbitrator or governmental
agency which could result in a Material Adverse Effect.

          (g)    The Company maintains books and records and internal accounting
controls which provide reasonable assurance that: (i) all material transactions
to which the Company or any Subsidiary is a party or by which its properties are
bound are executed with management's authorization; (ii) the recorded accounting
of the Company's consolidated assets is compared with existing assets at regular
intervals; (iii) access to the Company's consolidated assets is permitted only
in accordance with management's authorization; and (iv) all transactions to
which the Company or any Subsidiary is a party or by which its properties are
bound are recorded as necessary to permit preparation of the financial
statements of the Company in accordance with United States generally accepted
accounting principles.

          (h)    Except as provided in Section 2.1(d), no consent, approval,
order or authorization of, or registration, declaration or filing with, any
governmental entity is required in connection with the execution, delivery and
performance of the transaction by the Company and the consummation of the
transactions by the Company hereunder.

          (i)    Each of the Company and its Subsidiaries has previously
delivered to the Subscriber copies of (i) the consolidated balance sheet
of the Company and its Subsidiaries for the past two fiscal years, and the
related consolidated statements of income, statements of stockholders' equity
and cash flows for such years, as reported in the Company's annual report on
Form 10-K, filed by the Company with the SEC, in each case accompanied by the
audit report of Deloitte & Touche LLP, independent public accountants with
respect to the Company, and (ii) the unaudited consolidated balance sheet of
the Company and its Subsidiaries, and the related unaudited consolidated
statement of operations, statement of stockholders' equity and cash flows as
reported in the Company's quarterly reports on Form 10-Q, filed with the SEC
under the Exchange Act since the last audited 10-K. All of such financial
statements fairly present the consolidated financial position of the Company
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth, in each case subject, as to interim statements, to
changes resulting from year-end adjustments (none of which will be material
in amount or effect). All of such financial statements have been prepared in
accordance with GAAP consistently applied during the periods involved, except
as otherwise set forth in the notes thereto, and the Company and its
Subsidiaries have no liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which are not fully reflected or reserved
against in the balance sheet included in such financial statements, except
for liabilities that may have arisen in the ordinary and usual course of
business and consistent with past practice and that, individually or in the
aggregate, would not have a Material Adverse Effect.

          (j)    The Company has timely filed all reports, registration
statements, proxy statements and other materials, together with any amendments
required to be made with respect thereto, that were required to be filed with
the SEC under the Securities Act or the Exchange Act or with the NYSE (all such
reports and statements are collectively referred to herein as the "Company
Reports"). As of the respective dates, the Company Reports, including the
financial statements contained therein, complied in all material respects with
all of the statutes and published rules and regulations enforced or promulgated
by the regulatory authority or exchange with which they were filed, did not
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and were complete and accurate in all material respects.

          (k)    This transaction will not result in the creation of any lien,
claim or encumbrance on any properties of the Company or any of its
Subsidiaries, nor will it contravene any license or permit under which the
Company or any of its Subsidiaries operate.

          (l)    Since the date of the last audited financial statement, there
has been no change in the assets, liabilities, business or financial condition,
operation or prospects of the Company and its Subsidiaries that would have a
Material Adverse Effect.

          (m)    Except as set forth in Schedule 3.3(m), since the date of the
last audited financial statement, except as contemplated by this Agreement or
as set forth in the interim financial statements, neither the Company nor any
of its Subsidiaries has (i) issued any stock, bond or other corporate security,
(ii) borrowed any amount or incurred or become subject to any liability
(absolute, accrued or contingent), except current liabilities incurred and
liabilities under contracts entered into in the ordinary course of business,
(iii) discharged or satisfied any lien or incurred or paid any obligation or
liability (absolute, accrued or contingent) other than current liabilities shown
on the interim financial statements and current liabilities incurred since the
date of the last applicable interim financial statement in the ordinary course
of business, (iv) declared or made any payment or distribution to stockholders
or purchased or redeemed any of its capital stock, (v) mortgaged, pledged or
subjected to any lien or encumbrance any of its assets, tangible or intangible,
other than liens of current real property taxes not yet due and payable, (vi)
sold, assigned or transferred any of its tangible assets except in the ordinary
course of business, or canceled any debt or claim owed to it except in the
ordinary course of business, (vii) sold, assigned, transferred or granted any
exclusive license with respect to any patent, trademark, trade name, service
mark, copyright, trade secret or other intangible asset, (viii) suffered any
substantial loss of property or waived any right of substantial value other than
in the ordinary course of business, (ix) made any change in officer compensation
except in the ordinary course of business and consistent with past practice, (x)
made any material change in the manner of its business or operations, (xi)
entered into any transaction except in the ordinary course of business or as
otherwise contemplated hereby or (xii) entered into any commitment, obligation,
understanding or other arrangement, contingent or otherwise, to effect, directly
or indirectly, any of the foregoing.

