PLACEMENT AGREEMENT
September 17, 1998
Casinovations Incorporated
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Discussions have been held between Casinovations
Incorporated, a Washington company (the "Company"), and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Inc. and First Global Securities, Inc. (the "Placement
Agents") concerning an offering (the "Offering") by the Company
for 1,500,000 shares (the "Shares") of the Company's common stock
at a price of $2.50 per share pursuant to a prospectus on a
Registration Statement on Securities and Exchange Commission Form
SB-2/A (Amendment No. 1), SEC File No. 333-31373 (the
"Registration Statement"). The Company intends to file a Post-
Effective Amendment No.2 to the Registration Statement
(hereafter, as amended by the Post-Effective Amendment No.2,
references shall be to the Registration Statement). The
Placement Agents hereby confirm their interest in underwriting a
maximum of 1,182,100 shares of the Company's common stock on a
"best efforts" basis.
1. Timetable. The parties hereto shall forthwith
agree upon a timetable for blue-sky filings, and all other
steps necessary to effectuate the Offering.
2. Placement Agent's Counsel. The "Broker Dealer
Selling Agreement" shall be prepared by the Placement
Agents, and the Company shall make all required filings with
respect to the Securities and Exchange Commission. All
corporate proceedings undertaken by the Company and other
legal matters, which relate to the Offering and other
related transactions, shall be satisfactory in all material
respects to counsel for the Placement Agents.
3. The Company proposes to offer through the
Placement Agents and/or a selling group selected by the
Placement Agents up to 1,182,100 shares of the Company's
common stock at the purchase price of $2.50 per share. The
Placement Agents contemplate to place the Offering on a
"best efforts" basis, with a no minimum escrow requirement.
The Offering shall be closed only upon receipt of a letter
from the Company.
4. Warrants. The warrants issued and to be issued by
the Company within sixty (60) days from the date hereof
shall be acceptable to the Placement Agents, the consent to
which shall not be unreasonably withheld.
5. Future Sales. It is understood that during the
period of the proposed Offering and for one hundred eighty
(180) days from the date of this agreement, the Company will
not sell any equity or long-term debt securities without the
Placement Agents prior written consent, which may not be
unreasonably withheld.
6. Reciprocal Indemnification. It is understood that
there is reciprocal indemnification between the Company and
the Placement Agents as to certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
7. Information Available. It is understood and
agreed between the Company and the Placement Agents that all
documents and other information relating to the Company's
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affairs, including certain non-public, confidential or
proprietary information, whether oral or written (the
"Company Information"), will be made available upon request
to the Placement Agents and their respective attorneys at
the Placement Agents' office or at the offices of the
Placement Agents' respective attorneys and copies of any
such document will be furnished upon request to the
Placement Agents or their respective attorneys. Included
within the documents, which must be made available as soon
as possible, are the Company's Articles of Incorporation and
all amendments thereto, Bylaws and all amendments thereto,
minutes of all of the Company's Directors and Shareholders
Meetings, all quarterly and annual financial statements, and
correct copies of any material contracts, leases, and
agreements to which the Company is a party. At the earliest
practicable date, the Company will furnish the Placement
Agents a business plan showing projected cash flow (or
deficiencies) covering a three-year period and reconciled to
the proposed "Use of Proceeds" section of the Registration
Statement. In addition, the Company will provide the
Placement Agents with unaudited quarterly financial data.
8. Confidentiality. The Company and the Placement
Agents understand and agree that the Company will be
furnishing certain Company Information to the Placement
Agents and providing access to the Company's personnel for
the sole purpose of assisting the Placement Agents in their
efforts to act as underwriters for the Company. In
consideration of furnishing such Company Information, the
Placement Agents hereby covenant and agree that, without the
prior express written consent of the Company, the Placement
Agents shall hold in the strictest confidence, and shall not
disclose to any person, firm, corporation or other entity,
any of the Company Information, including but not limited to
information or other documents concerning (i) the Company's
business, customers or suppliers; (ii) the Company's
business plans, products, marketing methods, design
specifications, files, and credit and collection techniques
and files; or (iii) the Company's trade secrets and other
"know-how" or information not of a public nature.
9. Properties, Capital Structure, Dilution, Employee
Benefit Plans. The properties owned or held under option by
the Company, the capital structure of the Company
immediately preceding the Offering and Company's business
plan shall be provided to the Placement Agents. Any
employee (including officers and/or directors) incentive
plan (including royalty plan), of whatever nature, presently
contemplated, shall be fully disclosed to the Placement
Agents.
10. Blue-Sky Laws. It is understood and agreed
between the Company and the Placement Agents that it shall
be the obligation of the Company together with the Placement
Agents and their respective counsel to use its best efforts
to qualify the sale of the Company's common stock in such
states as may be designated by the Placement Agents. The
officers, directors and promoters of the Company will comply
with applicable Blue-Sky escrow requirements, including
those pertaining to the escrow of shares, provided such
escrow shall in no event extend beyond a period of two
years; notwithstanding the foregoing, in the event that
escrow or other terms of any Blue-Sky qualification are not
acceptable to the Company in its sole and absolute
discretion, the Company may elect to withdraw any
application for Blue-Sky qualification from any such state
or jurisdiction. The parties hereto shall agree on the
division of legal work pertaining to Blue-Sky qualification.
