EXHIBIT 1
PLACEMENT AGREEMENT
MAY ___, 1998
CASINOVATIONS, INCORPORATED
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Dear Sirs:
Discussions have been held between you and Xxxxxx Xxxxxx
Securities, Inc. (the "Placement Agent") concerning a proposed
offering by Casinovations Incorporated (the "Company"). The
Placement Agent hereby confirms its interest in underwriting a
maximum of 1,500,000 Common Shares at the purchase price of $2.50
per Common Share on a 'best efforts' basis, (the "Offering"),
pursuant to a prospectus on Securities Exchange Commission Form
SB-2/A (SEC File No. 333-31373) the ("Registration Statement").
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
Agent, and the Company shall make all required filings
with respect to the SEC. 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 Agent.
3. The Company proposes to offer through the
Placement Agent and/or a selling group selected by the
Placement Agent up to 1,500,000 Common Shares at the
purchase price of $2.50 per Common Share. The
Placement Agent contemplates 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 and Options. Warrants and options issued
and to be issued by the Company within sixty (60) days
from the date hereof shall be acceptable to the
Placement Agent, 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
1
securities without the Placement Agent's 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 Agent 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 Agent that
all documents and other information relating to the
Company's affairs will be made available upon request
to the Placement Agent and its attorneys at the
Placement Agent's office or at the office of the
Placement Agent's attorney and copies of any such
document will be furnished upon request to the
Placement Agent or its attorneys. Included within the
documents which must be made available as soon as
possible are at least all Articles of Incorporation and
Amendments, By-Laws and Amendments, Minutes of all 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 Agent 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 prospectus. In addition, the Company will provide
the Placement Agent with unaudited quarterly financial
data.
8. 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 Agent. Any employee (including officers
and/or directors) incentive plan (including royalty
plan), of whatever nature, presently contemplated,
shall be fully disclosed to the Placement Agent.
9. Blue-Sky Laws. It is understood and agreed
between the Company and the Placement Agent that it
shall be the obligation of the Company together with
the Placement Agent and its 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 Agent. 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.
2
The parties hereto shall agree on the division of
legal work pertaining to Blue-Sky qualification.
10. Placement Agent Fee. The Shares will be placed to
the public by the Placement Agent and selling group
members with an aggregate fee of ten percent (10%) of
the Offering price for shares placed by the Placement
Agent. The Placement Agent may re-allow all or part of
such fee to any member of the selling group.
11. Warrants. (a) In the event that the Placement
Agent places all of the 1,500,00 shares of Common Stock
at the Purchase Price of $2.50 per share in accordance
with this Agreement, upon termination of the Offering,
the Company will use its best efforts to cause certain
Company stockholders to transfer to the Placement Agent
up to 200,000 Common Stock Purchase B Warrants, as
defined in the Registration Statement, for a purchase
price of $.0001 per Warrant, and up to 250,000 C
Warrants, as defined in the Registration Statement.
The B Warrants and C Warrants shall have the terms and
be subject to the conditions described in the
Registration Statement. The B Warrants and C Warrants
will not be transferable to anyone for a period of
twelve (12) months after the date of the definitive
Prospectus, except to the officers of the Placement
Agent.
b) In the event that the Placement Agent places
all of the 1,500,000 shares of Common Stock at the
purchase price of $2.50 per share in accordance with
this Agreement, the Company shall issue to the
Placement Agent in exchange for the payment of $50.00 a
warrant entitling Placement Agent to purchase up to
100,000 shares of the Company's Common stock at the
exercise price of $2.50 per share (the "New Warrant")
for a period of up to one year from the date of this
Agreement. The New Warrant shall provide that shares
issuable pursuant to the New Warrant shall be subject
to piggyback registration rights for a period of up to
one year from the expiration date of the New Warrant,
excluding, however, from any piggyback registration
obligation registration statements filed by the Company
on XXX Xxxxx X-0 or S-8, or if, in the opinion of the
Company's counsel, the registration of shares issuable
pursuant to the New Warrant does not then require
filing of a registration statement.
12. Exercise Rights. In addition to the above, the
Company understands and agrees that if, at any time, it
should file a Registration Statement with the
Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or file a
Notification on Form 1-A under the Act, regardless of
whether some of the holder(s) of the Warrants and
Common Stock issued upon the exercise of the Warrants
shall have theretofore availed itself (themselves) of
the right above provided, the Company at its own
expense, will offer to said holder(s) the opportunity
to register or exercise of the B Warrants or C
Warrants, as the case may be, limited in
3
the case of a Regulation A Offering to the amount
of the available exemption. This paragraph is not
applicable to a Registration Statement filed by the
Company with the SEC on Form S-4 or Form S-8, or any
other appropriate form.
13. Expenses. The Company shall bear all the
Company's costs and expenses incident to the issuance,
offer, sale and delivery of the Shares, the costs and
the Company's counsel fees of qualification under state
securities laws, and fees and disbursements of counsel
and accountants for the Company, costs for preparing
and printing of the prospectus, and cost of printing as
many copies of the documents and Prospectuses as the
Placement Agent may deem necessary and related
exhibits. The Placement Agent agrees 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 proposed offering by the Company other
than counsel fees relating to blue-sky filings as
provided in the following sentence. To the extent blue-
sky work is undertaken by counsel to the Placement
Agent authorized in writing by the Company pursuant to
paragraph 9 hereof, it shall be separately billed to
the Company and shall be the financial obligation of
the Company. Commencing on the date of this Agreement,
and continuing until the earlier to occur of (a) two
months from the date of this Agreement or (b) the
completion of the Offering, the Company shall advance
to the Placement Agent or its designee up to $15,000
for a non-accountable expense allowance, payable in
three (3) installments as follows: (1) $5,000 on the
date of this Agreement, (2) one (1) month from the date
of this Agreement, and (3) two (2) months form the date
of this Agreement.
14. 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 Xxxxxxx Xxxxx. 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
proposed Offering. The Company represents that it has
separately disclosed to the Placement Agent all
conflicts of interest involving officers, directors,
principal shareholders and /or employees.
15. 1934 Act Registration and Quarterly Reports to
Shareholders, Quotation on NASDAQ, Listing in Xxxxx'x,
Transfer Agent. The Company represents that it will
prepare and file a Form 8-A or a Form 10 with the SEC
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
4
after the end of the Company's first three fiscal
quarters, quarterly reports containing unaudited
financial information. The Company, upon request of
the Placement Agent, will promptly upon becoming
eligible apply for quotation on the NASD Automatic
Quotation System, if the Company believes that such
filing is in the best interests of the Company.
16. The Placement Agent may suggest a 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.
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,
XXXXXX XXXXXX SECURITIES, INC.
By ___________________________
XXXXXX XXXXXXX, PRESIDENT
Understood and accepted
On ______________, 1998
______________________
By_______________
_________________,President
5