          (n)    Neither the Company nor any of its Subsidiaries nor any
officer, employee, agent or any other person acting on behalf of any of the
foregoing has, directly or indirectly, given or agreed to give any money, gift
or similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or other person who
was, is, or may be in a position to help or hinder the business of the Company
or any of its Subsidiaries (or assist in connection with any actual or proposed
transaction) which (i) might subject the Company or any of its Subsidiaries to
any material damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, could reasonably be
expected to have had a Material Adverse Effect or (iii) if not continued in the
future, might have a Material Adverse Effect.

          (o)    To the best knowledge of the Company:

                 (i)  neither the officers of the Company or any of its
Subsidiaries nor any officer of any of the foregoing has any interest (other
than as non-controlling holders of securities of a publicly-traded company),
either directly or indirectly, in any entity (whether as an employee, officer,
director, shareholder, agent, independent contractor, security holder, creditor,
consultant or otherwise) that presently (i) provides any services or designs,
produces or sells any products or product lines, or engages in any activity
which is the same, similar to or competitive with any activity or business in
which the Company or any of its respective Subsidiaries is now engaged, (ii) is
a supplier of, customer of, creditor of, or has an existing contractual
relationship with, the Company or any of its Subsidiaries, or (iii) has any
direct or indirect interest in any asset or property used by the Company or any
of its Subsidiaries or any property, real or personal, tangible or intangible,
that is necessary or desirable for the conduct of the business of the Company
or any of its Subsidiaries; and

                 (ii)  except as set forth in Schedule 3.3(o), no current
stockholder, director or officer of the Company or any of its Subsidiaries or
any affiliate of any such person, is at present (nor has any former stockholder,
director or officer of any such person who has acted as such within the 12
months preceding the date hereof been) directly or indirectly through his
affiliation with any other person, a party to any transaction with the Company
or any of its Subsidiaries providing for the furnishing of services by, or
rental of real or personal property from, or otherwise requiring cash payments
to any such person in excess of $1,000.

          (p)    The Company and each of its Subsidiaries own or possess, and
will own or possess after giving effect to this transaction, the valid right to
use all the patents, patent applications, patent and know-how licenses,
inventions, technology, permits, trademark registration and applications,
trademarks, service marks, trade names, copyrights, product designs,
applications, formulae, processes, circulation, and other subscriber lists,
industrial property rights and licenses and rights in respect of the foregoing
used or necessary for the conduct of its business (collectively, "Intellectual
Property"), except to the extent the failure to own or possess any such
Intellectual Property would not have a Material Adverse Effect.  The Company is
not aware of any existing or threatened infringement or misappropriation (a) by
the Company or any of its Subsidiaries of any Intellectual Property owned or
possessed by any other person or (b) by any other person of any Intellectual
Property of the Company or any of its Subsidiaries, which in either case would
have a Material Adverse Effect.

          (q)    Neither the Company nor any of its Subsidiaries, is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

          (r)    Neither the Company nor any of its Subsidiaries have dealt
with, nor is the Company or any of its Subsidiaries obligated to pay any fee or
commission in connection with, any broker, finder or other similar person in
connection with the offer or sale of the Notes or any of the transactions
contemplated by this Agreement, and the Company hereby indemnifies each of the
Subscribers against, and agrees that it will hold each of the Subscribers
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.