11. Placement Agents Fee. The Shares will be placed
to the public by the Placement Agents and selling group
members with an aggregate fee of ten percent (10%) of the
offering price for shares placed by the Placement Agents.
The Placement Agents will entitled to such fee for a maximum
of 1,182,100 shares sold pursuant to the Registration
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Statement. The Placement Agents may re-allow all or part of
such fee to any member of the selling group.
12. Warrants. In the event that the Placement Agents
place all of the remaining 1,182,100 shares of the Company's
common stock at the purchase price of $2.50 per share within
sixty (60) days of the signing of this Agreement, the
Company shall issue to the Placement Agents warrants for the
purchase of 550,000 shares of the Company's common stock at
a price of $3.00 per share (a) upon the termination of the
Offering, and (b) after receipt by the Company of full
proceeds for the 1,182,100 shares of the Company's common
stock sold under the Offering. The warrants to be issued to
the Placement Agents pursuant to this paragraph shall be
referred to as the "Class E Warrants."
13. Piggy-back Registration Rights. In the event the
Company files a registration statement with the Securities
and Exchange Commission (other than a registration statement
on Form S-4 or Form S-8, or any successor form thereto), the
Company shall give written notice thereof to the Placement
Agents. If the Company has received written requests from
the Placement Agents to register the shares underlying the
Class E Warrants (the "Warrant Shares") within thirty (30)
days after such notice, the Company shall include in such
registration such Warrant Shares.
14. Expenses. The Company shall bear all its costs
and expenses incident to the issuance, offer, sale and
delivery of the Shares, its costs and fees for qualification
under applicable state securities laws, and its fees and
disbursements to its counsel and accountants, its costs for
preparing and printing of the prospectus, and its costs for
printing as many copies of the documents and prospectuses as
the Placement Agents may deem necessary and related
exhibits. The Placement Agents agree to pay all fees and
expenses of any legal counsel whom it may employ to
represent it separately in connection with or on account of
the Offering by the Company other than its attorneys fees
relating to blue-sky filings as provided in the following
sentence. To the extent blue-sky work is undertaken by
Placement Agents' counsel authorized in writing by the
Company pursuant to paragraph 9 hereof, such work shall be
separately billed to the Company and shall be the financial
obligation of the Company.
15. Representations of the Company. The Company
represents and warrants that no officer, director or
shareholder of the Company is a member of the NASD, an
employee or associated member of the NASD, with the
exception of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. The Company represents and
warrants that it has not promised or represented to any
person that any part of the Shares will be directed or
otherwise made available to them in connection with the
Offering. The Company represents that it has separately
disclosed to the Placement Agents all conflicts of interest
involving officers, directors, principal shareholders and/or
employees.
16. Registration under the Securities Act of 1934;
Quarterly Reports to Shareholders; Quotation on NASDAQ;
Listing in ▇▇▇▇▇'▇; Transfer Agent. The Company represents
that it will prepare and file a Form 8-A or a Form 10 with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, as soon as possible but no
later than one year after the successful termination of the
Offering. The Company agrees that for at least five years
after its common stock is registered under the Securities
Exchange Act of 1934 the Company will issue to the Company's
shareholders, within 45 days after the end of the Company's
first three fiscal quarters, quarterly reports containing
unaudited financial information. The Company, upon request
of the Placement Agents, will promptly upon becoming
eligible apply for quotation on the NASD Automatic
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Quotation System, if the Company believes that such filing
is in the best interests of the Company.
17. Nominee to the Company's Board of Directors. In
the event that the Placement Agents place all of the
remaining 1,182,100 shares of the Company's common stock at
the purchase price of $2.50 per share within sixty (60) days
of the signing of this Agreement, the Placement Agents may
collectively suggest one (1) nominee for the Board of
Directors upon closing of this Offering. The Board of
Directors may nominate such person for election to the Board
of Directors if the Board of Directors believes that such
nomination is in the best interests of the Company and the
Company's shareholders.
18. Governing Law. The terms and conditions of this
letter shall be governed by and construed in accordance with
the laws of the State of Nevada in effect on the date of
this Agreement without resort to any conflict of laws
principles, and the courts of the State of Nevada shall have
sole and exclusive jurisdiction over any matter brought
under, or by reason of, this letter.
If this letter correctly sets forth our understanding,
please so indicate by signing and returning to us the enclosed
copy of this letter.
Very truly yours,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
FIRST GLOBAL SECURITIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chairman
ACKNOWLEDGEMENT
Casinovations Incorporated, a Washington corporation (the
"Company"), hereby authorizes the undersigned officer of the
Company to execute this acknowledgement of the terms and
conditions of this letter.
CASINOVATIONS INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
President
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