          (s)    The Company has not, either directly or through any agent,
offered any Notes or any other securities to, or solicited any offers to acquire
any Notes or any other securities from, or otherwise approached, negotiated or
communicated in respect of any Notes or any other securities with, any person
in such a manner as to require that the offer or sale of the Notes or any such
other securities be registered pursuant to the Securities Act or any Blue Sky
Laws.
          (t)    Neither this Agreement, the Notes nor any of the exhibits,
schedules, attachments, written or oral statements, documents, certificates or
other items prepared or supplied to the Subscriber by or on behalf of the
Company or any of its Subsidiaries with respect to the transactions contemplated
hereby or thereby contain any untrue statement of a material fact or omit a
material fact necessary to make each statement contained herein or therein not
misleading; provided, however, that with respect to any financial projections
furnished to each of the Subscribers by or on behalf of the Company or any of
its Subsidiaries, the Company represents and warrants only that such projections
were based upon assumptions reasonably believed by the Company to be reasonable
and fair as of the date the projections were prepared in the context of the
Company's history and then current and reasonably foreseeable business
conditions.

          (u)    The Company and each of its Subsidiaries own good and
marketable title to all of their respective properties and assets, real and
personal, tangible and intangible, of any nature whatsoever (including
Intellectual Property); free and clear of all liens (including infringement
claims with respect to Intellectual Property) except where the failure to do
so would not have a Material Adverse Effect on the Company.

          (v)    During the twelve-consecutive-month period prior to the date of
the execution and delivery of this Agreement, no steps have been taken to
terminate any pension plan, and no contribution failure has occurred with
respect to any pension plan sufficient to give rise to a lien under section
302(f) of ERISA.  No condition exists or event or transaction has occurred with
respect to any pension plan which might result in the incurrence by the Company
or any member of its Controlled Groups of any material liability, fine or
penalty.  Except as disclosed in Schedule 3.3(v), neither the Company nor any
member of its Controlled Groups has any contingent liability with respect to any
post-retirement benefit under a welfare plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.

          (w)    The Company and each of its Subsidiaries has accurately
completed and filed or will file within the time prescribed by law
(including extensions of time granted by the appropriate taxing authority) all
material tax returns and reports required to be filed with the Internal Revenue
Service and any states or governmental subdivisions and all foreign countries,
and has paid all taxes, interest, penalties, assessments or deficiencies shown
to be due and payable by the Company or any of its Subsidiaries on or in respect
of such tax returns and reports.  Except as set forth on Schedule 3.3(w),
neither the Company nor any of its Subsidiaries knows of (i) any other material
federal, state, county, municipal or foreign taxes (or other liabilities in
respect thereof) which are due and payable by the Company or any of its
Subsidiaries which have not been so paid, (ii) any other federal, state,
county, municipal or foreign tax returns or reports which are required to be
filed by the Company or any of its Subsidiaries which have not been so filed,
(iii) any other material unpaid assessment for, or any fact which would
constitute grounds for the assessment of, additional taxes or penalties due or
payable by the Company or any of its Subsidiaries for any fiscal period or any
basis thereof or (iv) any material tax lien, whether imposed by any federal,
state, county, municipal or foreign taxing authority, outstanding against the
assets or business of the Company or any of Subsidiaries.  Except as set forth
on Schedule 3.3(w), none of the federal or state income tax returns of the
Company or any of its Subsidiaries has been audited.  Proper and accurate
amounts have been withheld by the Company and its Subsidiaries from their
respective employees for all periods in compliance with the tax, social
security and any employment withholding provisions of applicable federal
and state law, and proper and accurate federa and state returns have been
filed by the Company and its Subsidiaries for all periods for which returns
were due with respect to employee income tax withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and payable have
been paid in full or provision therefor included on the books of the Company
and each of its Subsidiaries in accordance with and to the extent required by
GAAP.  The Company has not made any election under Section 341(f) of the Code.

          3.4    Covenants of the Company

                 For so long as the Note shall be outstanding:

          (a)    The Company will, and will cause each of its Subsidiaries to,
at all times preserve and keep in full force and effect its corporate or
partnership existence and all rights and franchises material to its business.

          (b)    The Company will, and will cause each of its Subsidiaries to,
comply in all material respects with all applicable laws, rules, regulations and
orders (including Environmental Laws), such compliance to include:

                  (i)  the maintenance and preservation of its corporate or
partnership existence and qualification as a foreign entity; and

                  (ii) the payment, before the same become delinquent, of all
Taxes, assessments and governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if the same
is being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
          (c)     The Company will, and will cause each of its Subsidiaries to,
maintain, preserve, protect and keep its properties (including all its
Intellectual Property and Licenses) in good repair, working order and condition,
and make necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times unless the Company determines in good faith that the continued maintenance
of any of its properties is no longer economically desirable.

          (d)     The Company will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained with responsible insurance companies
insurance with respect to its properties and business against such casualties
and contingencies and of such types and in such amounts as is customary in the
case of similar businesses and will, upon the reasonable request of the
Subscriber, furnish to such Subscriber at reasonable intervals a certificate of
the chief financial officer of the Company setting forth the nature and extent
of all insurance maintained by the Company and its Subsidiaries in accordance
with this Section.

          (e)     The Company shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock, for the purpose of
effecting the conversion of the Notes to Common Stock and otherwise complying
with the terms of this Agreement, such number of its duly authorized shares of
Common Stock as shall be sufficient to effect such conversions or otherwise to
comply with the terms of this Agreement.  If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the Notes into Common Stock, or otherwise to comply
with the terms of this Agreement, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.  In addition to the foregoing, all Common Stock issued in connection
with any such conversion shall be reasonably satisfactory in form and substance
to a majority in interest of the holders participating in such conversion,
including as to rights, preferences, privileges, etc.  The Company will obtain
any authorization, consent, approval from, or other action by, or make any
filing with any person or persons (including any applicable court or
administrative body) that may be required to effect the foregoing, including
under applicable state securities laws.

          (f)    At any time and from time to time upon the reasonable request
of the Subscriber, the Company will, and will cause each of its Subsidiaries to,
at its own expense, promptly execute, acknowledge and deliver such further
documents and do such other acts and things as the Subscriber may reasonably
request in order to effect fully the purposes of this Agreement, the Notes and
the other Transaction Documents and to provide for payment of the Obligations
in accordance with the terms hereof and thereof.

          (g)    The Company will not, and will not permit any of its
Subsidiaries to, enter into, or cause, suffer or permit to exist any
arrangement or contract with any officer or director of the Company or
any of the Subsidiaries unless such arrangement or contract is fair and
equitable to the Company or such Subsidiary and is an arrangement or contract
of the kind which would be entered into by a prudent person in the position of
the Company or such Subsidiary with a person which is not one of its officers
or directors.  Any such arrangement or contract shall be approved by a majority
of the disinterested members of the Board of Directors of the Company.

          (h)    The Company will timely file all reports, registration
statements, proxy statements and other materials, together with any amendments
required to be made with respect thereto, that are required to be filed with the
SEC under the Securities Act or the Exchange Act or with the NYSE (all such
reports and statements are collectively referred to herein as the "Company
Reports"). As of their respective dates, the Company Reports, including the
financial statements contained therein, will comply in all material respects
with all of the statutes and published rules and regulations enforced or
promulgated by the regulatory authority or exchange with which they are filed,
will not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading and are complete and accurate in all material respects.

          (i)    As promptly as practicable, the Company will apply to the NYSE
to list the shares of Common Stock into which the Notes may by converted, and
the Company will use its reasonable efforts to cause such shares to be listed
on the NYSE as promptly thereafter as practicable.

          (j)    The Company shall use its best efforts to take all action
required by the NYSE's rules and regulations to obtain the approval of the
Company's stockholders of the issuance and sale of the Notes to the Subscriber
hereunder.  Subject to its fiduciary duties under applicable law, the Company's
Board of Directors shall recommend that the Company's stockholders approve the
issuance and sale of the Notes hereunder.

          (k)     Promptly following the date hereof, the Company will prepare
and file with the SEC a proxy statement to be distributed to the Company's
stockholders in connection with the issuance and sale of the Notes hereunder,
including any amendments and supplements thereto (the "Proxy Statement"). The
Company will use all reasonable efforts to have or cause the Proxy Statement to
be declared effective as promptly as practicable. The Company agrees to provide
the Subscriber and their respective counsel with any written comments the
Company or its counsel receive from the SEC with respect to the Proxy Statement
promptly after the receipt of such comments. The form and substance of the Proxy
Statement shall be determined by the Company, in its reasonable discretion. The
Company will use all reasonable efforts to cause the Proxy Statement (i) not to
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (ii) to
comply as to form in all material respects with the applicable provision of the
Exchange Act and the rules and regulations thereunder.

                                   SECTION 4


          4.1  Modification.  Neither this Subscription Agreement nor any
provisions hereof shall be modified, discharged or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.

          4.2  Notices.  Any notice, demand or other communication which any
party hereto may be required, or may elect, to give to anyone interested
hereunder shall be sufficiently given if (a) deposited, postage prepaid, in a
United States mail letter box, registered or certified mail, return receipt
requested, addressed to such address as may be given herein, or (b) delivered
personally at such address.

          4.3  Counterparts.  This Subscription Agreement may be executed
through the use of separate signature pages or in any number of counterparts
(and by facsimile signature), and each of such counterparts shall, for all
purposes, constitute one agreement binding on all parties, notwithstanding that
all parties are not signatories to the same counterpart.

          4.4  Binding Effect.  Except as otherwise provided herein, this
Subscription Agreement shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors, legal
representatives and assigns.  If the Subscriber is more than one person, the
obligation of the Subscriber shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be deemed
to be made by and be binding upon each such person and his heirs, executors,
administrators and successors.

          4.5  Entire Agreement.  This Subscription Agreement and the
documents referenced herein contain the entire agreement of the parties hereto
and there are no representations, covenants or other agreements except as
stated or referred to herein and therein.

          4.6  Assignability.  This Subscription Agreement is not
transferable or assignable by the Subscriber; provided, however, that
Subscriber may assign its rights and obligations hereunder to its affiliates
and limited partners.

          4.7  Applicable Law.  This Subscription Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
giving effect to rules governing the conflicts of law.

          4.8  Pronouns.  The use herein of the masculine pronouns "he", "him"
or "his" or similar terms shall be deemed to include the feminine and neuter
genders as well and the use herein of the singular pronoun shall be deemed to
include the plural as well.

                     ALL SUBSCRIBERS MUST COMPLETE THIS PAGE









Principal Amount of
Notes
Subscribed For

___________________
Excess Amount



Manner in which Title is to be held (Please Check One):



1
 .

                                      G

                                 Individual

                                      7
                                      .

                                      G

                            Trust/Estate/Pension
                              or Profit Sharing
                                    Plan
Date Opened:



                                      2
                                      .

                                      G

                             Joint Tenants with
                                  Right of
                                Survivorship

                                      8
                                      .

                                      G

                             As a Custodian for
                            ____________________
                                    ____
                              Under the Uniform
                             Gift to Minors Act
                               of the State of




                                      3
                                      .

                                      G

                             Community Property

                                      9
                                      .

                                      G

                                Married with
                              Separate Property



                                     4.

                                      G

                              Tenants in Common

                                     10
                                      .

                                      G

                                    Keogh



                                      5
                                      .

                                      G

                            Corporation/Partners
                                    hip/
                              Limited Liability
                                   Company

                                      1
                                     1.

                                      G

                               Tenants by the
                                  Entirety



                                     6.

                                      G

                                     IRA









           IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
                INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 9.
            SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 10.



     IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement
on the ____ day of June, 2000.

                  EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY

      (Corporation, Partnership, Limited Liability Company, Trust, Etc.)


Name of Entity (Please Print):

State of Incorporation or Organization:

State of Principal Offices:

Federal Taxpayer Identification Number:



______________________________________
BY:
Name:
Title:

[seal]

Attest:
        (If Entity is a Corporation)

Address:
COMPANY ACCEPTANCE


     ACCEPTED this ______ day of June, 2000 on behalf of the Company.

                             JACKPOT ENTERPRISES, INC.

BY:
Name:  Allan R. Tessler
Title: Chairman

    IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement
    on the ____day of June, 2000.


                         EXECUTION BY NATURAL PERSONS

Exact Name in Which Title is to be Held:



Name:


(Please Print)

Name of Additional Purchaser:


(Please Print)




Residence:


Number and Street


Address of Additional Purchaser:


Number and Street





City, State and Zip Code



City, State and Zip Code





Social Security Number



Social Security Number





(Signature)



(Signature)


                            COMPANY ACCEPTANCE

     ACCEPTED this ______ day of June, 2000 on behalf of the Company.

                            JACKPOT ENTERPRISES, INC.


BY:
Name:     Allan R. Tessler
Title:    Chairman

                                  SCHEDULES
                               Schedule 3.3(m)


    1. An aggregate of 178,571 shares of common stock was issued to the
       following individuals for an aggregate consideration of $2,000,000
       in connection with the investment by Jackpot Enterprises, Inc. in
       TechTrader, Inc.

                          Jacob Pechenik      151,881
                          Greg Campbell        16,393
                          Martin Somarriba      4,518
                          David Zipkin          3,320
                          Neelan Choski         2,459

    2. Mark W. Hobbs was hired as President and Chief Operating Officer and
       Steven L. Korby has been hired as Executive Vice President and Chief
       Financial Officer.

                               Schedule 3.3(w)


    The Federal Income Tax Returns for Jackpot Enterprises, Inc. for the fiscal
year ended June 30, 1989 was audited by the Internal Revenue Service.

EX-27

 

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Jackpot's
Consolidated Balance Sheets - June 30, 1998 and 1997 and its Consolidated
Statements of Income - years ended June 30, 1998, 1997 and 1996 and is
qualified in its entirety to such financial statements.



                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          JUN-30-1998
<PERIOD-START>                             JUL-01-1997
<PERIOD-END>                               JUN-30-1998
<CASH>                                          46,775
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                72,506
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                  72,506
<CURRENT-LIABILITIES>                              844
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            99
<OTHER-SE>                                      70,772
<TOTAL-LIABILITY-AND-EQUITY>                    72,506
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                    2,774
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                (1,342)
<INCOME-TAX>                                   (1,148)
<INCOME-CONTINUING>                              (194)
<DISCONTINUED>                                   7,407
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     7,213
<EPS-BASIC>                                        .80
<EPS-DILUTED>                                      .80


 

EX-27

 

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Jackpot's
Consolidated Balance Sheets - June 30, 1999 and 1998 and its Consolidated
Statements of Income - years ended June 30, 1999, 1998 and 1997 and is
qualified in its entirety to such financial statements.



                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          JUN-30-1999
<PERIOD-START>                             JUL-01-1998
<PERIOD-END>                               JUN-30-1999
<CASH>                                          44,137
<SECURITIES>                                     7,292
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                75,716
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                  77,721
<CURRENT-LIABILITIES>                            2,274
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            99
<OTHER-SE>                                      74,515
<TOTAL-LIABILITY-AND-EQUITY>                    77,721
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                    3,403
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                (2,063)
<INCOME-TAX>                                   (1,085)
<INCOME-CONTINUING>                              (978)
<DISCONTINUED>                                   5,581
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     4,603
<EPS-BASIC>                                        .53
<EPS-DILUTED>                                      .53


 

EX-27

 

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Jackpot's
Consolidated Balance Sheets - June 30, 2000 and 1999 and its Consolidated
Statements of Income - years ended June 30, 2000, 1999 and 1998 and is
qualified in its entirety to such financial statements.


                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          JUN-30-2000
<PERIOD-START>                             JUL-01-1999
<PERIOD-END>                               JUN-30-2000
<CASH>                                          60,090
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                77,432
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                 104,735
<CURRENT-LIABILITIES>                              799
<BONDS>                                         12,750
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           102
<OTHER-SE>                                      87,808
<TOTAL-LIABILITY-AND-EQUITY>                   104,735
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                    6,732
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                  95
<INCOME-PRETAX>                                  8,713
<INCOME-TAX>                                     2,418
<INCOME-CONTINUING>                              6,295
<DISCONTINUED>                                     346
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     6,641
<EPS-BASIC>                                        .77
<EPS-DILUTED>                                      .75